No/Low Consumers: Understanding the Opportunity

In the UK and US, no and low-alcohol drinks are replacing regular-strength beverages, particularly in social settings.

Increasingly conscious of  their health and wellbeing, modern drinkers are open to changing what they eat and drink without compromising on the ambiance and experience associated with a relaxing dinner or a drinks party. Instead, they’re exploring the increasing variety and complexity of no- and low-alcohol drinks.

In the past, the choice of no/low drinks was often restricted to soft drinks, fruit juices or water, but in recent years, the drinks industry has seen a significant rise in craft producers and brands committed to developing no/low drinks that offer an elevated taste or experience.

The familiar sense of ceremony and occasion is preserved while the level of alcohol is reduced.

Many consumers are open to exploring new and challenging flavours developed by innovative producers and bartenders. It’s a trend offering exciting opportunities to creative entrepreneurs and ambitious craft producers in the drinks sector.

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Who is buying what and why, in the US and UK?

Eight out of ten bar managers in Los Angeles think non-alcoholic drinks are part of a growing trend. The anecdotal evidence we’ve seen supports this, both in the US and UK.

We commissioned two agencies specialising in global drinks trends, IWSR and CGA, to examine the market closely. These studies illustrate how consumers are increasingly choosing no- and low-alcohol products as part of their relaxation and social drinking lifestyle.

Numbers in this article are drawn from that research.

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Raise a Glass to the Occasion: The US No/Low Consumer

The US no/low alcohol market is in its infancy, at just 1% by volume. But it’s growing, with a 31.4% increase in 2020-21, and plenty of predictions that upward movement has only just begun. Over half the most influential bartenders in the US say this trend will increase in the year ahead.

As more Americans discover alternatives to alcohol  available to them, a growing number choose them. Their motivations include:

• Wanting to drink socially without the overhead that comes from alcohol.
• An openness to experimenting with new options.
• Abstaining, for health or religious reasons.
  
  

Many are opting, event by event, to go with full strength alcohol or to take the no/low route - for that specific occasion.

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What US consumers are buying

In 2020-21 the volume of regular-strength beer/cider sales in the US fell by 2% and low-alcohol beer/cider volumes dropped by a significant 13%. However, sales of no-alcohol beer jumped by 42%.

Of Americans choosing to purchase no- or low-alcohol versions of traditional drinks:

• Over half (55%) are buying beer or cider.
• 39% are choosing cocktails or mixed drinks.
• A little over one-third (35%) have bought no/low wine.
• Just 30% have purchased spirits.
  
  

However, that last category is growing significantly, with an 82% increase in sales by volume of no-alcohol spirits in 2020-21. This number is particularly high because volumes are so low, but it’s still a strong indicator of the overall trend.

Almost one in four of no/low buyers shop for low-alcohol products at least weekly. The number buying non-alcoholic products with the same frequency is slightly lower, at 32%.

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Why US consumers choose to go no/low

Americans choosing to buy low- or no-alcohol drinks do so from a mix of motivations. Our research tells us the top drivers are:

• They like the taste (36%).
• They want to limit the effects of alcohol (31%).
• To reduce alcohol intake in general (30%).
• To stay in control (28%).
  
  

Some no-alcohol products contain a trace amount of alcohol, less than 0.5% ABV. For many this isn’t a problem, but 27% of buyers avoid products with even this low level of alcoholic content.

Around a quarter of all no and low buyers abstain from alcohol entirely, either for religious or medical reasons.  

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Why US consumers reject no/low

When US adults who don’t buy no- or low alcohol drinks were asked why not, top reasons were:

• Prefer to drink other types of beverage (33%)
• Prefer full-strength alcoholic drinks (29%)
• Don’t generally like the taste (19%)
• They are too expensive (6%)
  
  

Encouragingly for producers, relatively few of those who don’t choose no/low products have issues with price (6%) or quality (5%).

Age plays a part in consumers choosing no/low drinks. Nearly half of those who don’t buy them are 55 or older.

Consumer Types Explained

Our research put people into one of four different categories, to explain their relationship with no/low beverages.

• Substituter: ‘I typically drink no- and low-alcohol beverages on certain occasions, and full-strength alcoholic beverages on others’
• Trialler: ’I normally drink full-strength alcoholic beverages and have very occasionally tried a no- or low-alcohol beverage’
• Blender: ‘I typically switch between no-alcohol, low-alcohol and full-strength alcoholic drinks in the same occasion’
• Abstainer: ‘I avoid alcohol completely’
  
  

Preferring the pints: The UK No/Low Consumer

Two in three no/low consumers in the UK buy beer or cider, making this by far the dominant choice in the no/low market. In 2021 their sales, by volume, were 2.8% of the total for that category, with volume growth at 15% for no-alcohol beer/cider for 2020-21.

