Low-and-No Alcohol Drinks – Passing Fad or Growing Trend?

Once dismissed by most of the public and consumed mainly in situations in which alcoholic beverages would not be permitted, the no-and low alcohol category has gained prominence in the market over the last few years and sales growth has outperformed traditional alcoholic drinks. After the first months of the pandemic, when people were bingeing on food and alcohol as a way to escape the reality of lockdowns, moderation now seems to be key and the low-and-no alcohol drinks have played an important role in consumers’ new lifestyle. However, is that only a passing trend for the low-and-no category or has it become the ‘new normal’?

Looking at the upward trends in the Food & Beverage industry, we cannot help but notice that consumers are more and more concerned about their health and wellbeing. However, as they do not want to give up on moments of pleasure and relaxation also, the demand for indulgent food and drinks that will not compromise their health goals is getting higher. This trend has risen sharply during the global pandemic since 2020.

When it comes to alcoholic beverages, this trend has taken off. Especially younger consumers, such as millennials and Gen Z, who are drinking less alcohol driven by this increased interest in wellness and, of course, the larger and improved selection of no-and-low alcohol drinks. According to Nielsen, 66% of millennials declared they were trying to decrease their alcohol consumption while only 47% of older adults share the same attitude towards alcohol.

“ No-and-low alcohol alternatives account for 11.8% of the total beer category in Germany, while in Spain, it constitutes 10.6%”

IWSR found out that no-and-low alcohol alternatives account for 11.8% of the total beer category in Germany, while in Spain, it constitutes 10.6%. Leaving the old continent towards the new world, the same research noted that volume sales of no-and-low alcohol beer in the US grew by 34.8% in 2020, reaching $1.7 Bn. While the overall consumption of beer volume in the American market decreased by 2.3% in 2019, the volume of low-and-no alcohol beer increased by 6.6%.

Big manufacturers, such as Boston Beer, Guinness and Heineken have responded to this consumer demand and developed products with little or no alcohol. Even Samuel Adams, whose founder Jim Koch’s once affirmed they would never do non-alcoholic beer because of its terrible taste, ended up creating their non-alcoholic IPA-style, Just the Haze.

Nevertheless, the expansion of the non-alcoholic offering by large beer companies was not only a response to the current demand but also a way to lead growth by putting their products in front of consumers in different moments and situations, supporting their lifestyle and building loyalty. Some brands, such as Athletic Brewing are even trying to recreate the category, as an athletic beer category. The company has been targeting an audience focused on fitness by attending numerous races and offering samples to runners.

Athletic Brewing (Retrieved from Athletic Brewing)

Even though the beer category has the largest share of the low-and-no alcohol market, other options are also available, such as wines and spirits. The low-and-no alcohol beer category has a 92% share of the total low-and-no alcohol market, while the low-and-no spirits for instance account for only 0.6%. However, the latter increased volume sales by 32.7% in 2020, while the former grew only 0.5%. In addition, low-and-no spirits are forecasted to rise by 14% between 2020 and 2024, presenting the largest Compound Annual Growth Rate (CAGR).

The UK is one of the most advanced markets for the non-alcoholic category and counts on over 40 brands of low-and-no alcohol spirits, offering a variety of alcohol-free tequilas, rums, whiskeys etc.

The Mockingbird Spirits is an example of a brand that is producing a free-alcohol alternative to tequila made of agave, the first one in the UK. Founded in 2020 by Fern McCoy, Mockingbird is made using the same plant used in the tequila process, 100% organic Blue Weber Agave, which guarantees the same quality of the traditional drink with the exemption of the classic hangover the following day.

Mockingbird Spirit (Retrieved from Mockingbird Spirit)

The truth is that in the past, non-alcoholic beverages would be mainly present in situations in which the consumer could not drink, for example, when driving, pregnant or maybe in the presence of alcoholics in recovery. However, most consumers of low-and-no alcohol beverages today are also consuming traditional alcoholic options. People are choosing to be more moderate and being more conscious of what they put in their bodies. So, with the number of options currently available and the much higher quality of the products, choosing a non-alcoholic alternative cannot be considered a sacrifice anymore.

“ Between 2021 and 2025, the volume of low-and-no is expected to grow by 8% CAGR, while the regular alcohol volume growth is expected to grow only 0.7%.”

The boost in the low-and-no alcohol category is clear. IWSR reported that it had its share of the total alcohol market increased by 3% in 2020, and, by 2024, it is forecasted to rise by 31%. Between 2021 and 2025, the volume of low-and-no is expected to grow by 8% CAGR, while the regular alcohol volume growth is expected to grow only 0.7%. However, the market is still small, with less than 5% of household penetration, which means there is still a lot of space for growth.

That being said, considering that consumer demand already exists, what will drive this growth is the effort brands will put in innovation to develop new flavours and deliver high-quality products to delight even the most demanding consumers.

If in the past, low-and-no alcohol drinks were defamed, nowadays they are aspirational, and consumers are willing to pay premium prices for the privilege of enjoying their drinks and avoiding the negative effects of alcohol. Furthermore, specialists say that the healthy and balanced lifestyle trend will stay longer, which signals a safe space for the low-and-no category to continue steadily growing.

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