Newsletter · · Ashutosh Agarwal

Acid Reflux Is Quietly Killing Spiked Seltzer - Alcohol, Nicotine & Beverages - Week of September 9, 2026

Alcohol, Nicotine & Beverages for the week of September 9, 2026. Podcast synthesis on why young drinkers are abandoning carbonation over acid reflux and reshaping the canned-cocktail business, how weight-loss drugs and sleep trackers are quietly draining alcohol demand, and why hemp-THC drinks are lining up to take the occasion, with the nicotine majors silent for a fourth straight week.

Alcohol, Nicotine & Beverages

Week of September 9, 2026: Acid Reflux Is Quietly Killing Spiked Seltzer

The most interesting drinks story this week isn't about a brand, a price, or a merger. It's about heartburn. America's youngest legal drinkers are walking away from bubbles because carbonated cans give them acid reflux, and the whole ready-to-drink business is scrambling to rebuild its factories around the change. Meanwhile the bigger, quieter force keeps growing: weight-loss drugs and sleep trackers are pulling servings of alcohol out of the market faster than most people realize, and hemp-derived THC drinks are lining up to grab the occasions that alcohol leaves behind. On the nicotine side, the majors went silent again, a fourth-straight week with no operator or analyst voice on pouches or heated tobacco.

TL;DR

  • Flat is the only thing growing. Non-carbonated pre-mixed drinks jumped from 27% to an estimated 38% of new alcohol-product launches, and college kids are ordering plain vodka-water because seltzer bubbles trigger acid reflux. The entire canned-cocktail category is being physically re-engineered around this, and the drinkers aren't drinking less, they're drinking differently.
  • The drink is disappearing, one wearable at a time. An investor who backed Olipop early argues weight-loss drugs (GLP-1s) hit alcohol "much more than anyone thought," with roughly one in eight Americans now on them, and that sleep trackers alone could quietly erase a billion-plus servings of alcohol a year. In some Minnesota liquor chains, hemp-THC drinks are already 15-20% of sales.
  • Nicotine is dark, again. For the fourth week running, no podcast covered Philip Morris/Zyn, Altria, or BAT, no pouch volumes, no heated-tobacco pricing, nothing. The pouch bull case keeps being made by challengers and public-health voices, not the majors themselves.

What's new

The bubbles are the problem, and it's reshaping the entire canned-cocktail business. The sharpest consumer story of the week came from a markets-and-business show, the "Why acid reflux killed spiked seltzer" episode (Sept 6, 2026). The trigger was a field observation from Britt West, an executive at E.&J. Gallo (the private wine-and-spirits giant behind the hit High Noon vodka seltzer): touring U.S. college campuses, West noticed students "actively choosing completely flat drinks," ordering vodka-water or tequila-water with a lime and passing entirely on anything fizzy. The reason is plain plumbing: a Minnesota gastroenterologist quoted on the show, Nyseser Torres, explained that carbon-dioxide bubbles expand in the warm, acidic stomach and mechanically push on the valve at the top of the stomach, letting acid escape upward, i.e., they cause acid reflux (GERD, the chronic version). Young adults are now getting heartburn that used to belong to a much older crowd.

Why this moves numbers, not just stomachs: the data cited on the show shows non-carbonated pre-mixed drinks jumped from 27% of new product releases to an estimated 38%, an 11-point swing that, for a packaged-goods company on multi-year development cycles, is a structural shift, not a fad. And it's expensive: carbonated cans are pressurized (the gas is literally what keeps the thin aluminum from crumpling), so switching to flat drinks means new sealing lines, liquid-nitrogen dosing, and different cans. Companies have "hundreds of millions of dollars tied up in carbonation infrastructure" that suddenly points the wrong way. The show's read on Gallo's response is the strategic takeaway: rather than deny it, Gallo appears willing to cannibalize its own carbonated High Noon before a startup does, "they would rather you buy a flat Gallo product than a flat product from a new competitor." Analyst Red Brown, quoted in the episode, called fizz-free ready-to-drink "the only growing category in the market right now," pulling in "all the new money" while craft beer, wine, and hard liquor stagnate with the young. And crucially, as consumer analyst Lavinia Cohen put it on the show, this "shows people aren't drinking less alcohol overall. They're just drinking differently."

