New IWSR data shows that while Germany dominates non-alc volumes, the greatest innovation in the category is being driven by markets such as the US, UK, France and Australia.
The four markets all recorded double-digit no-alcohol volume growth in 2020-2021, compared to a flat performance in the more mature German market. IWSR said all four are also expected to grow in the years ahead.
IWSR noted five key trends and developments that it believes are set to shape this dynamic growth in the non-alc market.
- Reinventing no-alcohol
IWSR said that in France – and, to a lesser extent, in Australia – there is a clear dichotomy between the established, historic non-alc category, dominated by inexpensive brands and private label products, and emergent new-generation products at significantly higher price points.
“In France, there are signs that new-generation no-alcohol spirits are recruiting new consumers and doing so on the products’ own merits,” says Jason Holway, market analyst at IWSR. “Younger legal-drinking aged consumers in particular are choosing primarily new-generation no-alcohol brands not because they lack alcohol, but because of what they represent: quality ingredients, new sensory experiences and good taste.”
In Australia, non-alcoholic “whisky-like” product Claytons was popular in the 1980s – and now this latent trend is re-emerging.
“Demand for non-alcoholic spirits is strong with consumers who want to be part of the social drinking ritual without the alcoholic element,” said Sarah Campbell, research director at IWSR.
2. Cross-category brand mobility
“Successful no-alcohol brands are moving between no-alcohol categories in a way that is not always possible for regular alcohol,” said Susie Goldspink, head of no- and low-alcohol at IWSR, highlighting a number of examples of no-alcohol portfolios including Australian-born Lyre’s – spanning spirits, RTDs and sparkling wine – and US-based Grüvi with their range of no-alcohol beer and wine.
3. Aperitivo hour
“The rising importance of the aperitivo occasion is driving demand for non-alcoholic substitutes,” said Goldspink.
The global spirit and wine aperitif category, for example, grew 23% in 2021, and is expected to grow at a 5% volume CAGR, 2021-2026.
“Taking advantage of the success of the Aperol Spritz, multiple brands have launched no-alcohol versions across both the core spirit and RTD variants,” Goldspink added.
Non-alc specialist Lyre’s launched its Italian Spritz variant in 2020, followed by an Amalfi Spritz RTD in mid-2021.
4. Better for you
Non-alc products with the perception of being ‘better for you’ are innovating through the use of adaptogens, probiotics, antioxidants, nootropics and other naturally sourced ingredients.
In Australia, hemp-infused sparkling water Beyond Hemp, launched in February 2021, claims it will “restore, balance [and] hydrate” – while UpFlow Brewing Co has created a range of rehydrating sports ‘beers’ with added electrolytes for use on hot or active days.
5. Dedicated routes to market
“In the US, an increasing number of no-alcohol-specific retailers are launching,” says Adam Rogers, research director for North America at IWSR. “These include ecommerce platforms, as well alcohol-free bars and retail stores in major cities. No-alcohol products can be sold anywhere with no restrictions, including online through major retailers like Amazon. By contrast, the sale of traditional-strength spirits remains largely limited in major online retailers.”
A similar trend can be seen in Australia, prompted by the fast-growing momentum of no-alcohol products across all channels. Established retailer Woolworths, for example, embarked on a significant expansion of its range in July 2021 to exploit the growing “sober-curious” trend, and in March 2022, Dan Murphy’s opened a zero-alcohol bar, signalling its intentions to lead in that space.
“The no-alcohol market is still very much in its early growth stage in many categories and geographies, as the sector continues to define itself,” notes Goldspink. “However, consumer interest and demand for no-alcohol offerings continue to grow, propelling brands to continue investing and innovating in the sector.”