Going out for a party or any social gathering revolved around, having a few beers, shots, or cocktails. However, in recent years, the popularity of non-alcoholic beverages has been on the rise. This shift is particularly noticeable among the younger Gen Z consumers, who show less interest in drinking alcohol compared to previous generations.
Today, consumers have access to a wide range of alcohol-free options, including non-alcoholic beer, wine, and cocktails. Heineken®0.0, Savanna 0.0% Alcohol Free,Castle Free, Tanqueray 0.0% and Belgravia non-alcoholic Gin Dry Lemon are just a few examples of the expanding choices available.
This write up explores the factors behind this trend and how it impacts the industry, and the drinking culture.
A Change in Priorities
Unlike their predecessors, Gen Z consumers view drinking in a different light. Additionally, there has been a broader movement focused on personal wellness and being in shape, with individuals of all ages striving to take better care of themselves. This change in mindset has contributed to the increased demand for non-alcoholic alternatives, allowing people to prioritize their health without completely giving up on alcohol.
The Sober Curious Movement
The trend towards non-alcoholic drinks gained momentum even before the pandemic. “Sober curious” individuals started buying more into non-alcoholic options, catering to those who were curious about sobriety or simply wanted to reduce their alcohol intake. This movement continues to grow rapidly, with more people exploring the world of alcohol-free beverages. Gen Z, in particular, is driving this demand as they seek to drink less while still enjoying social experiences.
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Catering to Various Lifestyles
Non-alcoholic drinks provide a range of benefits for different lifestyles and occasions. They serve as alternatives for those participating in Ocsober, maybe those ’30 day without alcohol’ challenges or aiming to limit their alcohol consumption while socializing. These options are also appealing to individuals who need to drive home after a night out, want to avoid hangovers, or are conscious of the negative health effects of alcohol. To meet these diverse needs, non-alcoholic beverage makers are positioning their products as sophisticated, flavorful, and visually appealing.
Changes in the Alcohol Industry
Recognizing the evolving consumer landscape, major alcohol companies such as Heineken, SAB and AB InBev, and Molson Coors have expanded their offerings to include more alcohol-free options. While the non-alcoholic market is still relatively small compared to traditional alcoholic beverages, it is experiencing significant growth.
Sales Figures Reflecting the Trend
The increasing popularity of non-alcoholic drinks is evident in figures. According to IWSR, a reliable source of information on the global alcoholic beverage market, the value of the no/low alcohol category exceeded $11 billion in 2022, compared to $8 billion in 2018.
The global market for no- and low-alcohol beverages experienced significant growth in 2022, driven by increasing consumer demand. In 10 key global markets, including Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, the United Kingdom, and the United States, the market value of no/low alcohol products exceeded $11 billion.
The growth in volume of no- and low-alcohol beer/cider, wine, spirits, and ready-to-drink (RTD) products was over 7% in 2022 across these markets. This growth rate is expected to surpass that of the previous four years, with a projected compound annual growth rate (CAGR) of 7% between 2022 and 2026, compared to 5% from 2018 to 2022. The majority of this growth is expected to be driven by the no-alcohol segment, which is anticipated to account for more than 90% of the total category volume growth.
No-alcohol beverages, in particular, experienced significant growth, with volumes increasing by 9% in 2022. No-alcohol products now hold a 70% share of the overall no/low-alcohol market in the 10 leading markets, up from 65% in 2018. Factors contributing to the dominance of no-alcohol over low-alcohol options include improved taste, production techniques, and a wider range of consumption occasions. The projected CAGR for no-alcohol volumes between 2022 and 2026 is 9%.
The consumer base for no/low-alcohol beverages is maturing, with Genz being the largest age group. Switching between alcoholic and no/low-alcohol options is common, with 78% of no/low consumers also consuming full-strength alcohol.
Overall, the market for no- and low-alcohol beverages is experiencing robust growth, driven by consumer demand and a maturing consumer base. No-alcohol options are leading this growth, and the market is expected to expand further with increased availability, innovation, and a shift towards emphasizing flavor and other benefits rather than the absence of alcohol.
Today, the range has gradually expanded to include options such as beer, wine, spirits, champagne, and cocktails.
The growing trend of non-alcoholic beverages represents a significant shift in drinking habits, largely influenced by Gen Z’s preferences. As the demand for alcohol-free alternatives continues to surge, the industry is witnessing innovation and an increased focus on flavor and quality. Although traditional alcoholic drinks still dominate the market, the upward trajectory of non-alcoholic sales signifies a broader change in consumer behavior and a recognition of the need for diverse options in the beverage industry.
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