Anybody who has visited a supermarket in the last years has noticed: “spirits” that are very low in alcoholic content or completely alcohol free have taken an increasingly large space on the shelves. This reflects the increasing demand of consumers for a tasty drink that won’t have consequences for their health. The spirits industry has listened and a plethora of bottles boasting little to no alcohol but still being categorized as “spirits” has made its appearance in the last years.
2020 was a boom year for this category of products. According to No- and Low-Alcohol Strategic Study 2021 by the IWSR Drink Market Analysis that’s what happened in the top 10 drinking countries: Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, the UK and the USA. These countries alone make up for over 75% of the total no and low alcohol spirits’ market worldwide, so they are quite a comprehensive sample of how overall the market is going.
How much of a boom?
The report says only 3% in 2020, which doesn’t seem much at first. But the forecast is an increase of the total volume of these “healthier” spirits of +31% by 2024, with a volume consumption of spirits of any kind raising only about 1% last year. It is clear then that within the larger spirits category, the no and low alcohol ones are the one increasing the most. Way above the average.
The spirits low in alcoholic content aren’t the main share of the larger market of non-alcoholic beverages. Only 0.6% of the market is made of these spirits, but it grew in sales a whopping 32.7% in 2020 alone. It is a tiny share, but one that is expected to grow at a two digits pace for the next few years.
The largest raise in 2020 was not because of the no and low alcohol beers: while being the largest category within the no and low alcohol spirits one, with a 92% of all the sales, it grew only by 0.5% between 2019 and 2020. Very little, then. Beers, and ciders, that have no alcohol in them appear to have plateaued. Unlike wine, which instead increased to a good 4.9% last year. We can say the same for the ready-to-drink (RTD) segment: free alcohol bottles rose 10.2% in 2020, mostly thanks to a boost in sales in Japan.
2020 appears to have shown that the largest margins of increasing are to be expected in the proper spirits or cocktails segments of the no and low alcohol sector. Which is nothing to be surprised about, as these products became popular after the no alcoholic counterparts in wine and beer. There’s still a lot of margin for growth, therefore.
Not all markets grew alike. Against the trend of general growth was Germany, which had a nearly 5% drop in consumption in 2020. The second largest market for no and low alcohol spirits is the USA, which instead registered an enormous increase of 30% last year. All the top 10 markets are expected to grow by 2024 though, with most of the volume increase being thanks to Germany, USA and Spain alone. Noticeably, South Africa is expected to see the highest compound annual growth rate volume from 2020 to 2024, at approximately 16%. That may be thanks to the quite low current volume of the market segment in the African country.
“No alcohol” vs “low alcohol”
A distinction must be done. Consumers enjoying “low alcohol” spirits may be driven more by a need to reduce their alcohol intake or to avoid the negative consequences of binge drinking, but still want to enjoy alcohol in its original form. They aren’t willing to compromise much in taste, only preferring to reduce the hangover after drinking large quantities of spirits.
The “no alcohol” crowd may be driven by more health-conscious reasons, or dieting. Completely giving up alcohol may be due to more serious health conditions that force those people to accept a greater difference in taste of their beloved spirit compared to the “normal”, alcoholic versions. Dieting alone may be a big enough reason for many to remain sociable with friends when drinking (at home these days) while not doing without their fitness objectives.
The IWSR report tells us that this second category has driven the increases of the overall market in 2020. The non-alcoholic subcategory increased in volume by 4.5% from 2019 to 2020, while the low-alcohol saw a drop of 5.5% in the same period. The IWSR noticed how low-alcohol products like “spirits” and RTD are more popular with mindful drinkers in markets like the US.
In total, the “low alcohol” sub category is much smaller than the “no alcohol” one. Yet, notwithstanding the drop in volume in the last 2 years, it is expected to show a vigorous growth in the close future.
The IWSR report delved into the different reasons that people choose to consume no and low alcohol spirits as well. The most popular way to drink these spirits is at home, unsurprisingly, given the pandemic effects still enduring. A large percentage of no and low alcohol drinkers, 64%, prefer to consume those spirits when relaxing at home. An increasingly large part of them is worried about having these spirits to taste exactly like their alcoholic counterparts. Most of no and low alcohol consumers choose to drink these alternatives to avoid the effects of alcohol consumption, which is a data that shouldn’t surprise anybody. More than half have no direct preference between the no and low alcohol spirits (58% of the interviewed), claiming that they happily switch between one or the other depending on the occasion. Only a minority, 14%, is strictly drinking only no alcohol at all spirits.
All these drinkers are willing to pay increased prices for their no and low alcoholic spirits if that means having a better tasting experience. This is an important clue for spirits companies that would do well in focusing on conserving all the taste of their products in these versions that do nearly without alcohol. Consumers are more and more conscious of the quality of the food and drinks they choose to buy, something that we have seen in most similar market’s segments in recent years. Being healthy shouldn’t mean renouncing taste.