- Consumers are increasingly choosing no-alcohol beverages over low-alcohol options, especially in the ready-to-drink segment, according to an analysis of data by IWSR. The no-alcohol segment grew in volume by 4.5% in 2019-2020 while low-alcohol dropped 5.5% across 10 key markets, including Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, U.K. and the U.S. In these markets, no-alcohol had 66% share of volume.
The United States is one exception to this larger trend. The data firm found low-alcohol wine accounted for 86.6% of market share here. Low-alcohol RTD beverages have about 70% share, with beer and spirits also proving more popular with U.S. consumers than nonalcoholic varieties.
While low-alcohol drinks have been doing well in the U.S. in recent years, manufacturers across all segments have been launching no-alcohol beverages that could meet the needs of consumers in this country who want to enjoy the taste without a buzz.
In the U.S., no-alcohol drinks have previously been brushed off due to taste and a lack of demand. But they may be having their turn in the spotlight.
The reasons why consumers choose to drink nonalcoholic beverages vary, according to IWSR. Some want to enjoy the taste, but not feel inebriated. Others may be looking for a low-sugar or low-calorie option.
Beer companies, which have seen a sales slump in recent years, have been some of the first companies to venture into the segment. And with 66% millennials trying to curb their alcohol consumption, according to Nielsen, there is potential for continued growth.
In early 2021, Boston Beer plans to release Samuel Adams Just the Haze, which is formulated to taste like a traditional IPA, without the alcoholic content. While company founder Jim Koch once said he would "never brew a nonalcoholic beer," the brewer spent two years researching and experimenting to develop the product.
In October 2020, Guinness introduced a nonalcoholic version of its popular stout in the United Kingdom and Ireland after launching other alcohol-free beverages, including a lager and a malt-based drink. The stout, called 0.0, has since been recalled due to a microbiological contamination, potentially delaying its worldwide launch.
Budweiser’s first nonalcoholic beer, Budweiser Zero, hit shelves this past July. It is part of parent company AB InBev’s plan to have 20% of its global beer volumes come from no- and low-alcohol offerings by 2025.
While no-alcohol spirits may be seeing an increase in popularity in other countries, in the U.S., low-alcohol varieties still take a majority share of the market. Spirits traditionally contain above 30% ABV. The IWSR report cites low-alcohol spirit offerings from well-established brands like Diageo's Smirnoff, which has a Zero Sugar Infusion vodka line with less calories and a 30% ABV (the original Smirnoff vodka has a 40% ABV) and Pernod Ricard's Beefeater gin, which launched Beefeater Botanics in Canada with a 27.5% ABV. Its original gin has an ABV of 44%.
Low-alcohol wine is also gaining traction, despite consumers' initial reluctance to try these offerings over no- and low-alcohol beer, adult soft drinks and mocktails.
Despite the growth of no and low-alcohol drinks, companies face some obstacles to greater consumption when launching a new beverage. According to IWSR, there is still the perception that no- and low-alcohol drinks are lower quality than their higher ABV counterparts.
Companies deciding to break into this market have often tried other marketing angles in order to gain traction. No-alcohol brand New London Light recently launched in the U.S., with an added focus on being vegan and free of other allergens to appeal to an increasing demographic of plant-based consumers.
Low-alcohol wine brands such as Truett-Hurst's Cense, Skinny Girl and FitVine have positioned themselves as flavorful and healthier options.
IWSR's data also shows that one headwind for low-alcohol beverages in general may be consumers' confusion about ABV levels, and knowing how much they can drink and still be within the legal driving limit. At least with no-alcohol offerings, these concerns can be alleviated.