Alcohol Spending Drops as Younger Adults Shift Habits

Bank of America report finds alcohol spending near 40-year lows as consumers, especially younger generations, cut back on drinking

Published on Feb. 25, 2026

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A new Bank of America Institute report has found that alcohol spending as a share of household budgets is hovering near 40-year lows, driven by a decline in drinking among younger adults. The data shows spending at liquor, wine, and beer stores fell 5% year-over-year in January, while spending at bars increased nearly 4%. Experts suggest the shift could signal a move toward healthier lifestyles or a shift to other substances like cannabis, which is becoming more widely legalized.

Why it matters

The decline in alcohol spending, especially among younger consumers, could have significant implications for consumer spending and the broader economy in the coming years. As younger generations cut back on drinking, businesses that rely on alcohol sales may need to adapt their strategies to cater to changing consumer preferences.

The details

The Bank of America Institute report found that about 0.8% of a typical household's expenses go to alcoholic beverages, down from previous years. Spending at liquor, wine, and beer stores fell 5% year-over-year in January, while spending at bars increased nearly 4%. This suggests consumers may be shifting towards drinking more at bars and restaurants rather than at home. The report also noted that 4 million fewer people aged 21-34 are binge drinking compared to 10 years ago, and spending on fitness activities is growing at three times the rate of spending at bars for Generation Z customers.

  • In January 2026, alcohol spending at liquor, wine, and beer stores fell 5% year-over-year.
  • Over the past 10 years, 4 million fewer people aged 21-34 are binge drinking.

The players

Bank of America Institute

A research institute that provides economic analysis and insights.

Joe Wadford

An economist at the Bank of America Institute.

Joshua Septimus

A primary care physician at Houston Methodist who has observed a shift towards cannabis use among his patients.

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What they’re saying

“We don't think it's because prices are up. We think it's because consumption is down, especially people just drinking around the house.”

— Joe Wadford, Economist, Bank of America Institute

“There really is no safe amount of alcohol to consume.”

— Joshua Septimus, Primary Care Physician, Houston Methodist

“Humans have been imbibing and smoking mind-altering substances for as long as we've kept records. And so, I have a hard time believing that just because some experts say that alcohol is not good for you that all mind-altering substance use is going to drop off.”

— Joshua Septimus, Primary Care Physician, Houston Methodist

What’s next

Experts will continue to monitor changes in consumer spending and substance use patterns, particularly as more states legalize recreational marijuana, to better understand the long-term implications for the economy and public health.

The takeaway

The decline in alcohol spending, especially among younger generations, suggests a shift towards healthier lifestyles or a potential increase in the use of other substances like cannabis. This trend could have significant impacts on consumer spending and the broader economy in the coming years as businesses adapt to changing consumer preferences.