Zero percent alcohol market expands ahead of Christmas

23 Nov 2022 --- As the festive season approaches, the beverage industry anticipates growing sales as consumers stock up with alcohol. However, producers are increasingly responding to consumer demands for zero percent alcohol options as Generation Z leads the way in the ‘moderate drinking” space. Younger generations still demand full flavors but with less ABV as health priorities overtake the levels of alcohol consumption often associated with previous generations.

As the desire for low and no-alcohol opens up, industry is taking note and investing in products aimed at consumers keen to celebrate on their own terms.

Tapped out
Some of the biggest players in the industry are making moves into the zero percent market.

Earlier this month, Keurig Dr Pepper, the beverage conglomerate that owns 7UP, Snapple and zero percent alcohol cocktail manufacturers Atypique, made a minority share investment into the non-alcoholic brewery, Athletic Brewing.

This purchase marks an expansion of Keurig Dr Pepper and the broader beverage industry’s increasing interest in low- and no-percent alcohol.

Increasing consumer demand for zero percent alcohol options continues to expand within the beverage market. Speaking to FoodIngredientsFirst, Chris Furnari, Athletic Brewing communications manager, flags the impacts of the on-going low alcohol trend. 

“A growing number of drinkers are reducing their alcohol intake, largely because they are discovering the harmful side effects of consuming alcohol too often. A recent Gallup poll found that 71% of Americans believe alcohol negatively impacts them,” he says.

“We’ve also seen recent data suggesting that nearly half (46%) of American drinkers are actively trying to reduce their consumption. Nevertheless, 80% of our consumers still drink alcohol. They are just being more mindful about when they decide to drink.” 

This reduction in alcohol consumption is contextual but also generational. 

“In particular, younger consumers – especially those in the Gen Z cohort – are opting to save their alcohol-drinking occasions for special events and weekends,” Furnari concludes.  

Christmas is still a lucrative period for drinks manufacturers then, although demand has shifted from traditional seasonal drinks to flavorful non alcoholic offerings. NPD aimed at developing this market is proving effective.

Growing demand 
Keurig Dr Pepper is keen to tap into this market of consumers. It presents robust data to support this direction.

 “Non-alcoholic beer in the US grew almost 20% in retail dollars over the past year, with the craft segment, where Athletic Brewing holds a 55% market share, far outpacing total category growth,” it says.

 Keurig Dr Pepper is backing up its direction into the zero percent market with an understanding that consumers still want to drink, just in moderation. 

 “Non-alcoholic beer accounts for over 85% of total sales in the fast-growing category of non-alcoholic beer, wine and spirits, as an increasing number of consumers moderate their alcohol consumption,” the company remarks. Largely fueled by Gen Z’s moderation, consumers are showing they are happy to buy non-alcoholic options. 

 Keurig Dr Pepper executive chairman Bob Gamgor confirmed the company’s direction. “Our investment reflects our interest and ability to move into exciting white spaces, including in the blurring of the alcoholic and non-alcoholic categories,” he says. “We look forward to partnering with the Athletic Brewing team to help them scale the business.”

Generation 0% 
Recent data and research from Innova Market Insights support Keurig Dr Pepper’s analysis. The numbers show underscore how Gen Z is pushing the increasing sales of zero percent beverages. 

The market researcher highlighted the potential of this space, noting the especially high number of consumers demanding non-alcoholic options. It also notes how this growing market still presents significant opportunities as consumers demand full-flavored beverages without the alcoholic effect.

There has been increasing NPD within the low and no-alcohol sphere, including 

Kerry releasing a line of premium zero-percent botanicals for the upscale market of the teetotal crowd, hoping to claim their own stake within the expanding zero-percent space. 

Earlier this year, FoodIngredientsFirst talked to Vicky Berry, senior European business development manager at Synergy Flavours, during International Beer Day. At the time, she was keen to note the rise of 0% launches. 

“2022 has seen some big launches in this space, such as Guinness 0:0 and Peroni Nastro Azzuro 0:0% – the alcohol-free counterpart of Peroni Nastro Azzuro, which the Asahi Group has reportedly invested €20 million (US$20.4 million) into developing,” she said. 

By James Davies