Beer and hot dogs are synonymous with patriotism, but at your July 4th barbecue, you might find fewer beers as spiked seltzers, canned cocktails, and hard teas take over the cooler. This shift is largely driven by Gen Z, the youngest generation of legal drinkers, whose preferences are significantly different from previous generations, according to Kaleigh Theriault of NIQ.

“They’re new to drinking and gravitating toward flavor-forward options,” Theriault, an associate director at the consumer intelligence company, told CNN.

Smaller companies are increasingly shaping the beverage market. High Noon, a spirit-based cocktail from E. & J. Gallo Winery, leads the category, while White Claw from Mark Anthony Brands remains the top-selling spiked seltzer. Newer entrants like Surfside, a two-year-old brand combining liquor with iced tea or lemonade, are quickly gaining popularity.

This presents a challenge for Big Beer, which is grappling with flat sales, declining volume, and a generation of drinkers who are either abandoning traditional beer or opting for alternatives.

In response, brewers like Molson Coors, Constellation Brands, and Anheuser-Busch InBev are diversifying their portfolios with flavor-rich drinks. Fruit-flavored beverages, in particular, have become a key focus, as they appeal to consumers looking for tasty, enjoyable options.

TikTok has even inspired new beverage launches. Constellation, for example, created its “Sunbrew Citrus Cerveza,” a beer inspired by the popular “Corona Sunrise” cocktail, which features tequila, orange juice, and grenadine. The drink, brewed with orange and lime peels, mirrors the sweet flavor of the cocktail and targets Gen Z’s affinity for experimentation. It’s currently available in the northeastern U.S., with plans for national expansion.

Meanwhile, Molson Coors’ new non-carbonated drink, “Happy Thursday,” caters to Gen Z’s dislike of bloating from carbonation. Available in four fruit flavors and with a low alcohol content of 4.4%, the drink is designed to appeal to younger drinkers. Launched less than three months ago, it’s been well-received, with sales and distribution both on the rise.

Molson Coors’ pivot to a broader range of beverages, including hard iced tea, energy drinks, and spiked beverages, aligns with its 2019 rebranding. The company’s acquisition of Blue Run Spirits, a high-end bourbon brand, reflects the trend of U.S. spirit sales surpassing beer sales.

“Suppliers must evolve to meet consumer trends, and right now, consumers want flavor,” Theriault said. “Innovation is key to staying relevant in the alcohol industry.”

Anheuser-Busch has similarly embraced the “Beyond Beer” trend, which includes its growing $1.5 billion portfolio of canned cocktails and spirits-based beverages. Brands like NÜTRL, a vodka seltzer, and Cutwater Spirits canned cocktails have performed well, with Cutwater’s sales growing by 23% this year.

However, the decline of Bud Light remains a concern for Anheuser-Busch. Sales of Bud Light Seltzer are down 50%, outpaced by a broader decline in malt-based seltzers as drinkers shift to spirit-based options. Despite this, the company has remained optimistic, launching new marketing campaigns to regain its footing after the controversy surrounding a 2023 ad featuring Dylan Mulvaney.

Despite challenges, experts believe Big Beer companies are adapting successfully. “Consumers now have access to an unprecedented variety of drinks in every flavor,” says Bryan Roth, an analyst at Feel Goods Company. “These companies are evolving, and it’s exciting to see consumers leading the way.”