Interest in low/no alcohol products has been growing significantly. The category saw overall volume growth of over 30% in the US market, bringing its total market value to over $2bn in 2021. The category now accounts for around 1% of the alcohol beverage market in the US, a small but significant – and growing – segment.
IWSR defines no-alcohol products as wine, spirits, beer/cider, and RTDs with an alcohol content below 0.5% ABV. The category also includes alcohol-adjacent products, which are alcohol replacements below 0.05% ABV. Low-alcohol products have an alcohol content above 0.5% ABV, but lower than normal for the category. For example, low-alcohol beers have alcohol volumes between 0.5-3.5%.
Category growth drivers
The growth of this category is linked to consumer interest in reducing alcohol consumption, though not necessarily cutting it out altogether. Research by IWSR found that 35% of consumers said they were motivated to buy into this category because they want to reduce the amount of alcohol that they drink.
Previously, abstainers represented the largest consumer market for these products. This has changed. Those who forego drinking alcohol altogether now represent just 23% of the customer base. The rise of sober-curious drinkers has instead been significant: Regular drinkers increasingly put more focus on moderation, opting for no/low alcohol drinks as replacements for full-strength beverages on certain occasions.
Mariana Fletcher, Head of Analytics US at IWSR, explains the appeal: “The social element is very important. No- and low-alcohol drinks provide the opportunity for consumers to feel like they belong in a social setting where alcohol is normally consumed. These drinks also provide options for those who want to enjoy the taste of traditional alcohol drinks, like a beer or a cocktail, while moderating their intake.”
For businesses, the category also has some interesting advantages. Although the production process is more complicated than for their alcoholic counterparts, no- and low-alcohol products provide attractive profit margins for producers. No/low can sell for the same price as full-strength products, or sometimes at a premium. No-alcohol products attract lower taxes as well.
“This is an interesting opportunity for bar and restaurant owners who are optimising their menus to regain financial stability as they reopen as well,” says Fletcher. Spirit-free cocktails, for example, are often priced at a premium to other no-alcohol drinks like sodas, teas or juices, especially in higher-end on-premise venues.
She also notes that the movement has been partly driven by bartenders who want to moderate their own drinking: “There is a movement within the bartending community around improving mental and physical health, and really taking care of themselves in what is a very stressful job. Many bartenders like having alcohol free options.”
No-alcohol products are also easier to distribute than alcohol beverages. “They can be sold to anyone, anywhere, without restrictions”, says Adam Rogers, Research Director at IWSR. “By comparison, alcoholic spirits are not allowed to be sold in around 80% of off-premise retailers in the US. The process of selling no-alcohol products is therefore much more straightforward.”
Many businesses are innovating to capitalise on the interest in no/low alcohol products, with a focus on premiumisation. No-alcohol beer is the best-known and most established no/low alcohol sub-category within the US. Until recently, however, products have targeted an older audience, and quality was not always well perceived by consumers. The category is now undergoing a reinvention with the launch of more premium iterations, including more craft-centric offerings, including stouts and IPAs. This new generation of products has created renewed energy in the market.
One example is Partake Brewing, an independently owned brewery based in Canada. It offers six no/low products, including an IPA, a pale ale, and a blond ale. Its branding focuses on celebrating life, rather than making its low ABV the unique selling point. It has won awards in events including the World Beer Awards, and the US Open Beer Championships.
Other categories are also seeing new product launches. In wine, Stella Rosa offers Stella Rosa Non-Alcoholics, a selection of non-alcoholic wine substitutes. Franzia recently entered the low-alcohol wine category with its Refreshers line, packed in three-litre boxes. It leverages “fresh” in its marketing materials, which often show the product being served on ice.
In spirits, large brand owners account for the majority of low-alcohol sales. Beam Suntory recently launched a lighter version of its Pinnacle vodka brand called Light & Ripe, which contains less alcohol and sugar. Independents are also emerging. Kentucky 74, for example, goes through a proprietary distillation process using thermal extraction to provide barrel-aged characters, before going through reverse distillation to remove the alcohol.
A set of online marketplaces, which focus on education, awareness, and sales of no/low products, has also emerged. Many offer monthly subscriptions, cocktail recipes, party-hosting suggestions and informative blogs. The sense of community offers consumers a feeling of inclusion and overall acceptance.
One example is No & Low, which carries a variety of no-and low-alcohol beverages. It is also community forward, publishing a blog containing views on leading a sober life. Another is The Zero Proof, where customers can order a curated selection which can be shipped directly. Other marketplaces include Better Rhodes and Sèchey.
With consumer interest and acceptance growing, and companies innovating to push the category forward, the future looks bright for no/low alcohol drinks.
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