As another Dry January approaches, the non-alcoholic (NA) category has posted “its largest year of absolute dollar growth in five years,” Adult Non-Alcoholic Beverage Association (ANBA) CEO Marcos Salazar shared during the trade association’s webinar earlier this month.
NA offerings have generated $510 million in sales during the rolling 52-week period ending July 29 in NIQ-tracked scan data, Salazar added. The increase amounts to $121.2 million in year-over-year (YoY) growth (+31.2%). Those sales peak during the July 4 and year-end holidays, but NA’s share of total alc is heightened throughout January, Salazar said.
Food and liquor channels drive 80% of NA growth, Salazar said. The breakdown by channel is led by food (62%, +33.2% YoY), followed by liquor plus (18%, +22.3% YoY) and convenience (9%, +29.5% YoY).
NA beer is driving the category, accounting for 86.1% share (+31.7% vs. last year) of NA sales, followed by NA wine with 11.2% share (+18.5% vs. last year), and spirits with 2.7% share (+94% vs. last year), per NIQ data.
Citing NIQ data, Salazar noted that 94% of NA buyers are still drinking alcoholic beverages. He noted that the number was 80% in 2022. Additionally, NA purchasers are spending more on total alcohol than those shoppers who just purchase alcohol, with a $783 to $491 ratio. There are 3.8 million households purchasing NA beer, wine and spirits, with a 3% penetration of LDA households.
Ritual Zero Proof co-founder and CEO David Crooch pointed to NA beer’s advantage of following its alcoholic counterpart’s route to market. He called NA spirits’ roll out “a bit more confusing,” with more consumer education needed.
“There’s an extra step when it comes to a non-fully-finished product,” he continued. “You’re using these to create a cocktail. You’re not just drinking them straight out of the can or the bottle.”
Mocktail Club founder and CEO Pauline Idogho said that gives ready-to-drink NA offerings an advantage. The challenge, though, is where those items are placed in retail shelf sets.
Gruvi co-founder Anika Sawni noted that her brand had an easier time getting placements for its NA beer offerings due to a longer product history compared to its NA wines.
“The shelf space wasn’t actually dedicated,” she said for the NA wines. “It’s really this past year and [a] half that we saw huge progress in that.”
To that point, there are now more than 150 NA brands, including 100 beer brands and 400 beer SKUs in the U.S.
Athletic Brewing co-founder Bill Shufelt stressed how NA beer is adding occasions and does not have to be boxed into certain hours of certain days of “busy modern life.”
“It’s opening a whole different side of the menu that’s not been there before,” he said. “It’s very inclusive. It welcomes people of all ages into bars and restaurants, social occasions, any day of the week, any time of the day, where beverage-alcohol has always been competing for the same occasions in a zero-sum way.
“This is the first unlock of occasion growth in decades, if not forever almost, and it’s done in a really exciting marketing fashion.”
Among the next frontiers for NA beer is draft in the on-premise. Shufelt said to expect more NA draft beer in 2024, which Athletic has rolled out with Run Wild IPA in pilot markets such as Connecticut, California, New York, Massachusetts, Colorado and Montana.
“It’s a really affordable entry point to the category, and then drives people to the shelf at grocery,” he said.
Shufelt cited NIQ data that found that 45% of legal-drinking-age Generation Z consumers have never had an alcoholic beverage, which is up from 36% and 32% for the previous two generations, a trend he’s seen play out in Athletic’s direct-to-consumer e-commerce sales.
“Almost 40% of our consumers are under the age of 35,” he added.
As 2024 approaches, Shufelt said he expects more mainstreaming of NA offerings, with public personalities and “bigger and bigger names” discussing the category.
Idoogho added: “The ability to drink and determine your fate versus you’re at this event and you’re feeling pressured is where I think 2024 is going, where people understand that’s exactly how you can put non-alcoholic into your life. And the more they get to do that, the more the category grows, the more they enjoy these choices.”