The non-alcoholic beverage market continues to grow, leaving many brands wondering what caused this trend. Non-alcoholic drinks like wine, beer, spirits, and other ready-to-drink (RTD) drinks are not new. They are usually alcoholic beverages with a volume of alcohol less than 0.5%. The category goes back to the prohibition period of the 1930s, but commercially successful products did not arrive until the 1970s.
Is the trend towards non-alcoholic beverages?
Yes, it is simple. Demand for mocktails and non-alcoholic beverages has been strong since 2023 and is expected to continue well into 2024. Over the past two years, non-alcoholic beverages have been the third-fastest-growing category in the US. Numerator also hopes that the category will continue to grow by $500 million more in 2024. This success is due to a variety of factors, including health and wellness, social occasions, distribution channels and an increased emphasis on social responsibility.
Why is the shift to non-alcoholic drinks increasing?
Non-alcoholic drinks can help consumers achieve their health and social goals. Many consumers adopt a mentality of “new year, new you” at the beginning of each year. Numerator discovered that as the calendar turned to 2024, over one-third of Americans had made resolutions for their health. The majority of consumers wanted to lose weight, improve their diet, or eat healthier.
The trend toward health and wellness did not stop with New Year’s Resolutions. In total, 34% of consumers choose their physical health above mental health, an increase of 13 points compared to the previous year.
Non-alcoholic drinks are a great way to promote a healthier lifestyle. One-fourth of non-alcoholic drink shoppers stated that they buy the category because of general health concerns. In one of our qualitative interviews, David, a Californian non-alcoholic beverage buyer, said that his family had a history of heart disease. “I found a non-alcoholic beer that still tasted great and had the same brand I was drinking before.”
David continued to list the benefits of drinking non-alcoholic drinks. “Now that I’m not drinking alcohol, I don’t have to worry about going out with my friends, getting in the car and driving home safely after the gathering. This is something I’ve found to be a good middle ground. You can still enjoy the taste of beer without alcohol. In an interview with more than 100 purchasers, a third of them said that non-alcoholic drinks allowed them to take part in social events without worrying about transportation.
Other people use non-alcoholic beverages to participate in social activities and remain sober. When I attend social events, I choose non-alcoholic drinks. “I don’t like people asking me why I am not drinking, so I prefer to have something that looks like it,” said a mother of 41 living in the Midwest. Brands that want to enter this space should use marketing and messaging to highlight the inherent benefits.
Why should beverage brands move into the non-alcoholic category?
Brands can benefit from non-alcoholic beverages in a variety of ways. The success of non-alcoholic drinks has benefited emerging brands the most. Established brands can also help. BevAlc titans like Budweiser and Heineken can increase the resilience of their portfolio in two ways. First, by increasing retail distribution. Second, by increasing consumption opportunities.
Local and state laws and regulations restrict many adult beverage brands. Brands can expand their reach by providing non-alcoholic alternatives that can be found easily in the regular beverage aisles of natural grocery stores or ordered online. Numerator’s data on purchases shows that new non-alcoholic beverage shoppers are more likely to enter the category via Amazon (77%), Sprouts (53%), and Whole Foods (16%).
Non-alcoholic drinks are a great way to boost the slow seasons for alcoholic beverages while increasing peak seasons. Dry January began as a UK initiative focusing on reducing alcoholic drinks in 2012. It has gained popularity since then. In November 2023, Numerator reported that more than 1 in 3 US consumers (38%) planned to take part in Dry January in 2024. Non-alcoholic beverages allow people to drink beer and wine without alcohol.
In contrast, non-alcoholic drinks have extended the consumption of similar products to beer and wine during summer. In interviews with consumers, many said that these drinks were a great way to cool down and enjoy something refreshing. Non-alcoholic drinks are a relatively new category for the entire alcohol market. In 2023, nearly two-thirds of the growth in non-alcoholic drinks will be driven by consumers who purchase this category to complement alcoholic beverages and not as a replacement.
What non-alcoholic beverages are in fashion?
Athletic Brewing, a non-alcoholic drink brand, is a hit with affluent Millennials. Athletic Brewing, founded by Bill Shufelt & John Walker, is in more than 2.6 million US households. In 2023, the brand will be in over 1 million households.
Who is driving this success? Athletic Brewing has developed a loyal customer base of affluent Millennials, one of the fastest-growing demographics in the beer industry. This segment of Millennials, with household incomes above $125,000, is expected to contribute $51 million to growth by 2024. Sales increased sevenfold between 2019 and 2023. Penn’s Best, Samuel Adams, and other brands are also growing in popularity with Millennials who have money. Both brands have seen significant market share growth within the non-alcoholic beverages sector.
Athletic Brewing is also on top of industry trends, embracing digital technologies and social initiatives. The brand improved its app ahead of Dry January to allow consumers to track their alcohol consumption, encouraging more mindful drinking. Numerator expects that 1/10 of US consumers will start using mobile apps to track their mental and physical health by 2024.
What are the prospects for the non-alcoholic beverages industry?
For the moment, non-alcoholic beverages are on a path to growth. Expanding geographic and channel distribution is one area for development. The non-alcoholic beverage category has made significant gains in most US regions, except the mid-Atlantic and southern regions. (The latter region is expected to add $28 million in the next 12 months.) Distribution into on-premises channels, such as bars, hotels, and airliners, could increase growth.
Adding innovation to the category can also drive growth. One of the downsides of not drinking alcohol for many consumers is the high price of the beverage. Brands must create a value proposition in order to avoid the category growing solely through promotional activities. The addition of functional ingredients and benefits is one way to do this. Nearly 1 in 4 consumers say functional benefits will drive their purchase, whether it is caffeine, vitamins, or electrolytes. Cannabis and THC could also be a source of opportunity. Numerator’s recent report found that Gen Z is less likely to buy alcohol at retail than other substances like cannabis.
