Why has the non-alcoholic beverages industry seen a boom?

More of us than ever are drinking beverages with little or no alcohol. Cutting out alcohol for health reasons, slimming down before a big holiday or trying to save money are all reasons consumers are turning to non-alcoholic alternatives. But why has this industry experienced such a boom in recent years? Business Leader investigates.

The pandemic has had two opposing effects on alcohol consumption.

As we were bound to our homes, many of us drank a lot more than usual. According to a government report, volume sales of alcohol increased by 25% at the peak of the pandemic. Yet, the inability to go to pubs and bars became an opportunity for some of us to take a break from drinking. Despite one-in-five people drinking more in lockdown, one-in-three people were making an effort to stop or had stopped drinking altogether over the pandemic, a survey by Alcohol Change UK and Opinium found.

Paul Mathew, Founder of Everleaf, a non-alcoholic aperitif, commented on the shift towards non-alcoholic beverages: “The consumer demand for great-tasting and high quality non-alcoholic and low alcoholic beverage options has increased dramatically over the last few years (sales of no & low nearly doubled from £98m in 2016, to £194m in 2020 and it looks like it’s set to continue to grow.

“From a business perspective, the pandemic was a period of strong growth for the no and low sector (particularly a few weeks into the pandemic when people realised that treating every night like a Friday night at home wasn’t going to work in the long run). Covid has seen a lot of focus on health and wellness, so no & low has fitted very well with this, along with trends in premium food purchasing (the non-alc consumer tends to spend more than average on their food) and sustainability.”

However, it hasn’t only been the pandemic that has pushed us to drink less. At the beginning of every year, thousands of people stop drinking as part of Dry January. According to Alcohol Change UK, 130,000 people took part in the event in 2021. What’s more, after taking part in the campaign seven-out-of-ten participants drink less alcohol in general, says a survey taken from the first-ever Dry Jan in 2013.

A more health-conscious nation?

You only have to look at the rise of plant-based diets to see that as a society we are becoming more health-conscious — understanding the potential negative impact of alcohol on our mental and physical health has been a part of this. For some non-drinkers, drinking less is a result of wanting to feel fresh for the next day’s plans or wanting to avoid a dreadful hangover.

Young people, in particular, are drinking less than their parent’s generation at the same age. Young people today are being forced to think about their futures in a way that previous generations haven’t had to — they are concerned about the climate crisis, being able to afford a house, and are being impacted by mental health concerns at a disproportionate rate compared to other generations. Social media has propagated a ‘toxic productivity culture’, forcing this generation to measure their self-worth based on their productivity levels — drinking increasingly isn’t a part of this new culture.

Jamie Wild, Co-founder of the Scottish non-alcoholic spirit Feragaia, said: “Ongoing changes in consumer habits have seen a continued trend in low and no-alcohol drinks. People are more aware than ever of the life they can lead without ties to alcohol, prioritising their health, and productivity and seeking more out of their existence.

“Over time the alcohol-free sector will be seen as not only a disruptor of the alcohol industry, but a positive change, and part of every drink list. Levelling the playing field so everyone can make a choice that they’re happy with can only be a good thing for both consumers and businesses, with the negative alcohol-free stigma becoming a thing of the past. Our personal mission is to help drinkers to break free from their expectations of what alcohol-free should look and taste like, creating a unique flavour profile that doesn’t seek to mimic alcohol, but instead offers a complementary way to connect with others around them.”

The desire for non-alcoholic beverages has grown so significantly, that companies such as Heineken, Brewdog, Budweiser and Peroni have all made their own version of a low or non-alcoholic beer.

Marie Fukuura, Future Growth Director, Budweiser Brewing Group UK&I said: “The no-and-low category continues to grow, and we are seeing more and more beer-drinkers look to moderate their alcohol consumption without eliminating it entirely. We know that one in 10 beer drinkers now regularly opt for an alcohol-free alternative and as a business, we are always looking at trends in the market so we can cater to a spectrum of different consumer preferences.”

Alternatives to look out for

Independent drinks businesses have also emerged, making soft beverages that replicate our favourite cocktails and mixer drinks. Sober living has grown so much in popularity, that celebrities like Katy Perry and Spencer Matthews have started their own non-alcoholic drinks companies. The industry is set to increase even more in demand, climbing 31% by 2024, a report by IWSR found.

In an interview, Spencer Matthews told Business Leader: “There’s a lot of negative connotation surrounding not drinking…it’s awkward. But not drinking is a positive life decision. So it’s funny there is still a stigma around this. I think people need an alternative to live aside full-strength alcohol in a positive way. This idea of ‘clean drinking’ developed this space that didn’t really exist. Everything was non-alcoholic, not fun and not what you want. I wanted to create ‘clean drinking’ in the same way ‘clean eating’ is a popular thing…’clean drinking’ which would be similar to the ritual of having an alcoholic beverage mixed for you at home.”

New technology and the growing appetite for alcohol alternatives have given way to Cannabidiol (CBD)-infused alcohol, which offers an alternative to regular booze while boasting potential health benefits. Cannabidiol reportedly alleviates inflammation, anxiety and pain – with physical and mental health issues an increasing concern, it’s understandable why people are turning to CBD beer instead of their usual pint.

What does the future look like?

Many in the hospitality industry feel that the initial excitement around non-alcoholic drinks will soon die down. Yet, as younger generations become more health and well-being conscious, the idea that these beverages are here to stay becomes likely. Is our desire for non-alcoholic beverages a phase? Is CBD-infused beer a passing fad? These are all questions we will have to wait to have the answers to.

Paul Mathew, Founder of Everleaf, commented: “I think we’re likely to see the exponential growth of this new category continue for the moment, particularly as more existing brands launch non-alc versions. These brands have bigger budgets and bigger reach, so in turn will grow the category’s volumes, but I’ve no doubt there will be a period of consolidation soon, as brands find their niches. Just like plants in a new forest clearing, there are generalists that will succeed first, while in time, it’s the specialists that will find successful strategies to compete! I definitely don’t think it’ll be dying out any time soon. Evolving to be part of the wider drinks industry for sure!”

Jamie Wild, Co-founder of Feragaia, said: “I think as the category grows in confidence, and more consumers are educated through positive experiences, we will see a larger market of drinking moderators moving in, sustaining the rise of alcohol-free. Innovation through product development and brand experiences will be important elements of building this confidence.”

Steph Buttery, Founder of non-alcoholic drink Chu Lo, said: “Looking at the past couple of years, the low and no drinks sector has boomed and it’s definitely not slowing down. What we’ve seen is a consumer shift in attitudes towards consuming alcohol and this is key when looking forward to future trends.

“This trend is being driven by a health conscious Gen Z who are championing experiences and good mental health practices. While alcohol will of course remain popular, low and no will keep rising, especially as the alternatives become just as good, if not better, than the originals alongside all of the health benefits of not drinking. As health is continuously put at the forefront, more people will explore low and no options, perhaps not to completely swap from alcohol but definitely switching between the two.”

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