In my latest Collab Hour presentation, I mentioned that there was evidence that Gen Z (the generation that starts in the mid to late 1990s) is showing different preferences than millennials, particularly as it relates to their relationship with “local.” Based on the questions and comments at the end of the presentation, there was great interest (and some incredulous disagreement) with this statement. So I thought I’d write a post of some of what we know about Gen Z, focusing on things like preference for “small” and “local.”

I’ll start by saying that “generational stories” may have insights in them, but we shouldn’t overstate how much we can describe the collective actions of tens of millions of individuals. In addition, there’s nothing magical that makes a Gen Z-er different than a millennial, who is only a few years older, so what we’re really talking about are subtle shifts over time more than stark differences that arise at what are partially arbitrary birthdate cutoffs.

In addition, we don’t really know much yet as it relates to beverage alcohol. Depending on the cutoff you use, legal drinking age Gen Z-ers are limited to 21-23 (18-23 for our Canadian readers), and if you remember being that age, you probably had pretty different preferences than those you have now. So, we need to separate out the differences between Gen Z and millennials that are real differences in world view from those that are differences based on age and life stage.

Generation Z Cares About Actions, Not Attributes

With those two paragraphs of caveats out of the way, as you delve into the data, I think there are plenty of signs the next generation will want different things and interact with your businesses in different ways, just like every generation before them. If I were to state this as an overarching meta-theory, Gen Z cares less about attributes, and cares more about actions. So, who you are in terms of “local,” “small,” etc. matters less than what you are doing as a small and local business.

Let’s start with support for “local,” which is what generated the most discussion during my Collab Hour. I went through the raw data for our Nielsen-Harris survey this past year (which we sample boosted specifically so we could look at some of these smaller age groups).

Here’s the percentage of respondents where local was somewhat or very important by age:

• 21-24 = 57%
• 25-34 = 66%
• 35-44 = 70%

As I wrote above and mentioned on the call, we’re not talking about a seismic shift, but a trend. Now, you might be saying “maybe they will care more in a few years when they are older and can afford it!” That’s a good theory, but I don’t necessarily see it in the data.

Here’s the same Nielsen survey from 2015. Caveat: we didn’t do a sample boost that year, so the sample is only 26 for 21-24 year-olds (versus 136 this year). That said, back then 21-24 year-olds were more likely to say local was important to them.

• 21-24 = 69%
• 25-34 = 63%
• 35-44 = 65%

Again, I don’t want to overstate these results or suggest they are definitive. We’re talking about one question from a larger survey with a small sample size. Margin of error is almost 20% for that 21-24 year-old group in 2015.

That said, I think this data backs a larger theory I outlined: Gen Z cares less about who you are and more about what you do.

That means that lower automatic support for local doesn’t translate into Gen Z-ers rushing to big businesses. Salesforce Research found that 63% of Gen Z say they “trust companies” versus 71% of millennials. This follows the longer trend of three decades of decline in trust for big business (see graph below with data from Gallup).

Confidence in Big Business

Source: Gallup (2020)

So taking a step back, I do believe Gen Z will be willing to support local businesses, but they aren’t going to support them just because they are local. This is a generation that wants to connect and know everything about who they are buying from, and as the most connected generation of all time, has the skills to rapidly find out. A McKinsey report coined Gen Z the “True Gen” (it hasn’t caught on as a moniker) and discussed how they will have consumption anchored on ethics: “In a transparent world, younger consumers don’t distinguish between the ethics of a brand, the company that owns it, and its network of partners and suppliers. A company’s actions must match its ideals, and those ideals must permeate the entire stakeholder system.”

For small brewers, this might mean an initial challenge in connecting with Gen Z-ers – small and local businesses won’t get their trust or business just by being small and local. But it offers a larger opportunity. By acting as members of your community and walking the walk, Gen Z may be more likely to connect with local brewers who demonstrate why supporting local matters.