Learning Zone

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 Over the last few years, consumers have been practicing more conscious drinking, whether that’s abstaining, sipping low-proof drinks or tiger-striping — switching between no-alcohol drinks and regular-strength drinks,

In 2022, sales of no- and low-alcohol beverages grew by more than 7% in volume across 10 key global markets, surpassing $11 billion in market value. This is up from $8 billion shown in 2018, according to IWSR Drinks Market Analysis.

The pace of growth is expected to surpass that of the last four years, continuing at a CAGR of 7%, compared to a CAGR of 5% between 2018 and 2022.

“The dynamic no/low-alcohol category presents opportunities for incremental sales growth as consumers are recruited from drinks categories such as soft drinks and water” comments Susie Goldspink, Head of No- and Low-Alcohol, IWSR Drinks Market Analysis. “Brand owners have an opportunity to recruit non-drinkers of alcohol.”

  The increasing growth of non-alcoholic beverage trends across the U.S. is being reflected in sales figures. Between August 2021 and August 2022, total dollar sales of non-alcoholic drinks in the US stood at $395 million, showing a year-on-year growth of +20.6%. 

 Non-alcoholic spirits took up 1.3%, worth $5.03 million, up +88.4% from a year ago. 

• There was a time when a few beers, shots or cocktails were staple of social gatherings, but in recent years, non-alcoholic beverage trends have been rising.
• Younger Gen Z consumers are less interested in drinking alcohol than previous generations,
• But there has also been a wider wellness movement taking place throughout society, with more people from every age and stage of life trying to take better care of themselves.

Hannah Connelly remembers the first time she drank a product from Kin Euphorics, a beverage company specializing in booze-free drinks advertised as alcohol replacements. The contents of the candy-colored cans are infused with “adaptogens,” a broad class of herbs, botanicals and mushrooms that have been associated with enticing effects — including relieving stress and improving mood — that are sometimes linked to the experience of drinking alcohol.

“It was very subtle,” said Connelly, 25, who lives in New York and sampled a Kin Spritz at a pop-up event in the city last year. She likened the sensation to being submerged in water, calling it a “comforting shift in your sensory experience.”

Because consuming alcohol can make her nauseated and later cause “massive bouts of anxiety,” Connelly said Kin beverages have been a welcome substitute.

“It gives you the same social aspect [as alcohol], maybe kind of helps you loosen your inhibitions a bit, but you’re actually feeling better the next day instead of feeling worse,” she said. “That might not be the case for everyone, but I feel like for me, it’s been a win-win.”

From energy drinks to relaxing teas, terpenes can add natural flavor to beverages without added sugar and calories. 

Everyone has a go-to beverage. For some, it’s a sports drink before working out or a calming evening tea. Sometimes a nice sparkling water helps people feel fresh and bougie. No matter what though, you want to make sure YOUR beverages are the ones people reach for. That’s why more brands should consider using terpenes in their beverages.

Terpenes are jam-packed full of benefits and can add flavor to drinks without adding calories or sugar. If you’re on the run though, here’s the summary of what we’ll be covering today:

• Why More Brands Should Use Terpenes in Their Beverages
• Benefits of using terpenes in beverages
• What kinds of beverages can benefit from terpenes
• Cannabis-infused beverages and terpenes

Benefits of Using Terpenes in Beverages

Terpenes are organic hydrocarbons produced by most plants and they’re responsible for many of the tastes and aromas we’re so familiar with.

Consumer interest in nootropics is building but remains patchy.

When Radiohead released their seminal album OK Computer 25 years ago, they could have been writing about life two decades from then with the lyrics “Fitter, happier, more productive, comfortable, not drinking too much, regular exercise at the gym (three days a week).”

Back then, the band captured a sentiment that has crystalised into a way of life for many, especially in younger generations. Many have wanted to maximise their potential, from the use of anti-ageing creams to remain youthful looking, to the drinking of protein shakes to bulk up their muscles. More recently, however, the focus on self-improvement has turned cerebral: an increasing number of people are looking for ways to boost their mental function.

