Why Nonalcohol Drinks Are Here to Stay

For many, the “damp” or “dry” beverage choices have gone well beyond January. According to Nielsen IQ, sales growth of alcohol-free beverages increased from 0.22% of total alcohol sales in 2018 to 0.47% in 2022. Global Market Insights also predicts the no alcohol drinks category to grow to $30 billion by 2025.

“The non-alcoholic industry is simply not a trend — it’s a societal shift,” says Emily Heintz, founder of the Charleston, SC-based alcohol-free spirits, wine and beer retailer Sèchey. “Consumer demand for different options is what’s fueling the growth of the category. They’re looking for different options to celebrate, socialize and connect as adults without alcohol. And when you think about this societal and cultural shift, it all comes down to wellness.”

With more consumers gravitating towards healthier beverage options, both on- and off-premise businesses are taking note. While wine and liquor stores are beefing up their shelves with a variety of no- and low-alcohol options, bars and restaurants are adding mocktails or zero-proof cocktails to their menus.

For instance, Malibu restaurant in Fairfield, CT, boasts three mocktails on its drinks menu. The Malibu Passion, made with passion fruit, pineapple, lemon, orgeat and Coco Lopez, is priced at $6.95; Gracias Madre mixes blueberry, rosemary, lemon juice, agave and sparkling Topo Chico mineral water ($5.95); and Adios Padre uses fresh strawberries and lemon and organic Mexican agave aqua vitae ($5.95).

“The non-alcoholic industry is simply not a trend — it’s a societal shift,” says Emily Heintz, founder of the Charleston, SC-based alcohol-free spirits, wine and beer retailer Sèchey.

The menu at Honey Elixir Bar in Denver, CO, features “creatively curated ‘elixirs’ for all types of drinkers,” according to its website, offering a plethora of low- and high-ABV cocktails and mocktails for customers. The bar’s low-ABV cocktails are made with jun, which is an ancient brew fermented with green tea and honey. Blended with jun, the Ling’s Ecstasy ($12) combines sassafras, ashwagandha, tribulus, damiana and saw palmetto.

Alongside the diverse drink options, mocktail and dry bars are now popping up all over the U.S. Take AltBar in Rochester, NY, for example, which boasts “a non-alcoholic experience” on its website. AltBar’s Old Fashioned, made with Monday zero-proof whiskey, bitters, a sugar cube and a smoked orange peel has all the same ingredients a traditional Old Fashioned would have, just without the alcohol.

Making Shelf Space

The growing interest in no- and low-alcohol cocktails has wine and liquor stores making room on their shelves for zero-proof beverages. The NA category in particular has been gaining traction at Wilbur’s Total Beverage in Fort Collins, CO, says general manager Mat Dinsmore.

“It’s a category that has continuously been increasing over the last five years or so, and we’re seeing many different products come out,” he says. “Seedlip was first to market and continues to thrive. There are some NA wines like Chateau Diana that are very popular.”

Dinsmore also cites newer offerings, such as RTD four-packs with a diverse mix of products. “It’s a nice substitute for consumers who want a drink but have other things to do that night or the next day and don’t want a hangover.”

Chan Cox, owner of Chan’s Wine World & Spirits, also sees the no- and low-alcohol sector as one of the fastest-growing categories in the industry. “This is being reflected in our sales as new products are being brought in and gaining traction,” he says. “Consumers are more likely to try new items, simply because there has been a lack of options in the category.”

The market previously consisted of low-quality products that lacked diversity and taste, Cox explains. But just within the past year, the Destin, FL-based Wine World has built the category with more than 20 new SKUs.

Popular no- and low-alcohol beverages at Chan’s Wine World & Spirits include Waterbrook Clean Wines, Joyus, Parch Spirits Co., Per Se, Lyres and CleanCo. “Almost all new NA products have been successful. Even products that did not do as well still were purchased out,” Cox says.

In terms of alcohol-free beer, Athletic Brewing Co. appears to be a fan favorite. Not only is it a staple for both Dinsmore and Cox, but it was also named a Top 5 Non-Alcoholic Beer Brand by Visitor, The Best Alcohol Free Craft Beer by Liquor.com and a top contender for Food Network’s Best Non-Alcoholic Beers. The list goes on.

“Guinness is also pretty good,” Dinsmore says of the beer brand’s nonalcoholic option, which hit the market in 2021. He also praises Heineken 0.0, launched in 2019, not only for the product, but the marketing behind it as well.

