Distill Ventures, the independent drinks accelerator funded by Diageo, has published a mini whitepaper on the Non-Alcoholic sector. Titled ‘One for Every Occasion,’ the piece outlines the emerging segments within Non-Alc spirits, with an added focus on the functional drinks space, and it brings together studies conducted by leading trends and insights consultancies including Nielsen IQ and IWSR.
Consumers have embraced Non-Alc, whether it be beer, spirits, or ready-to-drink, as they seek greater choice, new experiences, and products that fit within their evolving lifestyles. Once a fledgling segment, Non-Alc spirits have firmly established themselves at bars, restaurants, and retailers.
In fact, the Non-Alc market continues to grow, and now the No- and Low-alcohol category has a market value of just under US$10 Billion globally, according to the IWSR Global No- and Low-Alcohol Strategic Study 2022. That same study also found that the No- and Low-alcohol category is projected to have a compound annual growth rate (CAGR) of 8.0% from 2021 to 2025, adding 126.4 million cases globally.
Emerging segments of the Non-Alc market include clear and dark spirits replacements, distilled botanicals, aperitif and digestif alternatives, and ready to drink (RTD) alternatives.
Functional and wellbeing beverages are also emerging as popular in the Non-Alc segment. In fact, 92% of surveyed consumers are interested in drinks containing functional ingredients according to the Ritual Beverage Company January 2022 Consumer Survey.
These drinks focus on the “with” versus “without” of this category by adding adaptogens, nootropics, caffeine, vitamins, CBD and more. Many of these functional ingredients claim to boost concentration or mood, give sharper focus, aid restful sleep, aid digestion, provide stress relief, give an energy boost or boost relaxation, and more. (Note: Benefits do need to be substantiated). These additional ingredients and benefits appeal most to health and wellness-conscious consumers who look for unique flavor experiences with benefits.
Distill Ventures’ whitepaper says, “As the Non-Alc segment transitions away from language focused on the absence of alcohol, consumers are beginning to focus on products that claim to offer additional benefits or functionality, beyond simply a lack of alcohol.”
Aside from perceived benefits, consumers are also turning to Non-Alc as a way to join in social occasions without restriction or compromise on flavor or presentation. According to the whitepaper, “Non-Alc’s evolving focus on ‘with’ – meaning new flavor experiences and added ingredient benefits – allow these products to show up in a larger variety of moments throughout the day, while also fitting into the traditional cocktail, spritz, and dining occasion.”
Most consumers are flexible about when they turn to Non-Alc as well, with many non-Alc consumers identifying as moderators rather than abstainers. According to the IWSR Global No- and Low-Alcohol Strategic Study 2022, 83% of consumers choose between No/Low and full-strength drinks based on the occasion. In addition, the Ritual Beverage Company Consumer Survey from January 2022 found that 97% of Non-Alc drinkers had consumed alcohol in the past 90 days.
“We're entering a new chapter in Non-Alc's journey,” said Gareth Bath, Managing Director of Distill Ventures. “Since 2015, pioneering Non-Alc founders have set the benchmark in liquid innovation, and thanks to their vision and talent we now have one of the most exciting, vibrant drinks landscapes out there. Far from being a one-dimensional category offering just straight spirit replacements, we're seeing a new wave of brands, products, and innovation that ensure those opting to abstain from alcohol have a wide array of choices suitable for any occasion.”