De-Alcoholized Drinks Maintain High Growth Trajectory
November 30, 2023Even with low-proof, spirits-based RTDs still booming, total beverage alcohol momentum has slowed quite a bit this year—according to Impact Databank, the overall drinks industry is projected to decline for a second straight year in 2023. But alcohol-free brands are flourishing, albeit from a small base, driven by health and wellness concerns among American consumers, especially Millennials and Gen Z drinkers.
Beer and other malt-based beverages always peak in the summer months, and so do non-alcoholic brews. But de-alcoholized wine and spirits always start the year on a high note, due to the strength of the Dry January movement. The non-alc industry has also gained buzz during other parts of the year—particularly Sober October. And the sector’s growth is expected to endure and capture share in other months as well, as the major drinks players continue to invest in the space.
In the malt-based sector, brewers have capitalized on non-alc offshoots of established beer brands, such as with the two largest-selling alcohol-free brews, Heineken 0.0 and Budweiser Zero. Other recent de-alcoholized extensions of large commercial brands include Stella Liberté, Guinness 0, Peroni Nastro Azzurro 0.0%, and Corona Non-Alcoholic. Craft brewer Athletic Brewing Co. has also seen tremendous growth from its line of alcohol-free brews—according to Impact Databank, the Athletic range is already the fourth largest-selling non-alc beer brand in the U.S.
Even faster growth is being registered by de-alcoholized spirits, and industry leader Diageo has been busy investing in the category by way of its Distill Ventures unit—which counts the widely available Seedlip ($35 a 750-ml.) in its non-alcoholic portfolio, as well as a minority stake in Ritual Zero Proof ($30), the market leader. As Diageo CEO Debra Crew recently told analysts, a “key consumer trend is wellness, and as consumers prioritize this, they look for moderation, lower calorie alternatives, and more natural ingredients…Non-alcohol spirit products, while still small, have grown 13 times since 2017.”
New labels have also gotten into the act, including Lyre’s, which offers a range of 18 alcohol-free recreations of classic spirits along with five RTDs and an Italian non-alc sparkling wine; and CleanCo, which offers non-alc versions of rum, gin, whiskey, Tequila, and vodka. Lucas Bols has also made a solid investment in the zero-proof space with three brands: Pallini Limonzero ($25 a 750-ml.), a non-alcoholic version of Pallini Limoncello; Damrak Virgin 0.0 ($30), a zero-proof offshoot of Damrak gin; and Fluère ($35), a portfolio of five non-alcohol spirits inspired by traditional spirits categories.
In wine, New Zealand’s Giesen, imported by Opici, has expanded its non-alcoholic 0% line with a new brut sparkler, retailing at $20 a 750-ml. The brand’s non-alcoholic wines, led by Sauvignon Blanc, surpassed 50,000 cases in the U.S. last year. Market-leading de-alcoholized wine brand Sutter Home Fre, from Trinchero, reached 344,000 cases in 2022 and this year added a Sauvignon Blanc to the lineup.
Beyond the October trends, de-alcoholized beverages also represent premiumization opportunities for drinks marketers. In NIQ channels, non-alcoholic spirits were priced at an average of $24.35 per 750-ml. last year, compared to an average of $15.76 per bottle for all spirits with alcohol. And although they currently represent just half-a-percent share of total beverage alcohol dollars, according to Impact Databank, alcohol-free alternatives will continue to comprise a fast-growing percentage of the overall drinks market into the foreseeable future.—Juan Banaag
| Sober October—Off-Premise Trends (millions of dollars) |
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| Month of October | Percent Change1 | |||||
|---|---|---|---|---|---|---|
| Category/Type | 2020 | 2021 | 2022 | 2023 | 2022-2023 | |
| Total Beer2 | $2,714.5 | $2,706.4 | $2,850.2 | $2,841.7 | -0.3% | |
| Non-Alcoholic Beer | $14.92 | $18.15 | $21.88 | $27.08 | 23.7% | |
| Total Wine3 | $1,506.7 | $1,448.4 | $1,452.0 | $1,419.7 | -1.2% | |
| Non-Alcoholic Wine | $2.14 | $3.12 | $3.53 | $4.25 | 28.4% | |
| Total Spirits3 | $1,488.4 | $1,499.1 | $1,577.2 | $1,605.1 | 2.9% | |
| Non-Alcoholic Spirits | $0.11 | $0.25 | $0.43 | $1.23 | 87.3% | |
| 1 Based on unrounded data 2 4 weeks ending 11/1/20, 10/31/21, 10/30/22, and 11/5/23 in Circana channels 3 4 weeks ending 10/31/20, 11/6/21, 11/5/22, and 11/4/23 in NIQ channels Sources: Circana, NIQ and IMPACT DATABANK © 2023 |
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