There are numerous considerations swirling round Diageo (LSE: DGE) shares these days. These vary from cash-strapped shoppers to US tariffs and even the impression of weight-loss medication like Wegovy.

The share price is down one other 14.4% in 2025, bringing the five-year decline to round 30%. Nonetheless, there’s one other mounting concern I’ve as a Diageo shareholder. That’s the habits of these born between the late Nineteen Nineties and early 2010s within the West — in any other case referred to as Gen Z.

The developments appear clear

Nearly each examine on alcohol consumption amongst younger adults factors to the identical conclusion: they’re consuming far lower than earlier generations. However why? There appears to be a cocktail of things.

One main purpose is well being consciousness. As public well being campaigns spotlight the dangers of alcohol — habit, coronary heart illness, most cancers, and many others — many younger individuals are rethinking their consuming habits.

It would simply be a matter of time earlier than we see cigarette-style warning labels on alcohol, full with these grotesque pictures of diseased organs. That would definitely dampen the temper over dinner as somebody reaches for an additional glass of purple!

Subsequent is price. As we all know, nearly the whole lot is dear these days within the West, together with nights out and drinks. For a lot of Gen Z’ers, it simply makes zero sense to spend the equal of a working hour’s wage on a flowery cocktail or couple of pints of Guinness.

Lastly, there’s a extra elementary generational shift. All through historical past, alcohol has been used as a social lubricant. But Gen Z’s pursuits are largely solo-based, together with video video games, social media, YouTube, or doing non-drinking actions like health club and yoga. Health trackers are scorching — one other new phenomenon.

Going to nightclubs and pubs — what’s left of them — simply isn’t as widespread for this cohort because it was for Boomers, Gen X and even Millennials. A World Finance report reveals that Gen Z’ers drink on common 20% lower than Millennials, who additionally devour much less alcohol than older generations.

Zebra striping

After all, Diageo is aware of all this. In any other case, it wouldn’t be scrambling to construct out its zero-alcohol choices, together with Guinness 0.0.

In actual fact, it has been utilizing synthetic intelligence (AI) to analyse developments shaping client behaviour. This concerned listening in to 60m on-line conversations from the world over.

In accordance with its 2025 Distilled report, Diageo discovered that buyers are taking part in a development referred to as “zebra striping”. That’s, alternating between alcoholic and non-alcoholic drinks throughout social occasions.

Whereas that simply feels like a buzzy time period for moderation, I feel Diageo is implying it’d nonetheless profit by providing them each alcohol and non-alcohol choices. Or not less than that’s what it hopes.

Low cost-looking valuation

If all this stuff are true, it might recommend that international alcohol gross sales are going through long-term structural decline, much like oil and cigarettes. In different phrases, the gross sales points the FTSE 100 agency is going through won’t be cyclical. That’s the potential big purple flag right here.

Now, this doesn’t imply the inventory is untouchable. At 2,171p, it’s buying and selling at 15.6 instances forecast earnings for FY26 (beginning July). That’s traditionally low-cost for Diageo, which can recommend many of those points are already priced in. However they’re regarding nonetheless.

My plan is to digest all this earlier than deciding what to do with my Diageo shares.