Enter nootropics: ingredients or substances that improve cognitive activity. The term ‘nootropic’ was created by Romanian neuroscientist Corneliu Giurgea in 1972 when it was noted during clinical trials that the drug piracetam boosted memory.

According to an analysis of the nootropics niche by US-based consultancy Grand View Research, the size of the market globally is projected to grow from US$10.67bn in 2021 to $29.24bn in 2028, representing a compound annual growth rate of 15%.

 The global non-alcoholic spirits market size was valued at $281.1 million in 2021, and is projected to reach $642.4 million by 2031, growing at a CAGR of 8.7% from 2022 to 2031.

Alcohol free-spirits made from a mixture of spices, herbs, and fruits. They are sweeter, fruitier, and balanced with strong and bitter flavors. The herbal aroma provides a lasting aftertaste. They are a perfect solution for those who wants a mixed drink minus the side effects of alcohol. Alcohol free-spirits contains active ingredients that are designed to mimic the positive effects of alcohol.

"In the midst of the spread of Covid-19 pandemic the interest for product having low and no-alcohol content increased abruptly, because of the health-related concerns across the globe. The COVID pandemic resulted in positive impact on the global non-alcoholic spirits market. During the pandemic manufacturers were focused on creating innovative products to meet the increasing consumer shift towards non-alcoholic spirits. Strong global concerns about the pandemic have positively influenced the global non-alcoholic spirits industry as pandemic shifted consumers focus on healthy food & beverage alternatives."

KELLY: Well, while you sip, let me pose a first question, which is this - we had a hard time deciding which nonalcoholic beer to try. There are, like, a zillion options now. Tell us about the whole playing field of nonalcoholic drinks today.

ROSALSKY: First, I got to say, this does not taste like the nonalcoholic beer I remember from the past. So I don't know if you remember there was O'Doul's. It was basically the only buzz-free game in town. But now, if you like the taste of alcoholic drinks but don't like the effects of alcohol, you're basically living in a golden age. We're talking drinks like Kentucky 74 Spiritless bourbon, Luminara alcohol removed chardonnay, zero-proof margaritas. Over the last year alone, there have been more than 70 new nonalcoholic beers, wines and spirits that have hit the market. And to be clear, nonalcoholic usually means it has less than half a percent of alcohol by volume.

KELLY: What is the demand like? Are people buying these drinks?

ROSALSKY: Yeah, apparently they are. I talked to an analytics company called NielsenIQ, which is tracking this market. Their data shows that the market for nonalcoholic beer, wine and spirits grew more than 20% last year and more than 120% over the last three years. 

Non-alcoholic (NA) wine, beer, and spirits are nothing new; non-alcoholic beer in particular has been produced for over a century. But the category has experienced marked growth in recent years, driven by consumers’ desire for “better-for-you” beverage options and innovation within the non-alcoholic beverage space.

In 2022, NA categories share on Drizly rose 24 percent year-over-year compared to the same period in 2021. Despite the relatively small size of the category, the significant recent growth makes it one to watch.

“Even if you drink alcohol, there’s a time and place for a really good non-alcoholic beer,” says Samantha Itzkovitz of Brooklyn Brewery, which has offered its non-alcoholic line, Special Effects, for several years. “We realized there was so much stigma surrounding non-alcoholic beers and beverages in the United States, especially surrounding taste, which led us to release a craft alcohol-free beer.” 

The beverage industry sees opportunity in no- and low-alcohol options.

Giving up alcohol for the first month of the year is a growing trend following holiday indulgences, but the adult beverage industry sees opportunity far beyond Dry January for year-round low alcohol and booze-free options.

The latest data from IWSR Drinks Market Analysis forecasts 25.4% growth in non-alcoholic offerings in the U.S. through 2026 and 5.9% growth in the low-alcohol segment during the same period.

