This Is What Gen Z’s Happy Hour Looks Like Now

Forget cocktails, 2025 is about function. Gen Z is reaching for kombucha, matcha and mushroom coffee in a wellness-fueled rebrand of happy hour

Unquestionably, Gen Z is rewriting the rules, whether it’s prioritizing mental health (including in the workplace), preferring short-form content, shopping from brands that align with their values or flat-out refusing to answer a phone call.

And yes, even their go-to social sip is getting a Gen Z makeover, according to new data from online supermarket Ocado Retail. The findings pull from Ocado.com search and sales data from March 2023 to April 2025, along with two consumer surveys conducted by Savanta in March and May 2025.

Here’s what the data says:

Sip Happens: Functional Drink Sales Surge 54%

Ocado Retail reports a 54% surge in functional drink sales, fueled by growing demand for beverages that go beyond hydration, such as kombucha and prebiotic sodas.

PepsiCo is certainly on board, having acquired better-for-you Poppi for $1.95 billion, while Coca-Cola has launched Simply Pop, a fruit-forward functional beverage line that reimagines the Simply Orange Juice brand.

Gen Z Is Thirsty for Function

While 40% of UK adults buy functional drinks multiple times a month, the number jumps to 61% among Gen Z shoppers, according to the findings. Earlier this year, Celsius, a leading player in the energy drink category, scooped up competitor Alani Nutrition, maker of Alani Nu beverages, for $1.65 billion.

Gut Feeling: Fermented Drinks Are Fermenting Sales

Fermented drinks are gaining traction, with kefir sales up 30% and fermented tea kombucha up 22% year-over-year on Ocado. Elsewhere in the space, Supergut, a prebiotic superfood brand that launched in 2022, inked a deal with GNC earlier last year to launch its line of prebiotic drink mixes and bars in the health retailer. 

Booze, Who? Gen Z Ditches Alcohol for Functional Fizz

Nearly half of Gen Z (49%) say they’ve swapped alcohol, soft drinks or energy drinks for functional options. More than half (53%) see them as better alternatives in social settings. Perhaps most surprising? Sixty percent of Gen Z report they have cut back on alcohol and even Coachella has expanded its “Soberchella” offerings, adding more non-alcoholic options for attendees looking to skip the buzz.

While it’s unlikely that keg stands will be entirely replaced with kombucha anytime soon, the non-alcoholic space is gaining serious ground. One recent market report projects the global non-alcoholic beer market will hit $34.97 billion by 2032, growing at a CAGR of 7.3% between 2025 and 2032, as brands like Athletic Brewing and Bero charge ahead.

Notably, Solidcore founder and serial wellness investor Anne Mahlum appears to have been ahead of the curve. In an interview with Athletech News last year, she shared that she’s bullish on the non-alcoholic space. Beyond retail shelves, Justin Gurland, a young, sober entrepreneur, is setting out to open The Maze, New York’s first alcohol-free members club, this fall.

Rise and Refresh: Morning Routines Get a Makeover

Twenty-two percent of UK adults and 39% of Gen Z now reach for functional drinks like matcha or mushroom coffee in the morning. In the afternoon, 42% of Gen Z report doing the same.

Shroom Boom

Ocado searches for mushroom coffee have jumped 1,552% year-over-year, driven by interest in lower-caffeine alternatives with functional benefits.

Laird Superfood, a functional coffee, creamer and superfood brand founded by big-wave surfer Laird Hamilton, recently launched six new Organic Mushroom Powders that can be blended into coffee, tea and smoothies to elevate mood and function.

“Laird Superfood has long been incorporating functional mushrooms into our products – from Coffee to our Prebiotic Daily Greens – and this latest expansion provides even more ways to add organic high-quality adaptogens into our daily lives,” Laird Superfood CEO Jason Vieth said. “As the market for functional food grows, Laird Superfood will continue to provide products to improve the mental and physical performance of all of our consumers.”

Matcha Made in Heaven

Matcha sales are up 67%, with brands like Dirtea Matcha growing 6,000%. Mission’s Natural Energy drinks saw over 100% week-on-week growth for some flavors.

As more consumers look to replace jittery highs with steady, functional energy, brands like Mission are seeing a shift well beyond elite athletes, according to sales director Tom McKelvey.

“We’re seeing more and more everyday customers making that same switch,” he said. “People are choosing natural, sustained energy from ingredients like yerba maté, green tea and matcha, rather than reaching for high-caffeine or sugar-loaded coffee and energy drink options. Consumers have been sleepwalking to the coffee machine for too long; there’s now far more choice when it comes to how you fuel your day.”

Brands like Juni Adaptogenic Sparkling Tea, founded by author and podcast host Jay Shetty and his wife, Radhi Devlukia, are also leaning into the growing demand for calmer, more focused energy. The sparkling adaptogenic drinks contain ingredients like ashwagandha for memory and endurance, lion’s mane to help manage stress and anxiety and reishi mushroom to fight fatigue.

Protein Power

Searches for “protein drink” and “protein shake” are up 140% and 68%, respectively, as shoppers look for convenient nutrition. Ocado data shows 43% of people have increased protein intake over the past year.

Coffee giant Starbucks is also getting into the protein craze as it sets to pilot a banana-flavored protein cold foam at select U.S. stores.

Also on the radar is ON3 Athletic, a green super powder packing more than 60 functional nutrients. The brand offers both a standard tub and a travel-ready five-pack for on-the-go use.

credit: ON3 Athletic

TikTok Made Me Buy It

Thirty percent of consumers say they discover functional drinks via platforms like TikTok and Instagram and they’re ready to spend, with 38% willing to pay more for drinks with added health benefits. The finding jives with a report last year from healthy eating app Lifesum, which found that Gen Z and Millennial consumers are more than happy to scale back on non-essentials such as Netflix in favor of healthy food.

Stocked & Loaded: Retailers Expand to Keep Up

Ocado has grown its functional drinks range by 11% in the past year, adding brands like Mission, Hip Pop and Turmeric Co to cater to the health-conscious crowd.

“We’re seeing a clear shift, driven by Gen Z shoppers who are choosing functional drinks as part of their daily routine – whether that’s swapping out regular coffee for a mushroom blend or substituting alcohol with a healthier alternative,” said Edward Horne, Ocado Retail’s buying manager for chilled drinks. “Consumers are more informed, more experimental and looking for drinks that do more than just quench their thirst. As a result, we’re continuing to expand our range to meet the growing demand as we’ve grown the category by 11% in the last year with exciting and innovative products.”