We believe non-alcoholic beer is well set for future growth. Historically dominated by a few brands, and often associated with a less satisfying taste experience, the category has recently become more diverse, offering betterchoices and tastes. Alcohol-free beer on draught is being rolled out.

UK buyers of no and low products are looking for drinks they can relax with at home, or drink socially with friends, typically in the evening.

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What UK consumers are buying

No- and low-alcohol spirit sales grew by a massive 120%, by volume, in 2020-21. While market penetration is low, at 0.9%, this number captures growth in both quality of new products coming through and people’s appetite to move away from traditional choices.

There’s a strong bias towards beer and cider in the UK. Of adults buying no/low drinks:

• 2/3 (66%) buy beer or cider.
• Over 1/3 are wine drinkers (38%).
• Around a quarter (27%) purchase cocktails or mixed drinks.
• With a similar number (26%) selecting no/low spirits.
  
  

No- and low-alcohol wine buying is growing rapidly in the UK, with volumes of no-alcohol up by 32% in 2020-21. Sparkling products drive this, being closer to the taste and mouthfeel of regular strength wines than other types of wine.

Almost three in ten no/low buyers purchase at least once a week. A higher number (35% for no-alcohol products) are classified as occasional buyers.

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Why UK consumers choose to go no/low

Many UK adults want to reduce their alcohol intake. That’s their top reason for buying no- or low-alcohol drinks (38% of purchasers). This reflects an increased concern for health and wellness.

Health isn’t the only driver behind the moderation trend. When we asked people what led them to increase how much no/low they drank, they said:

• Trying to reduce my alcohol intake (40%)
• Trying to be healthier (35%)
• Better-tasting options (28%)
• More availability (25%)
• Lifestyle change due to Covid-19 (25%)
  
  

There’s a distinct trend towards younger, urban consumers increasing consumption of no/low products, while enthusiasm among the 55+ group is waning.

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Why UK consumers reject no/low

We believe many of those choosing not to buy no- or low-alcohol drinks represent a future opportunity. Many of today’s no/low consumers were in a similar position to them until recently.

Our research show key reasons why UK consumers don’t buy no- or low-alcohol beverage are:

• Prefer full-strength alcoholic drinks (23%)
• Too expensive (21%)
• Prefer to drink other types of beverage (20%)
• Lack of choice (17%)
• Generally don’t like the taste (15%)
  
  

Price and taste are significant barriers, unlike the US, where these numbers are below 10%.

The overall trend is more positive, with half (53%) of consumers saying they are likely to trial new low- and non-alcoholic brands in the future.

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It’s out of the bottle: The growth of no/low consumption

Our research shows uptake of no- and low-alcohol drinks is happening around the world. A cultural shift is underway, but not at the same rate everywhere. Evidence suggests the US is leading the way, although not uniformly.

For example, enthusiasm from consumers and venues seems to be higher in Los Angeles than New York. In LA, 8 out of 10  bar managers we interviewed think non-alcoholic cocktails are part of a wider trend, while in New York 7 out of 10 think the opposite.

Increased media mentions and online searches are measures of growth offering support to the no/low trend. Online searches for ‘mocktail’ are up, as are uses of ‘non-alcoholic’.

Our research suggests growing numbers of drinkers of regular-strength alcohol are experimenting with, and often continuing to consume, no/low drinks.

Many of those surveyed were relatively new consumers of no- and low-alcohol products, with well over 10% began consuming in the last twelve months, and similar numbers being recruited during the previous two years.  

Ecommerce makes reaching new customers easier. People increasingly conduct research online before buying, and lighter regulations around shipping no/low products, particularly in the US, make it more attractive.

We think the higher end of the market offers significant opportunities. When asked their feelings about no/low products, consumers are positive about taste and quality however, sentiment is negative about luxury and brand.

In short, they like the drinks but aren’t excited by the branding. This implies an opportunity for brands to stand out with a premium offer.

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Distill Ventures - navigator for acceleration of new drinks brands

Distill Ventures is actively investing in brands which fulfil the need for more non-alcoholic drinks brands and is always seeking new investment opportunities in this area.

As specialists in helping brands grow into this exploding market, we keep a close eye on how tastes and trends are changing. Learn more by reading our take on non-alcoholic spirits in 2020 and beyond.

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