"A drink has to pass a physiological comfort test before the consumer even considers the taste." (from the "Why acid reflux killed spiked seltzer" podcast)

The best explanation yet of where the drinking money is quietly going: weight-loss drugs and sleep trackers. On the Joshua Schall Audio Experience, "Billion-Dollar CPG Playbook with OLIPOP Early Backer, Nathan Cooper (Barrel Ventures)" (Sept 3, 2026), investor Nathan Cooper laid out the mechanism better than most sell-side notes. His headline: with "one out of eight people right now in the U.S." on a GLP-1 (the appetite-suppressing weight-loss and diabetes drugs like Ozempic and Wegovy), the effect on food is milder than feared, "you still have to eat," but the drugs have "much more of an effect on alcohol than anyone thought." Then the part that's easy to miss, and the reason he's worth quoting at length: the second-order hit from wearables. If roughly 75 million Americans wear a sleep-and-fitness tracker, and the single thing they track most is sleep, and the single thing that wrecks sleep most is alcohol, then even a modest behavior change compounds. "If you take, on average, those 75 million wearables users are going to decrease their alcohol consumption by 10 or 20 servings a year... that's three-quarters of a billion to a billion and a half servings a year of alcohol that just disappeared." No headline, no campaign, just people quietly connecting a bad sleep score to last night's wine. For a book, this is the structural, non-cyclical leak in alcohol demand, and it's additive to the moderation and GLP-1 stories rather than a substitute for them.

Liquor is at an all-time low, and THC drinks are lining up to take the occasion. The Breeze with Beverage Digest, "Episode 35: Future-Proofing Coca-Cola, PepsiCo, and Keurig Dr Pepper" (Sept 3, 2026) is hosted by Beverage Digest editor Duane Stanford with former editor-turned-consultant John Sicher, as close to an industry-insider read on the numbers as this space gets. Two data points to keep. First, Stanford cited a recent Gallup poll showing American liquor consumption at an all-time low, with only 54% of Americans saying they now consume liquor. Second, both hosts flagged that hemp-derived THC beverages could "walk into that area of consumption where folks who used to drink more alcohol," and noted that by the count they were looking at, there are now more regular cannabis users than regular alcohol users. The regulatory clock matters: as they recorded, the U.S. hemp-THC-drinks industry looked set to win a one-month reprieve from a pending federal ban (headed to the president's desk), buying time to build a real regulatory framework rather than get banned outright. Their strategic point for the soda giants: THC drinks can enter without alcohol's licensing hurdles, and if the category is "sensibly regulated," Coca-Cola and PepsiCo risk missing it the way they largely missed energy drinks (Coke owns only about a fifth of Monster). Watch this: the same regulatory catalyst is a tailwind for THC-drink makers and a slow-drip threat to beer and spirits.

Functional soda keeps proving the "better-for-you" thesis has real money behind it. On How I Built This with Guy Raz, "Advice Line with Ben Goodwin of Olipop" (Sept 3, 2026), Olipop co-founder Ben Goodwin, an operator, not a pundit, put fresh figures on the prebiotic-soda leader. The company is valued at over $2 billion, running gross revenue "well over half a billion" and targeting $1 billion, on a lean team of about 280 people (headed toward 300 by early next year). He framed last year's roughly $2 billion PepsiCo acquisition of rival Poppi as validation of the whole functional-soda category, and pointed to Olipop's first published human research showing its stevia-sweetened cola (five grams of sugar or less) didn't spike blood sugar. Why it belongs in an alcohol-and-nicotine letter: this is the health-positioned, low-friction "new soda" shelf that a moderating, wellness-minded drinker reaches for instead of a beer or a cocktail, and PepsiCo paying ~$2 billion for Poppi tells you the strategic buyers see it as a durable land-grab, not a fad.

