Low and no-alcohol celebrations for St Patrick’s Day as moderate drinking gathers pace
17 Mar 2023 --- Consumers are embracing the low and no-alcohol category while beverage innovators are creating adult-tasting alcohol alternatives that deliver on health and taste. Innovation in this space is driven by trends toward moderate alcohol consumption, while there is greater social acceptance of drinking low and no-alcohol beverages.
Speaking to FoodIngredientsFirst, John Kelly, strategy director for beverages at Kerry, Europe, believes all these factors are driving category growth. He expects that this St Patrick’s Day, more consumers will opt for low and no-alcohol beverages.
“Globally, the low and no-alcohol category is now valued at US$11 billion, according to an Interactive Web Response Systems (IWRS) study.”
The pace of growth is expected to surpass that of the last four years, continuing at a CAGR of 7%, compared to a CAGR of 5% between 2018 and 2022. The low and no-alcohol category presents opportunities for incremental sales growth as consumers are recruited from drinks categories such as soft drinks,” he explains.
Product diversification
According to Kelly, taste, increased innovation in production and the diversification of consumption occasions is driving the category’s growth.
According to Kerry, taste is the number one driver of purchase and repurchase.“The 0.0% non-alcoholic category is where growth and innovation is focused and it is expected to account for more than 90% of the total category growth,” he flags.
Similarly, last month, rising beer prices and greater demand for low and zero-alcohol offerings saw the Super Bowl become the first of many to highlight alternatives to traditional beers.
FoodIngredientsFirst reported that drinking habits are changing, especially among younger consumers. Heineken took advantage of the rising market for low-alcohol offerings by targeting teetotallers, focusing on their zero-alcohol offering, Heineken 0.0%.
Traditionally, sporting events like the Super Bowl and other events in annual calendars are often synonymous with alcohol, specifically beer.
Kelly says the low and no-alcohol category has been led by beer, with all the major breweries developing a 0.0% version of their major brands. “We have seen spirits and wine companies doing the same in recent years. There has also been a lot of product innovation in developing completely new products that deliver unique taste and flavors sensations in areas such as aperitifs and spirits alternatives.”
“There is a move by the traditional beer companies to innovate ‘beyond beer’ into a new fourth category that has seen many of them launch hard seltzers and RTD cocktails and in low and no-alcohol spirits and wine-based offerings as well as energy drinks.”
Backing this notion, we also reported that even though consumers drink less alcohol, they haven’t lost their appetite for thrills and adventure through beverages. Continued momentum in the “hard” category, which now sees hard teas, lemonades, and even water, come off the back of the initial success of hard seltzers.
According to Kerry, flavor-filled, premium pre-mixed libations are also hitting the shelves, with the RTD category forecast to grow more than US$11.6 billion over the next five years.
No more social drinking?
As products permeate a wider variety of drinking occasions – such as low-key social settings or unwinding with a partner at home – newer recruits to low and no-alcohol space are increasing their frequency of consumption.
“With people motivated to drink low and no-alcohol by lifestyle, rather than necessity, growth is now being driven both by recruitment of new consumers (across all age groups) and by greater participation in the category,” explains Kelly.
“Daytime consumption of both no- and low-alcohol has increased this signaling potential for the category to expand beyond alcohol-replacement occasions.”
He adds that Millennials are the biggest age group for no and low-alcohol consumers.
John Kelly (pictured) believes the low and no categories will grow, led by traditional alcohol companies looking to innovate in this area.
“A recent study by IWSR found that consumers in this age group like to switch between alcohol and non-alcohol (or lo) – 78% of consumers of no or low-alcohol products also drink standard alcohol. Abstainers – those who don’t drink – now account for 18% of no and low-alcohol consumers. Nine out of ten markets are seeing an increase in abstainers.”
Delivering great taste is still crucial
Kerry has a significant focus on helping brand owners and manufacturers innovate in the low and no-alcohol category and deliver products taste great, from market-leading consumer and category insights to Kerry’s ingredients technologies and application expertise, all with a key focus on sustainability.
The company has developed a range of ingredients technologies that significantly improve the taste, texture and enjoyment of low and no-alcohol products, such as Kerry’s Simply Nature Botanicals and Kerry Tastesense Sensations, which all help to improve the overall flavor and taste delivery in low and no-alcohol products.
Kelly says that product innovation focuses on taste, flavor and an interest in functional benefits.
“Many NPD approaches have focused on changes to ABV% (alcohol by volume). Some brands are focusing on innovation beyond this with flavor and functional benefits. This broadens the options available to consumers and allows brands to keep consumers within their portfolios,” he outlines. “The use of botanicals to create more intense flavor, and the introduction of spirit alternatives across a wider range of categories, such as aperitifs, dark spirits and agave.”
Moreover, there are also signs of increasing product focus on functional benefits with a 0% alcohol base, such as added nootropics, vitamins, and adaptogens, with product messaging shifting from the absence of alcohol to increased flavor and other benefits. “In terms of formats, the RTD canned format continues to grow strongly and there are an ever-increasing number of 0.0% launches in this pack format,” says Kelly.
Looking ahead, Kelly believes this category will only grow, led by the traditional alcohol companies looking to innovate in this area.
“Interestingly, traditional soft drinks companies are launching products into this category looking to win, giving consumers more choices. Traditional category lines are blurring very significantly – all helping to drive growth in this exciting category,” he concludes.
By Elizabeth Green
