More and more drinkers are switching up their consumption patterns, be it full-on teetotalling or taking more breaks from boozy nights.
This shift in consumer behavior has fueled massive growth in the low- and no-alcohol categories, beckoning in new brands and drumming up exciting category innovation. Beverage analysis firm IWSR expects the category to increase 31% by 2024.
The IWSR just released a report assessing the performance of both categories in ten key markets (Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, UK and US). Collectively, those countries make up 75% of the global consumption of no- and low-alcohol beverages, according to IWSR data.
Overall, no-alcohol is outpacing the low-alcohol segment. In these ten key markets, the no-alcohol category increased +4.5% over 2019 and 2020, while the low-ABV segment declined -5.5%. IWSR cites the decline is caused by the poor performance of low-alcohol beer in Western Europe.
IWSR defines non-alcoholic beer, cider, wine, spirits, RTDs and alcohol replacements as products that contain less than 0.5% ABV. Low-alcohol beers and ciders contain between 0.5% ABV and 3.5% ABV, while low-alcohol wines check-in under 7.5% ABV.
Though both categories are driven by overarching health and wellness trends, the no-alcohol category is showing more impressive growth globally. The IWSR’s findings note consumers are largely looking to take an entire break from alcohol, switching between regular drinking nights with full-strength alcohol and ‘nights off,’ where they opt for non-alcoholic options.
“Consumers are able to moderate their alcohol intake by enjoying sophisticated products while still having the occasional full-strength drink. Moreover, consumers who choose to abstain from alcohol, or moderate their alcohol consumption, are still able to remain part of the drinking occasion,” remarks Sophia Shaw-Brown, senior insights manager at IWSR.
When it comes to low-alcohol propositions, consumers seem confused; unsure of how to serve low-alcohol spirits or wary about how many drinks they can consume before, say, operating a motor vehicle. They’re largely lacking that educational outreach and experience.
“Consumers don’t necessarily know that an alcoholic spirit brand normally sits at 30-40% ABV, so they don’t always know what a 20% ABV spirit means for a gin brand, or how a 20% ABV spirit might relate to a 5% ABV wine or a 1% ABV beer,” explains Shaw-Brown.
Diageo-backed Distill Ventures noted similar feedback in a report released in January, finding that without the educational teachings of bars and events, the sober-curious are not being indoctrinated into the low-ABV world as quickly as in the pre-pandemic times. “As these brands become more visible and well established and the quality improves, there is a real opportunity for growth in low-alcohol,” describes Shaw-Brown.
Nonetheless, spirits giants are starting to offer lower-alcohol offerings of familiar favorites. Smirnoff, Ballantine’s and Beefeater all sell lower-ABV alternatives to their flagship bottles.
It’s not just the Dry January partakers, the sober or the designated drivers that are reaching for no- and low-alcohol beverages: it’s a new slate of health-minded millennials. According to IWSR consumer research, 58% of no- and low-alcohol consumers report they still drink but in moderation. 58% of consumers are drinking more non-alcoholic beverages than last year while 61% of consumers want better choices when it comes to NA drinks.
So why aren’t these health-conscious drinkers opting for low-alcohol beverages?
Shaw-Brown points out that much of the confusion is because low-alcohol brands focus on health rather than moderation. “Brands in the low-alcohol space tend to have a healthier, ‘better for you’ premise, rather than being completely about moderation,” explains Shaw-Brown. Low-alcohol brands that target consumers looking for that moderation have the opportunity to recapture attention.
While the no-alcohol segment is performing strongly overall, individual markets are interacting with both categories differently. American consumers prefer low-ABV products over no-alcohol proxies. Specifically, low-alcohol wine has captured 86.8% of market share compared to its no-alcohol counterpoint. The ‘clean’ wine trend, one that originated in the US, is fueling this performance.
On the flip side, the UK heavily favors no-alcohol spirits. The market share of low- and no-spirits in Australia and Germany is evenly split.
One promising new avenue for the no- and low-alcohol segments? RTDs.
Non-alcoholic beer has been around for ages, but non-alcoholic canned cocktails have been slow to grow. While it’s a small segment of the RTD sector, the category shows promise, particularly as the NA shift and hard seltzer crazes algin.
Of the 10 key markets studied, the US is the low-alcohol RTD market leader, with low-alcohol RTDs making up approximately 70% of the country’s no/low RTD segment.
With major brand funneling money into both the RTD and the NA category (Canadian-owned non-alcoholic brewery Partake drummed up $4 million in funding while CleanCo secured $12 million. Diageo recently acquired a minority stake in Ritual Zero Proof), it will be exciting to see what the next year of releases brings.