Curiously sober: the rise of the non-alcoholic drinks sector
With increasing health-consciousness and a demand for wellness-oriented products, the non-alcoholic drinks sector is steadily rising and the big alcohol brands are starting to take note. Callum Tyndall finds out what is driving the growth and where the sector may be headed.
According to the International Wines and Spirits Record’s (IWSR) Global Opportunities in Low- and No-Alcohol report, in the US alone, 52% of surveyed consumers are trying to reduce their alcohol intake. In the UK, among heavier alcohol consumers, 65% are trying or have tried to cut back. And while consumers may not currently be heavily invested in low/no-alcohol options (70% of US respondents and 61% of UK respondents said they have not considered drinking low/no alcohol products), that could soon be set to change: the report found that ready-to-drink products in the low/no sector are set for a compound annual growth rate (CAGR) of 38.8% in the US between 2018 and 2022, and 44.3% in the UK.
The two countries are not the only ones experiencing this change of course. In Spain, for example, 95% of survey respondents said they are trying to reduce their alcohol intake. These figures are indicative of a categoric shift in consumers' drinking habits in major markets. With the wellness trend at the forefront of consumers' minds, and adult alternatives to alcohol still somewhat limited, the low- and no-alcohol sectors are set for a boom as manufacturers begin to accelerate their attempts to meet the clear demand.
Spain sets an example for a growing consumer base
Spain may be the prime example to look to for the change: not only did the IWSR report find that nearly all Spanish respondents were trying to decrease their alcohol consumption but 80% said that they either had tried or were interested in trying low/no-alcohol products. Moreover, the report’s surveying found 50% of bars and 60% of restaurants in the country were offering low- or no-alcohol products. There are region-specific reasons for this beyond wellness, for example stricter rules around drink driving but it cannot be ignored that the country is successfully moving to match supply to demand.
The same of course cannot be said globally; while the low and no markets are growing at pace, they still have some way to go to prove equal competition to the alcohol industry. Regular soft drinks have already had to diversify to match consumer demand for decreased sugar and while the water market has seen impressive growth in recent years, it is perhaps unlikely to become the alternative of choice at pubs. Instead, it’ll be up to manufacturers and service outlets to produce and provide a range that can match the diversity and quality of alcohol.
We are seeing consumers of all ages moderating their alcohol consumption, and seeking out alternatives
“The low and no alcohol markets are currently tiny, when considered in the context of the wider drinks market,” says to Luke Boase, founder of low-alcohol beer brand Lucky Saint. “Non-alcoholic beer represents less than 1% of the total beer market in the UK, but it is growing rapidly. Everyone is talking about the 29% of young people who consider themselves 'non-drinkers'. But in reality we are seeing consumers of all ages moderating their alcohol consumption, and seeking out alternatives such as non-alcoholic beer and spirits.
“Most broadly, the trend is motivated by a desire to improve your health. But more interestingly, and more commonly among younger generations, people are making lifestyle choices which include drinking less. People in general are becoming ever more aware of what they consume; they are seeking out healthier, natural products; veganism has become synonymous with healthy eating; people are doing more exercise; and drinking less is becoming a positive aspirational lifestyle choice.”
Keeping the craft: beyond soft drink standards
Of course, the big soft drink brands such as Pepsi and Coca-Cola are industry giants, but the movement around low and no-alcohol is likely to see decline from such brands’ eponymous products.
As much as consumers are looking to avoid alcohol, the same wellness inclination is likely to drive them away from high-sugar products that may in some way lack perception as an ‘adult’ drink. Those seeking to stop drinking or cut down the amount they drink aren’t necessarily doing so out of aversion to alcohol; they are simply seeking something better for them. In turn, brands must produce something as compelling as a good alcoholic drink, particularly given the popularity of premiumisation.
Tom Evans, Adnams’ low and no-alcohol ambassador, told us: “The type of beer we already brewed clearly influenced the sort of low/no-alcohol beers we wanted to make. There are very few hoppy pales ales in the low and no market and this was one of the reasons why we decided to do Ghost Ship 0.5%. This ultimately also led us to the decision on the process and equipment we needed to help us produce that sort of hoppy pale ale and to do it well.
“As we are still a relatively small brewer, we also reach people who may not consider the low and no beers from the big multinational brewers or those who wouldn’t consider one of the mainstream lagers. I would like to think we add a bit of credibility, some assurance that if Adnams are producing it then the low-alcohol beer we produce will also be good.”
Adnams isn’t the only craft name investing in the low and no sectors of course. With the growth of craft alcohol and consumers leaning towards premium products, producers are rolling out non-alcoholic versions of everything from beer to spirits. The big alcohol brands have made their own headway with products such as Heineken 0.0 but with the elevated expectations around craft products, it is maybe this area that will prove definitive. The manufactures that stand out will be those that can not only offer a healthier product, but one that maintains or even exceeds the standards craft consumers have come to expect.
A note of caution from Bernstein and the pursuit of ‘sober curiosity’
One potential hurdle to the sector’s continued growth is a recent client note from beverage analysts at Bernstein. According to Bernstein, while consumers in North America and northern Europe may seem to be drinking less alcohol by volume, this is largely because they are switching from beer to spirits. Moreover, UK consumption per capita is actually up by 6% in the last three years.
In addition, the Bernstein analysts state that the image of younger consumers drinking less is similarly false. While under-age drinking in the US and Europe has decreased, US men aged 21-34 are supposedly drinking just as much as the age group did ten and twenty years ago. Women in the age group are, in fact, drinking more.
It’s fundamentally about reacting to a new market - a new sensibility, a different focus on leisure time
It must of course be taken into account that this is a single point of analysis counter to prevailing sentiment, and clearly growing sales, but it is worth considering. We must also keep in mind that most consumers don't make a clear switch from alcohol to low/no-alcohol products, but are found somewhere on the transition spectrum - something journalist and author Ruby Harrington has described as ‘sober curiousity’, a wellness-based approach oriented around recognising drinking habits and changing behaviour accordingly. Rather than suddenly switching to no-alcohol alternatives, consumers in the pursuit of wellness may be looking for a more diversified drinking habit which includes said alternatives.
Mike Nolan, CEO of Product of the Year UK and co-owner of Black Dog Sparkling Wine and Hairy Dog Beer, says of the future: “We’re likely to see a steady incline of new products being released to market. These new entrants will have diverse ingredient lists and will tell increasingly inventive and compelling stories aimed at a deeper emotional connection with the consumer. Also, just because it isn’t alcohol don’t assume the consumer doesn’t want the ‘theatre’ and ceremony we’ve come to associate with drinks brands. People want the popping-open-a-bottle-of-champagne moment with non-alcoholic drinks, too.
“Current predictions are seeing a continued trend towards a restrained drinking habit among consumers but who knows, perhaps in the future we’ll see a reaction to this with an alcohol renaissance. It’s fundamentally about reacting to a new market - a new sensibility, a different focus on leisure time. The desire for today’s younger consumers is to celebrate an occasion without alcohol, necessarily, being the central component.”