The market for non-alcoholic beverages is growing. According to Euromonitor, one of the world’s largest market analysts, the global market size was about 20 billion or 200 million dollars in 2023, which is double what it was five years ago. Last year, the sector grew by about 20 percent, while the rate for alcoholic beverages was only 8 percent.
The demand for non-alcoholic beverages is not limited to January. Many of the health-conscious younger generation are avoiding alcohol throughout the year. A survey by Gallup, a US-based multinational analyst and advisory company, showed that the alcohol consumption rate among US citizens aged 18-34 has dropped from 72 percent to 62 percent in the last two decades. Those who drink alcohol are also drinking less.
In such a situation, leading alcohol producing companies are focusing on producing non-alcoholic products. For example, Diageo, the largest alcohol producing company in the US, spent two years developing an alcohol-free version of its Captain Morgan Spiced Gold rum. Even the famous French multinational LVMH has invested in another French brand, French Bloom, which produces alcohol-free sparkling wine.
According to experts, the production of alcohol-free drinks is not having much impact on the core sales of companies. According to data from the information, data and market measurement company Nielsen, 94 percent of Americans who buy alcohol-free drinks also buy alcoholic drinks. Moreover, since alcohol-free drinks are taxed less, more profit can be made from them.
However, producing alcohol-free drinks is quite challenging. The beer industry is the most advanced in this sector and beer occupies 89 percent of the market for non-alcoholic alternatives. Wine (liquor) and spirits have 7 percent and 4 percent shares respectively. According to Moritz Zierowitz, founder of German ethanol-free beverage brand Gentle Wine, the wine or liquor industry is 20 years behind the beer industry.
However, there are various challenges in expanding the market for alcohol-free drinks. One of them is the high price of the product. A bottle of non-alcoholic beverages, mostly made with spices and herbs, can cost around $40 or as much as $4,000. A recent survey by The New Consumer and Coefficient Capital found that 38 percent of Americans believe that non-alcoholic beverages should be “much less” than alcoholic beverages.
Social pressure is also a major barrier. In a joint survey by world-renowned beer brand Heineken and Oxford University, 15 percent of respondents said they had been criticized by others for choosing non-alcoholic beverages.
Despite all this, brands are taking various initiatives to increase the acceptance of non-alcoholic beverages. AB InBev’s non-alcoholic beer ‘Corona Cero’ was the official sponsor of the Olympic Games last year. On the other hand, Heineken’s ‘0.0%’ is sponsored by Formula One. A non-alcoholic beer brand called Lucky Saint has opened its own pub in central London, serving both alcoholic and non-alcoholic drinks.
In addition, many celebrities have launched their own non-alcoholic drinks brands. Actress Blake Lively, singer Katy Perry and Formula One star Lewis Hamilton have all launched non-alcoholic drinks brands in the past few years.
However, global sales of alcoholic drinks are still strong. The market was worth $1.8 trillion in 2023. In many countries, as incomes rise, so does the cost of alcohol consumption. At the end of January, many will celebrate with their favorite alcoholic drinks. However, the rise of the non-alcoholic market is signaling a new culture around the world.
Source: The Economist
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