Fun and Functional

Since most consumers are new to the no- and low-alcohol beverages market, they don’t know what’s good or what they should buy. Sèchey employees aim to help each customer navigate the spiritless aisles, Heintz says.

“Most consumers are looking for something that replicates the feeling that alcohol gives them or to replicate their favorite beverage,” she notes. “Typically what we do when someone walks in is ask them what they like to drink, and most popular brands have something that’s similar.”

Aside from the zero-proof drinks that Heintz can lead the customers to, if the shopper is looking to replicate the feeling that alcohol gives them, she will direct them to the functional beverages.

Food Research International defines functional beverages as “any nonalcoholic drink that provides additional health benefits due to the inclusion of any bioactive component from a plant, animal, marine or microorganism source.”

The bioactive ingredients in functional beverages can include phenolic compounds, minerals, vitamins, amino acids, peptides, unsaturated fatty acids, etc., which can be obtained from plant, animal and microorganisms.

“Functional beverages are within the alcohol-free movement,” Heintz explains. “Some beverages contain ingredients that may give you a little lift or help you sleep — it replicates similar feelings without the alcohol. It’s still a relatively new category, so it’s still in its discovery phase, but the brands that were early to the category are some of the ones in our assortment.”

In terms of alcohol-free beer, Athletic Brewing Co. appears to be a fan favorite. 

Three-Tier System Optional

For the spiritless sector, since the beverages technically don’t contain any alcohol, there’s no need for retailers to go through the three-tier system. But some still do anyway, out of convenience.

Wine World orders products from both its regular distributors as well as online wholesalers such as Faire Wholesale Market.

“We have seen that the beer distributors were the first to catch on to this trend and start offering a variety of nonalcoholic products,” says Cox. “A few of our regular liquor and wine distributors have begun to catch on as well, which is good business for them and ourselves as well.”

Wilbur’s Total Beverage also buys both directly from the producer and through wholesalers. “Traditionally we buy from wholesalers since we deal with them every week and they can have the products shipped sooner, but there’s some beverages like mixers that you can mail order and have drop shipped,” notes Dinsmore.

Sèchey’s Heintz currently purchases zero-proof beverages through three different avenues. “I either order directly through the brand, from wholesale sites that specialize in alcohol-free products or from distributors that are starting to build out their non-alcoholic options,” she says. “We decide what to buy based on customer demand, and then of course we have to taste everything and make sure we like it. The branding also has to look great.”

While the convenience of ordering straight from the producer can be tempting, it has its drawbacks. Both Cox and Dinsmore note the increased cost of shipping when there’s no middlemen involved. “The shipping kills you — it can get pretty expensive,” says Dinsmore.

Demand for no- and low-alcohol beverages is not expected to slow anytime soon.

“It is truly showing you how you must change with the industry,” says Cox. “Many of our customers who we might not have at all simply because they don’t drink now have many options in every subcategory of NA products. The non-alcoholic category is eliminating the alienation that one might feel in a social setting for not drinking.”

Dinsmore sees the category continuing to grow, “especially with Millennials who are looking to not drink. Now they have other substitutes,” he says. “You’re also watching some Boomers grasp it because their body doesn’t handle alcohol the way it used to, so it gives them an alternative to what they’ve been doing for the last 50 years.”

Agreeing with both Cox and Dinsmore is Heintz, adding that the wellness aspect will help continue to boost the category. “It’s a wellness trend, so as people continue to look at their overall health and wellness, alcohol is just one level of that,” she says.

“I compare this to the early days of indie beauty, clean beauty and thinking about what we put on our skin,” Heintz says.

“Now, we’re thinking about what we’re consuming. The alcohol category speaks specifically to wellness and as people continue to choose options over traditional alcohol, we see this category continuing to grow.”

Krystina Skibo is the Trade Managing Editor at Beverage Dynamics. Reach her at kskibo@epgacceleration.com. Read her recent piece, Vodka Trends in 2024.

The post Why Nonalcohol Drinks Are Here to Stay appeared first on StateWays.

For many, the “damp” or “dry” beverage choices have gone well beyond January. According to Nielsen IQ, sales growth of alcohol-free beverages increased from 0.22% of total alcohol sales in 2018 to 0.47% in 2022. Global Market Insights also predicts the no alcohol drinks category to grow to $30 billion by 2025. “The non-alcoholic industry
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