Low- and no-alcohol beverages see significant growth globally11 Apr 2022
Alcohol-free and low-alcohol beverages are helping drive growth for many alcohol manufacturers that have been struggling to adapt to the changing tastes of the market in recent years.
What used to be an annual phenomenon known as Dry January, a period when people around the world greeted the new year without alcohol, has morphed into a growing, year-round segment of the alcohol industry.
The beer, wine and spirits industry has seen its share of fads and trends over the years, but according to market trend analysis, interest in no-alcohol and low-alcohol beverages is poised for continued growth. Data from the research firm Nielsen showed that 66% of adults between 21-34 in the US are consciously reducing their overall alcohol consumption.
Less buzz, more growth
Not only are people saying they want to reduce their alcohol consumption, but buying patterns are reflecting this claim. Just in the US, sales of non-alcoholic beverages grew 33.2% between 2020 and 2021 to reach $331 million (€297.8 million) while low-alcohol sales grew 8.1% to $2.77 billion (€2.53 billion) during the same time period according to Nielsen data cited by Forbes. Despite these large jumps, the household penetration of these beverages hovers at 5% and is dwarfed by the $1 billion (€900 million) alcohol industry.
In Europe, the market for no- and low-alcohol drinks sat at €5.9 billion in 2018. However, research from the consulting company Zenith found that the segment is expected to grow at 10% per year to reach €9.3 billion by 2023. Germany, Russia, Spain and the UK were singled out as key markets for the growth of these products. Western Europe in general was the dominant region for these beverages.
As a microcosm of the overall phenomenon, Dry January alone has seen increased interest from consumers. In a study done by the market research firm Morning Consult, the number of US adults avoiding alcohol during the month of January grew from 11% in 2020 to 13% in 2021. That figure ticked up to 19% this year.
In the UK, where this campaign was created in 2013 by Alcohol Change UK to raise money for alcohol abuse and treatment, the number of participants rose from 4,000 in 2013 to approximately 130,000 people in 2021, according to the Society for the Study of Addiction.
However, despite the growing interest in these beverages, data from Euromonitor International reported by Reuters showed that, following four years of 9% average annual growth, global non-alcohol beer sales fell 4.6% in 2020 to $11.6 billion (€10.4 billion). Nevertheless, alcohol manufacturers remain interested in gaining a foothold in the space.
From 0.0% beer to 'spiritless' liquor
Although Nielsen data found that non-alcoholic beer currently makes up 0.7% of total beer sales in the US, this is a growing figure. Brewers worldwide are jumping at the chance to attract consumers — beer sales have declined in recent years as consumers search for alternatives like hard seltzers. Heineken, the world's second-largest brewer, has Heineken 0.0. Anheuser-Busch InBev, which is the largest brewer in the US, launched a zero version of its Budweiser lager.
With such a small percentage of the beer market occupied by zero-alcohol choices but a large interest in these products, the US presents manufacturers with a prime opportunity for growth.
In comparison to the US, Japan’s market for zero-alcohol beer represented 5% of total beer sales in 2019, but by 2021, experts at Mintel forecast that market share to increase by 7% year over year. Europe has an even larger share and represents nearly three-quarters of the non-alcoholic beer consumed globally, according to market research company insightSLICE cited by Reuters.
Similarly, there has been a rise in spirit-less liquors like Seedlip out of the UK or Ritual from the US. Even beverage companies that have traditionally been uninvolved in the alcohol space are dipping their toes in to attract consumers that are looking for non-alcoholic adult beverages. Coca-Cola launched premium mixers and Mountain Dew unveiled a new hard seltzer line.
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