The beer world is quietly re-tooling around moderation, and calling it "the great convergence." Beernet Radio, "Ep. 348: Craig Purser and Kim McKinnish of NBWA" (Sept 2, 2026) featured the CEO and COO of the National Beer Wholesalers Association, the trade group for the middle tier of the U.S. alcohol system (the distributors who buy from brewers and sell to stores and bars). Their read on the industry: a "great convergence" is now genuinely happening, traditional beer distributors are pushing into spirits and non-alcoholic drinks, wine-and-spirits distributors are pushing into beer, and canned cocktails have reshuffled the supplier rankings. Bluntly, "volumes are down. We've got to sell more beer." Their answer is a "Beer First" push that leans hard on the health-and-wellness, low-and-no-alcohol angle, CEO Craig Purser argued beer is a far better value in the zero-alcohol space than spirits, name-checking Michelob Ultra Zero, Heineken 0.0, and Athletic Brewing. On the THC question, the association's line is consistent and useful for anyone modeling the cannabis-drinks path: if hemp-THC survives, regulate it like alcohol, age-gate it at 21-plus, tax it, cap the dose per serving, and run it through the same three-tier distribution system, and get the unregulated "candy and snack" knockoffs out. They confirmed the House passed the 30-day hemp extension by roughly 380-45.

The debate

The core question this letter keeps asking is whether the drop in drinking is a permanent generational shift or a cyclical dip that snaps back. This week both sides got a real hearing, and, as before, they mostly disagree on emphasis, not facts.

Bull (the decline is structural). The exhibits stacked up. Liquor consumption at an all-time low (only 54% of Americans) is not a soft patch. The GLP-1 and wearables mechanics are the durable part: one in eight Americans on appetite-suppressing drugs that hit alcohol "more than anyone thought," plus a quiet, compounding pullback from tens of millions of sleep-trackers that could remove a billion-plus servings a year. And the young aren't just moderating, they're substituting, with hemp-THC drinks already at 15-20% of sales in some Minnesota liquor chains and more regular cannabis users than alcohol users by one industry count. When the erosion is spread across drugs, devices, and a whole competing intoxicant, it doesn't look like something that reverses when the economy turns.

Bear (the dip is overstated, the money is just moving). The counter this week wasn't "everyone's about to start drinking again." It was subtler and, honestly, better supported: people aren't drinking less so much as drinking differently. The flat-drink data is the cleanest evidence, fizz-free ready-to-drink is the one part of alcohol still growing, pulling in "all the new money," which means the demand is there, just re-pointed at a format the industry hadn't built for. The beer distributors' "great convergence" is the same idea from the supply side: the drinking dollar is migrating into canned cocktails, low-and-no-alcohol beer, and premium formats, not evaporating. If that's right, the volume that looks lost is partly a measurement-and-format artifact, and the brands that meet drinkers where they now are, flat, lower-alcohol, health-positioned, in the right can, can still grow inside a "declining" category.

The honest synthesis is unchanged and worth repeating: both sides agree the behavior is changing structurally (fewer, more scrutinized, more health-conscious occasions). They disagree on whether that's a shrinking market or a reshuffled one. For a book, that still argues against betting the whole thesis on either "alcohol is dying" or "this is cyclical," the safer read is that total volume drifts down while the money concentrates in flat, low-alcohol, wellness-positioned, and premium formats. That's a stock-picker's environment, not a sector call.

On nicotine, there was no debate to have, no operator or analyst voice appeared on the podcasts this week at all. Worth noting the silence, not filling it in.

The names in play

This was a thematic week, not a stock-picker's one, and the sharpest data points sit on private companies, Gallo's High Noon, the Poppi/Olipop functional-soda fight, the boxed-wine brands from prior weeks. But a few read-throughs land on public tickers.

The flat-drink shift is a genuine warning for the seltzer-heavy public names. Boston Beer (SAM), with Truly, and Molson Coors (TAP), with Vizzy and its hard-seltzer line, both sit in exactly the carbonated ready-to-drink category that the young are now walking away from on physical-comfort grounds, and both need the flat, spirits-based canned-cocktail wave (where Gallo's private High Noon leads) more than they need seltzer share. Constellation Brands (STZ), still beer-heavy through its Mexican import franchise, is more insulated but not immune to the broader "drinking less, differently" drift.

