Ten years ago, turning down an alcoholic drink might have raised eyebrows. And the choice of beverages on offer to non-drinkers were sugary soft drinks or a couple of alcohol-free lagers. But times have changed.
Today, consumers are much more mindful of their drinking habits, which is having a major impact on the sale of low alcohol and alcohol-free beverages. Global sales of non-alcoholic drinks have increased by almost $3 billion since 2018. And the compound annual growth rate of this category (+8%) far exceeds regular alcoholic beverages (+0.7%).
It’s not just changing consumer attitudes that are driving this shift. The alcohol-free beer, wine and spirits market has exploded in the last five years, improving the quality and diversity of available beverages. Big brands are expanding their product ranges to capture wider audiences – and innovative independents are hot on their heels.
Society’s getting sober curious
Since household alcohol consumption peaked in the early 00s, consumers have started to look more closely at what drinking does to their physical, mental and financial health. And this is leading people to reduce their alcohol intake or quit drinking altogether.
For young adults in particular, getting drunk doesn’t hold the same allure as it did for previous generations. Research by the University of Sheffield has revealed that nearly 25% of 16-24 year-olds abstain from alcohol, an increase of 15% since 2001. This movement is helped by the presence of prominent young sober influencers on social media – like Millie Gooch, who founded the Sober Girl Society in 2018.
Alcohol is also losing appeal among older consumer groups, particularly in the professional environment. “Fizzy Fridays” and after work beers stopped during the pandemic, and most people aren’t worried about reprising these perks. 63% of professionals are keen for employers to offer more non-alcoholic drink options at work events.
Away from the business world, many consumers see the personal benefits of breaking up with booze – either temporarily or permanently. 1 in 6 adults embarked on Dry January this year (a 22% increase on 2021), and 13% of consumers say they’ve stopped purchasing alcohol because they simply can’t afford it in the current economic climate.
That’s the spirit
While health and money concerns might be diluting people’s relationship with alcohol, product innovation is paving the pathway to mindful drinking. High-quality alcohol-free beverages are providing the same flavour sensation as alcoholic drinks, without the physical effects.
Seedlip was the trailblazer for ‘grown-up’ alcohol alternatives, bringing the world’s first distilled non-alcoholic spirit to market in 2015. Seedlip products are now sold in 37 countries worldwide, with founder, Ben Branson, noting that the secret to the brand’s success is creativity.
“There aren’t any rules in the new category that we’re creating,” he told Penta. “It’s an opportunity to create unique, diverse, complex flavour profiles without needing to try and mimic alcohol.”
And although Seedlip is the pioneer, many brands have followed in its wake to take alcohol-free spirits mainstream. Both Gordon’s and Tanqueray now offer alcohol-free gins. While challenger brand growth has been prolific: Lyre’s has brought 22 non-alcoholic spirits and five premix drinks to 63 markets since its launch in April 2019, and Crossip recently exceeded its recent crowdfunding target by more than 50%.
Alternatives to boozy beer and cider
Alongside spirits, the low and no-alcohol beer and cider market has evolved significantly since the days when most consumers could only choose between Kaliber and Becks Blue.
Asahi has invested over €20 million in the launch of Peroni Nastro Azzurro 0.0% across 28 markets, while Kopparberg and Thatcher’s have launched alcohol-free ciders. And industry stalwarts face stiff competition from craft brewers and challenger brands like:
- Bemuse – sparkling low alcohol mead, available in four different flavours
- Big Drop Brewing Co – a craft brewery dedicated to creating great quality, full-flavoured low/no alcohol beer
- Drynks – alcohol-free lager, pale ale and cider brand. Drynks is also an advocate of clearer industry labelling to make sure consumers understand what ‘low alcohol’ means in percentage terms
- Jump Ship – a range of four small-batched brewed beers with less than 0.5% ABV
- Lucky Saint – an unfiltered alcohol-free lager that’s golden in colour
Big wins in wine
While the overall choice of non-alcohol beverages is more expansive than ever, some categories are further behind the curve – particularly wine. Many consumers find the taste and mouthfeel of alcohol-free wine disappointing compared to beer and spirits.
That being said, several brands are trying to change alcohol-free wine’s reputation – such as Oddbird, which uses traditional winemaking and barrel ageing techniques to produce zero alcohol wine. And major players including Accolade Wines and Hardy’s are launching alcohol-free wines alongside their traditional products.
Non-alcoholic sparkling wine is also becoming better received by consumers, courtesy of brands like Belle & Co and Noughty by Thomson & Scott – which recently expanded into Hong Kong.
Soft drink innovation’s becoming more serious
It’s not just alcohol-free alternatives to beer, cider, wine, and spirits that are experiencing major product innovation. The mindful drinking movement has created new opportunities in the regular soft drinks market – as consumers seek sophisticated premium beverages over standard fizzy pop.
Product development is diverse, with innovations across several categories:
- Cordials – the humble glass of squash has been given a grown-up glow-up in recent years, with brands like Gimber and Juke’s tickling consumer taste buds with the flavours of ginger and apple cider vinegar
- Kombucha – the number of kombucha brands is increasing by 30% year-on-year as entrepreneurs respond to snowballing interest in the fermented fizzy drink
- Mixers – no longer the bridesmaid, brands like Fever Tree and Fentimans are benefitting from consumers turning mixers into the star of the show – with a strong appetite for citrus flavours and botanicals
- Seltzers – growth in the hard seltzer market has also stirred up interest in alcohol-free seltzers and sparkling waters, with brands like Punchy, Athletic Brewing Co and No1 Botanicals creating ready-to-drink products
- Tea – iced tea has been a staple of supermarket shelves for many years, but the sparkling tea segment is much newer. Brands like Saicho are changing perceptions of this traditional breakfast beverage, developing cold brewed sparkling teas as an accompaniment to fine dining food
What’s next for the non-alcoholic drinks market?
Despite shifting perceptions towards mindfulness and moderation, alcohol will of course remain a multi-billion dollar industry for years to come. However, both established and emerging beverage brands recognise that consumers want more than sugary soft drinks and water as an alternative to traditional tipples – and they’re happy to pay premium prices for premium products.
With this in mind, the industry will continue to see product innovation in beer, cider, wine, spirits and regular soft drinks, with brands exploring new flavour frontiers to catch consumers’ eyes in an increasingly crowded market. Sobriety is here to stay.
Hooley Brown helps brands in high-growth categories like non-alcoholic drinks to develop compliant recipes for an international customer base. For help with product innovation, packaging and marketing, get in touch.
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