1. The category is growing (and here’s the figures to prove it)
All the noise around Dry January is very exciting, but does that really equate to growth and long-term opportunities for the no and low alcohol category? Let’s take a look.
Dry January started out as a niche challenge in the UK a number of years ago. But this year one in seven people were expected to take part; and what’s more, a similar number of Americans were expected to take part this year.
This increased and broadened global interest illustrates the continued interest reducing alcohol intake and a whole new potential consumer base for low and no alcohol brands.
But does this actually translate into non-alcoholic beverage sales? Early indications say yes: UK supermarket Tesco has already released data showing that its Dry January sales are up 15% on the prior year: with record demand for low and no alcohol beer.
Skeptics would (rightly) argue that Dry January alone can’t be taken as a hard-and-fast guarantee of long-term category growth. But new data from IWSR, released this month, shows the category is growing year on year.
Taking a broad, multi-market and multi-year view, its data puts the value no and low alcohol category in the 10 key markets as nearly $10bn in 2021: representing sturdy growth from a total of $7.8bn in 2018.
2. Innovation is broadening beyond new ingredients to new categories
Dry January is naturally a great time to launch a new non-alcoholic beverage, and so this month’s innovations can help show us where the no/low alcohol category could be heading next.
No and low alcohol drinks have always been about appealing to a healthier mindset: and so adding in fortification or functional benefits is proving to be a natural direction of travel for the category.
Corona has launched Corona Sunbrew 0.0%, containing 30% of the daily value of vitamin D in a 330ml serving. Fellow new launch All the Bitter is crafted using beneficial plants like dandelion root, burdock, lemon balm and milk thistle seed: with the bitters designed as drinks that may support digestion, liver health and detoxification, according to the brand.
Beer giant AB InBev has gone even further, however, eying up the opportunity for non-alcoholic beer to take on a new category.
It’s just announced its non-alcoholic Budweiser energy drink launch in India: calling Budweiser Beats a ‘natural progression’ in the non-alcoholic category. It believes it can capture 10% of the local energy drink market within two years.
We’ve already seen non-alcoholic beer presented as an isotonic drink for use after sports; we’re now seeing an increasing number of fortified or functional non-alcoholic drinks; and opening up the energy drink space represents a completely new take on the categories.
Expect low and no alcohol to push more category boundaries as the year progresses.
3. Getting organized
One of the challenges for low/no brands is an absence of universal regulations or industry standards: particularly when growing entrepreneurs are looking to expand abroad only to find the very definition of a ‘low’ or ‘no’ beverage is completely different.
Responding to such challenges – as well as aiming to promote the category in general – is the newly-formed Adult Non-Alcoholic Beverage Association (ANBA) in the US.
Already consisting of more than 40 brands across the spectrum of alcohol alternatives, the association sees plenty of opportunity to help carve out the category as a solid proposition.
Similarly, in the UK the Low2No Bev show debuted in June last year to create a dedicated trade event for the category: featuring everything from big name brands to up-and-coming entrepreneurs and a conference program with the latest insights.
The show, run by BeverageDaily publisher William Reed, returns in June 2022 as a one-stop shop for anyone involved in the industry.
4. Understanding the consumer better
Perhaps one of the biggest questions for brands is understanding when and where people are turning to no and low alcohol drinks. Are they a simple replacement for alcoholic drinks in any occasion, or is the picture more complicated than that?
According to IWSR research released this month, no and low alcohol products are finding most success as an accompaniment for meals or as a drink to unwind.
Noting that entertaining at home is set to continue with the pandemic, Bacardi has created guides for the ever-growing number of home mixologists to help them discover new innovations and ideas for no and low cocktails: ranging from glassware to garnishes.
Meanwhile, millennials and higher-income consumers are also turning to no/low products to unwind or post-exercise, according to IWSR.
Tackling the late-night party occasion, however, is a harder sell, it suggests. Its study found that only 5-6% of no/low consumers drink these beverages after 11pm: “Many no/low brands targeting late night partying and dark spirits occasions have found it tougher to gain consumer acceptance.”
5. Learning how to compete with alcoholic drinks
Dry January has traditionally been about giving up alcohol for the month. But in reality, this isn’t what the no and low alcohol category is about: drinkers often flit between traditional full ABV products and lower or no alcohol drinks.
IWSR figures suggest 43% of adults substitute low and no alcohol products in place of full-strength alcohol for certain occasions, rather than abstaining from alcohol overall. The majority of no/low drinkers also enjoy standard strength alcohol too – only 17% of people reported they are drinking no/low to avoid alcohol completely.
Primer Hard Seltzers, which launched just before Christmas, sees an opportunity to cater for this trend by packaging a variety of ABV drinks within the same multipack.
The lesson, of course, is that low and no brands are not catering to a niche group of consumers for one month: rather, products must be able to stand up to full strength counterparts all year round if they’re to be a success.