The trend: Gen Z isn’t afraid to spend and members of the generational cohort are increasingly able to do so as their buying power increases.

• Roughly three in four Gen Z consumers would rather feel fulfilled now than save for the future, per an Intuit survey.
• Gen Z’s annual hourly earnings grew 11.9% year-over-year in May, nearly double the national rate of 6.3%, per the Federal Reserve Bank of Atlanta.
• Nearly half (46%) of Gen Z reports feeling wealthy, according to a Charles Schwab survey. That’s a higher share than Gen X and baby boomers.

The cohort's feelings about its personal financial situation, along with inflation and a boost in savings from government stimulus at the height of the pandemic, helps explain why Gen Z has stepped up its spending while other generations tighten their belts. That’s driving food and beverage companies to look for ways to cater to the cohort’s preferences.

Zooming in: Gen Z—defined as those born in 1997 through 2012—is accustomed to personalization and a variety of choices, which is driving companies to roll out new products aimed at their unique tastes.

• Kraft Heinz last month announced plans to roll out a customizable sauce dispenser with over 200 possible combinations for restaurants.
• Yum Brands adjusted menus across its chains. For example, Taco Bell added new items such as Cheesy Chicken Crispanada to account for the generation’s preference for chicken over beef, and Pizza Hut has experimented with bolder flavors such as Spicy Lovers Pizza, per The Wall Street Journal.
• Heineken invested $100 million to roll out Heineken Silver, a lower-calorie, less bitter version of its flagship beer aimed at younger consumers.

The challenge: While it's relatively easy to tweak food and beverage recipes to meet younger consumers’ palettes, some brands have had a harder time adjusting to Gen Z’s cultural norms and preferences.

• Anheuser-Busch InBev saw a rapid decline in US demand after its Bud Light brand partnership with transgender social media influencer Dylan Mulvaney sparked an anti-trans uproar. The company reacted to the blowback by walking back the sponsorship and placing executives responsible on leave, which alienated both conservative and young consumers in one fell swoop.
• Bud Light’s challenges (as well as similar missteps by Target and others) demonstrate the need for companies to be authentic and resolute in both their messaging and brand positioning.

The big takeaway: While authenticity is always important, it is all the more essential when seeking to appeal to Gen Z consumers, who are more diverse and open than previous generations. Brands would be well-advised to tread carefully around social issues, and focus on incorporating Gen Z values into their overall ethos and product offerings.

Go further: Read our report, “Gen Z Consumer Payment Habits.”