As the non-alcoholic beverage industry continues to expand, it leaves many brands wondering: what made non-alcoholic beverages trend? Despite their recent popularity, non-alcoholic beverages like beer, wine, spirits, and other ready-to-drink (RTD) options are not new. These drinks, generally defined as an alcoholic drink with an ABV (alcohol by volume) of less than 0.5%. The category dates back to the 1930s prohibition era, though commercially successful products didn’t arrive until the late 1970s.
Are non-alcoholic beverages trending?
The simple answer is, yes. The demand for non-alcoholic drinks and mocktails has remained strong throughout 2023 and should continue into 2024. Over the past two years, non-alcoholic beverages have been the third-fastest-growing category in the US. Additionally, Numerator expects the category to continue growing by another $500 million in 2024. The reasons behind this success vary, including factors related to health and wellness, new social occasions and distribution channels, and a growing emphasis on social responsibility.
Why are consumers shifting to non-alcoholic beverages?
Non-alcoholic beverages help consumers with health and social goals. With the start of a new year, many consumers take on a “new year, new you” mentality. As the calendar flipped to 2024, Numerator found that over 1 in 3 Americans made New Year’s resolutions to focus on their health. A majority of consumers planned to lose weight, eat healthily, or improve their diet.
Yet, the trend towards health and wellness didn’t just stop at making New Year’s resolutions. Overall, 34% of consumers are choosing their physical health over mental health, an increase of 13 percentage points from the prior year.
The trend towards a healthier lifestyle has lined up well with the better-for-you messaging that non-alcoholic beverages offer drinkers. One in four non-alcoholic beverage shoppers said they purchase the category for general health reasons. “The main reason I consume non-alcoholic beverages and more specifically non-alcoholic beer is because my family has a history of heart disease, “said David, a non-alcoholic beer buyer living in California, in one of our qualitative interviews. “I found non-alcoholic beer, [which] still had the same great taste of the brands that I preferred and was consuming beforehand.”
David went on to share additional benefits of consuming non-alcoholic beverages, “Now with the non-alcohol aspect, I don’t have to worry about being out with friends and jumping in the car after that gathering and getting home safely. That’s something that I found is a happy medium. Still get the great tasting beer flavor but without the alcohol aspect.” In interviews with over a hundred purchasers, one-third of them mentioned that non-alcoholic beverages allowed them to participate in social activities without concerns about transportation.
Others use the beverages to enjoy social activities while staying sober. “I choose non-alcoholic beverages when I go to social events. I don’t want people to ask me why I’m not drinking, so I like having something that looks like alcohol,” quoted a 41-year-old mother living in the Midwest. Brands looking to enter the space should look to use marketing and messaging to highlight these inherent benefits.
Why should beverage brands enter the non-alcoholic category?
Non-alcoholic beverages provide broader benefits for brands. Emerging brands have been the most obvious benefactors in the success of non-alcoholic beverages. However, established brands can also find benefits. BevAlc giants such as Budweiser and Heineken can build resiliency in their portfolio through two ways. The first is through greater retail distribution. The second is by extending consumption occasions.
Local and state legislation and restrictions limit the retailers that carry many adult beverage brands. However, brands can extend their reach by offering non-alcoholic variants that are easily found in the regular beverage aisle of naturals-focused grocery stores or can be shipped-to-home from online retailers. Numerator’s purchasing data shows new shoppers of non-alcoholic beverages are entering the category through Amazon (77% more likely), Sprouts (53%) and Whole Foods (16%).
Non-alcoholic beverages are helping buoy the slow seasons of alcohol beverages while also growing peak seasons. Dry January started as a UK initiative in 2012 focusing on reducing alcohol drinks and has since gained support. Numerator found in November 2023, over 1 in 3 (38%) US consumers planned to participate in Dry January 2024. The non-alcoholic beverage category has allowed for people to enjoy beers and wines without any of the alcohol content.
Conversely, non-alcoholic beverages have helped extend consumption of beer- and wine-like products during the summer months. In consumer interviews, several stated these drinks are a way to cool off and have something refreshing. In fact, non-alcoholic drinks have been largely net new for the alcohol category as a whole. Nearly two-thirds (64%) of non-alcoholic beverage growth in 2023 was driven by consumers purchasing the category as an addition to alcoholic beverages rather than a replacement.
Which non-alcoholic drinks are trending?
Athletic Brewing is a non-alcoholic beverage brand that is becoming a home run for affluent Millennials. Founded by Bill Shufelt and John Walker, Athletic Brewing is found in over 2.6 million US homes. The brand has seen major success by growing household adoption of over 1 million homes in 2023.
Who is fueling this success? Athletic Brewing has built a strong consumer base among one of the fastest-growing demographics in the industry: affluent Millennials. With household incomes over $125,000, this segment of Millennials is expected to contribute $51 million to growth in 2024. This is following a seven-fold sales increase from 2019 to 2023. Other brands growing with affluent Millennials include Penn's Best and Samuel Adams. Both brands have experienced notable market share growth in the non-alcoholic beverage sector.
Furthermore, Athletic Brewing remains attuned to industry trends by embracing digital technology and advancing social initiatives. Ahead of Dry January, the brand enhanced its app to enable consumers to monitor their alcohol intake, promoting more mindful consumption. Numerator is expecting 1 in 10 US consumers to start leveraging mobile apps as a way to track their physical and mental health in 2024.
What is the outlook of the non-alcoholic beverage industry?
Non-alcoholic drinks, for the time being, have a large roadway to continued growth. One area of growth is expanding geographic and channel distribution. Non-alcoholic beverages have managed to make significant inroads in many US regions except for the south and mid-Atlantic regions (the latter is projected to potentially add another $28 million to the category in the next year). Further distribution into on-premise channels such as bars, hotels, airliners and clubs could further drive growth and increase adoption.
Additionally, added innovation into the category could drive and continue growth. For many consumers, one of the trade-offs to not drinking alcohol is that the price of the drink is hard to warrant given the lack of alcohol. Brands will need to consider ways to create a value proposition to prevent the category from growing only through promotions. One such way is by adding functional benefits and ingredients. Whether that is caffeine, vitamins or electrolytes, nearly 1 in 4 consumers said functional benefits would drive a purchase. Another opportunity could be through cannabis and THC usage. In Numerator's latest report, Gen Z was less likely to purchase alcohol drinks at retail and more likely to engage in other substances such as cannabis.
If you want to learn more about the rise of non-alcoholic beverages, watch our webinar featuring these insights. To get more insights connected to your brand and trending topics, contact your Numerator representative or get in touch with our team today.