"Both no- and low-alcohol are in growth mode, outperforming the rest of the U.S. drinks market in terms of percentage increase, albeit on a smaller overall volumetric base," says Brandy Rand, chief strategy officer at IWSR. 

"No/low is increasing in significance as the ‘better for you’ movement in the United States commands an increasing portion of consumer spending."

DOES ‘DRY JANUARY’ ACTUALLY IMPROVE YOUR HEALTH?

We’ve been watching the popularity of non-alcoholic drinks grow over the last 3 years, and according to new research commissioned over the last 8 months, their time has finally come.

With London leading the way and Los Angeles not far behind in terms ofnon-alcoholic drinks growth, we commissioned IWSR and CGA to closely examine the market and provide us with first-of-its-kind data. Here are a few key insights and findings extracted from our research.

In light of their continuous efforts towards wellness, increased curiosity and demand for greater product and flavour choices, consumers continue to lead the changes in both the hospitality and drinks industry. 

The current market. 

A large percentage of restaurants based in both Los Angeles and London are taking full advantage of this shift to no and low drink consumption. Customers now have more choice,  with dedicated non-alcoholic cocktail menus as well as a wide selection of sophisticated non-alcoholic spirits, aperitifs, beers and fermented drinks. Non-alcoholic Gin has proven to be particularly in demand. 

With availability growing steadily, the popularity of these alcohol-free alternatives is only set to increase. While innovative bars and restaurants are fully seizing this opportunity and providing their customers with a myriad of choices, there are still many who have yet to engage with the non-alcoholic trend, and adoption across the board is still a way off.

Buoyed by broader moderation trends and a growing interest in cocktails and mixology, non-alcoholic spirits are finally having their moment in the limelight.

From the outside, the Club Soda Tasting Room, Bar and Shop looks like any other boutique off-licence. However, this white-fronted shop just a short walk from Seven Dials in central London is a store like no other. Adorning its shelves and filling its fridges are dozen upon dozens of beers, wines and spirits with a key difference; none of them contain any alcohol. Trade at the shop – which opened its doors in November – is booming, its owners say.

“The interest in alcohol-free, and around alcohol-free cocktails in particular, is really high,” says Club Soda founder Laura Willoughby. “We’ve got amazing mixologists and our own cocktail list. It’s certainly exceeding our expectations in terms of customers coming in and having drinks.”

Willoughby describes trade in the run-up to Christmas at the shop as “massive” and points to the fact the company extended its pop-up shop last year through until the end of March as evidence the trend is no longer limited to drinkers taking a break for Dry January.

“The demand is there year-round now,” she says. “Certainly we saw that all the way into February, March last year. It didn’t really change hugely and we had – and continue to have – a lot of good regular customers. Speaking to a lot of brands they will say that January is ceasing to be as significant for them, they’re finding that sales are steady throughout the year.”

For some people, “Sober October” is in full swing, meaning not a drop of alcohol will pass their lips this month. Luckily for them, consumers looking to avoid alcohol have far more options than they might have just a few years ago, as an increasingly robust selection of booze-free beverages from nonalcoholic beers to mocktails flood onto the market.

Demand for these drinks, which set out to emulate their boozy counterparts as closely as possible, has expanded rapidly in recent years due to a rise in product quality as well as a broader public interest in decreasing alcohol intake. According to research by Nielsen, the growing “sober curious” movement is driven in large part by younger people seeking healthier alternatives to traditional drinks. Megan Klein, founder of the nonalcoholic mocktail company Little Saints says that new trends among Gen Z consumers are helping drive the shift.

“About 42% of millennials drink on a regular basis, and only 21% of Gen Z drinks on a regular basis,” Klein told “Marketplace Morning Report” host David Brancaccio. “And so as generations drink less and less, kind of at a rapid rate, we’re seeing a shift in culture because they’re much more health conscious.”

The following is an edited transcript of their conversation:

David Brancaccio: Megan, what is the problem with alcohol these days, I’m seeing some actually pretty decent no-alcohol IPA ales, you got into mocktails. What is driving this?