The alcohol-free industry has exploded during the pandemic. Where does it go next?


Delete what you have heard about people who drink more during the pandemic. Staying confined to the home, many alcohol drinkers began to cut alcohol, seeking instead a dram in the ever-growing non-alcoholic category.

Kim Cox, senior vice president of account development at NielsenIQ, notes that demand for soft and low-alcohol drinks has exploded over the past year. “In fact, in the past 52 weeks alone, off-premises sales reached $ 3.1 billion in low-alcohol and non-alcoholic wine, beer and spirits categories (up from $ 291 million in the year last).” The market is still small – less than 5% of household penetration, “but an interesting area to watch – non-alcoholic drinks are outpacing the growth of low-alcohol drinks.”

Some defenders of the category are not surprised. “If the alcohol industry is a billion dollar industry, why can’t the non-alcoholic industry be a billion dollar industry? says Drew Davis, the founder of the alcohol-free bar Gem.

The confines of Covid-19 have become the perfect incubator for the budding category. “NA trends have already been on the rise globally for the past seven years,” says Dave Deuser, CEO of Sales and Marketing, Radeberger Gruppe United States. “Previously, nonalcoholics were about situations where you can’t drink – designated drivers, pregnancy, recovering alcoholics, etc. Today’s consumer says he can drink alcohol, but that he just doesn’t want to. “

He finds that “the category is led by younger consumers, most with families, who are more aware of the choices they make and what they put into their bodies. It has become trending and cool among the peers. This is further fueling the plethora of new choices in the market, with the opening of storage space. “

“I live in New York and, in my neighborhood alone, two non-alcoholic spirits stores opened this year,” says Elizabeth Staino, Director of Strategy and Innovation at Importer-Distributor. Hotel & Cie.

“When we opened SIPPLE, the first alcohol-free bottle store in Texas, we thought it would take a while to get off the ground,” says owner Danny Frounfelkner. “We had no idea what demand we would see from people in their early 20s to mid-70s. Our opening weekend was packed and people are so thankful that a store like ours exists.

According to Nielsen, NA sales totaled $ 331 million (up + 33.2%) last year, while low-alcohol sales rose 8.1% to $ 2.77 billion. of dollars. Brands saw a 315% increase in dollar sales of low-alcohol and non-alcoholic beverages.

By category, NA beer and cider increased 31.7%, wine increased 39.4% while non-ABV spirits saw sales increase 113.4% in the past year.

Who drinks non-alcoholic beverages?

Interestingly, 78% of non-alcoholic beverage buyers also buy alcoholic beer, wine, or spirits – moderation is a driving force (Nielsen).

“The founding of the movement is rooted in the desire of young Americans to lead healthier lives,” said Bill Meissner, president and chief marketing officer of Splash Beverage Group. “It’s a macro trend that we don’t see fading away.”

“The way people choose to consume alcoholic and non-alcoholic beverages is changing so quickly and that hard line in the sand between drinkers and non-drinkers is eroding quickly,” says Mitch Cobb, co-founder of Upstreet Craft Brewing and Balance, a beer without ABV. “We see this a lot in our taprooms and retail stores. People will come for an after-work beer followed by two NA beers or drink NA beer during the week and traditional craft beer on the weekends, or buy both four-packs of IPA and NA beer for their party.

New Wave Soda CEO Nat Noone found that the majority of the brand’s customers are drinkers between the ages of 24 and 35, people who take a night without alcohol. “The new generations are a lot smarter than me at this age, which is encouraging. ”

Lynnette Marrero, who designed the Aplos hemp-infused NA Spirit flavors, noted that their primary customers are “women aged 35 to 55 – highly educated and high disposable income for whom. Aplos replaces their ritual of nocturnal wine.

Deadly KombuchaBecca Schepps notes that she has seen a huge increase in the number of people choosing their kombucha over wine, with drinkers pouring it into a wineglass or a pilsner glass, “so that they can have that drinking experience.” . In that vein, the Canadian company Silver Swallow recently released an alcohol-free kombucha that mimics champagne, a closed cork bottle and all.

“I’ve always brought non-alcoholic beer to my bars, and there’s always been a demand for it,” says Julia Momose, co-owner of Kumiko in Chicago, who prefers Japanese company All-Free by Suntory. “Now the people who choose the low proof and the zero proof range from people in the industry like bartenders and chefs to the younger generation of aspiring drinkers. My friends drink these beers as an afternoon treat.

“We’re even seeing historically dry sites promoting this segment to their customers for additional revenue,” Meissner explains. “Alcohol-free alternatives increase the size of the pie, not just divide it.”

Explosion Open category

One of the biggest drivers in the category? Increased innovation. “Although alcohol-free beer has been available to consumers for many years, there are now more options than ever before,” says Neilsen’s Cox. “These new innovations better meet the health and well-being desires of some consumers, such as lower blood alcohol levels, less sugar, fewer calories or sustainable sourcing practices.”

There are also the technical aspects. “Canning machines are much smaller and cheaper than they were 10 years ago,” says Matt Vincent, owner of Ska Brewing Co., and Ska Fabrication. “This opens up a lot of options for beverage startups to get their product into the hands of consumers at a much lower cost to determine market viability. Meissner believes that it is these startups, and not the major beverage players, that are driving the category forward. “Big brands are going into mass offerings, but the innovation we’re seeing is developing alcohol-free, small-batch, artisanal and flavored options. “

“We have noticed a big wave of alcohol-free spirits innovations entering the space specifically in the high-end price,” said Hotel & Cieit’s Staino. “What surprises me is the sophistication of the flavors. You find artisanal products made with high quality ingredients which give bold flavors very similar to artisanal spirits.

Jonathan Lambrianidis, the founder of the alcohol-free podcast TippleZero, even credits innovations in materials. “Beer brewers now regularly use kombucha yeast and specific yeast from companies such as NEER who are innovating in yeast strains to suit the brewing of non-alcoholic beer. “

As consumers increasingly seek out non-alcs, bartenders and on-site workers have had to do the same. “Mocktails have been around for a while, but bars and restaurants take them much more seriously,” says Stacey Swensen, bar manager at Lodi, Estela and Altro Paradiso. “They are now an integral part of our beverage program. Customers who don’t soak up appreciate that we put more thought and creativity into our alcohol-free offerings. “

But not all locals want to add non-alcs to menus. “We are still surprised that some retailers and food service operators are reluctant to add high quality non-alcoholic beverages to their alcoholic offerings,” said Michael ZonFrilli, CEO of Bambucha Kombucha. “Obviously the costs are higher than that of a soda or iced tea, but consumers are starting to expect and demand the drinks they are happy to consume, even without alcohol. . Beverage companies like Coke, Pepsi and Molson Coors

FAUCET
have invested in or acquired functional beverage producers because they, too, are seeing consumers turn to non-alcoholic beverages that consistently deliver a healthier and more satisfying drinking experience.

Where does the category go? Meissner notes that as the pandemic became the norm in 2020, “several of our non-alc-anchored brands with existing distribution have started to experience triple-digit growth,” but as consumers move into somewhat normal life, “we see it setting in a bit.

“People literally crave (no pun intended) healthier alcohol-free options,” he continues. “By removing the unnecessary archaic stigma surrounding not drinking, we have found that interest, support and demand are increasing day by day. At Sipple and across this industry, we’re changing the conversation from why don’t you drink To what are you drinking?


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