The clearest single catalyst on the board is regulatory and dated: the U.S. hemp-THC-beverage rules, with a 30-day federal extension just passed and a decision due to force the category into either a workable framework or a ban. A sensible framework is a tailwind for cannabis-drink makers (and, as Beverage Digest argued, a call to action for Coca-Cola (KO) and PepsiCo (PEP) not to repeat their energy-drink miss); a ban is a reprieve for beer and spirits. Either way it's the swing factor to watch into November.

Conspicuous by their absence, again: Philip Morris (PM), Altria (MO), and BAT (BTI). For a fourth straight week there was no operator or analyst commentary on Zyn, on!, or Velo pouch volumes, on heated-tobacco pricing, or on the smoke-free profit mix. The reduced-risk story isn't being contradicted, it's just not being told by the majors on the podcasts right now.

Read-throughs

Distributors: the middle of the industry is retooling for a smaller, more complicated business. The NBWA read, "volumes are down," a "great convergence" of beer, spirits, and non-alcohol onto the same trucks, and a wave of investment in warehouse automation and technology, is the wholesaler's version of the whole thesis. The takeaway for anyone with exposure to the three-tier system (the legal setup where brewers and distillers must sell through independent distributors to reach stores and bars): the distributor's job is getting harder and more diversified, and the winners will be the ones who add spirits, canned cocktails, non-alcoholic, and eventually maybe THC to a shrinking beer base, and who automate to protect margins as volume softens.

Non-alcoholic and functional drinks: real money, real staying power. Olipop at a $2 billion-plus valuation with over half a billion in revenue, PepsiCo's ~$2 billion Poppi buy, and the distributors' bullishness on non-alcoholic beer (Michelob Ultra Zero, Heineken 0.0, Athletic) all point the same way: the "instead of a drink" shelf is now a durable, well-capitalized category, not a novelty. It's a direct claim on the moderating drinker's wallet, and the strategic buyers (PepsiCo, and the beer majors behind the 0.0 brands) are paying up to own it.

Cannabis and THC drinks: the highest-beta read in the letter. Two facts to sit with: hemp-THC drinks at 15-20% of sales in some Minnesota liquor chains, and more regular cannabis users than regular alcohol users by one industry count. The category is real and growing; the only question is the federal framework, and that gets decided in the next month or two. A workable, three-tier, age-gated, taxed regime turns THC drinks into a legitimate long-term competitor for the alcohol occasion; a ban buys alcohol time. This is the single cleanest catalyst in the space right now.

Bars and restaurants: the plumbing may literally change. If flat drinks keep winning, the classic bar built around pressurized kegs and CO2 lines becomes less essential, lowering the cost to open simpler venues that pour high-quality flat mixtures. It's early and speculative, but it's a reminder that a shift in what people drink eventually reshapes where and how they drink it.

Convenience stores and nicotine: quiet on the vice angle. Couche-Tard's earnings surfaced on the podcasts (revenue up, solid quarter), and one macro show flagged c-stores as a warning light on the U.S. consumer, but neither touched tobacco, nicotine, or alcohol specifically. So there's no fresh channel read on pouches, cigarettes, or beer through the c-store lens this week.

What changed

  • Nicotine went dark again. After last week's rare operator data point (a Turning Point Brands executive putting hard numbers on the pouch boom), the tobacco side of this story vanished entirely, no majors, no challengers, no pouch or heated-tobacco commentary at all. The reduced-risk transition thesis has no fresh podcast evidence behind it this week.
  • The "why alcohol is falling" story got a sharper, more physical mechanism. Prior weeks framed the decline through Gen Z/Millennial moderation and value-seeking. This week it hardened into concrete mechanics: appetite drugs and sleep trackers quietly removing servings, THC drinks absorbing occasions, and, the vivid new one, acid reflux physically pushing young drinkers off carbonation. Less vibe, more plumbing.
  • The format winner rotated. Last week the standout "money is moving, not leaving" story was bougie boxed wine (up 144%). This week it's flat, fizz-free canned cocktails, the same migration, a different destination. The through-line holds: the drinking dollar keeps relocating into whatever format is cheaper, healthier-feeling, or gentler on the body.