Non-alcohol spirits, wine and beer now have a market value exceeding half a billion dollars in off-premise channels, according to a new NIQ report on the category.
With a 31% growth rate, the no-alc category amounted to $510 million in off-premise sales in the last 52 weeks ending July 29. Trends in the new analysis include data in NIQ measured off-premise channels (xAOC, convenience and liquor channels) during that same period unless otherwise noted.
While the non-alc category only represents a 0.6% share of total alcohol, growth has hit double digits in the last five years, with sales now regularly peaking for holidays like 4th of July and end of year celebrations. Here are five of the top insights from the report, including must-win regions, what segments are fast-growing, and the top trending wellness labels.
The Must-Win States
Compared to its boozy counterpoints, non-alc products have the unique opportunity to sell outside of the three-tier system. The category experienced a 9% increase in online sales dollars versus a year ago.
But off-premise, food and liquor channels are important, driving 80% of non-alc growth. Regionally, five states account for 30% of dollar sales, and the report highlighted that must-win states need special attention in terms of resources, with a particular focus on population centers. California leads those states, with $85.7 million in sales, up 21% since this time last year. Other states thirsty for zero-proof drinks include Colorado, Massachusetts, Michigan, and Ohio.
Spirits, Craft Beer Growth Up
Each category is experiencing varied upward trends, with spirits currently surpassing wine and beer in terms of growth rate. Non-alc beer still reigns as the largest segment, comprising 86.1% of sales and growing 31.7% since this time last year. Spirits makes up 2.7% of sales but up 94% since last year.
Among non-alc beer, craft is setting the pace: the segment grew 78.2% since last year, wth super premium beer also up 66.5%. Among non-alc spirits the same category drivers in full-proof spirits are leading including RTDs (+160%), whiskey (+130%), and tequila (+161%).
Opportunity On-Premise
On-premise the data lines up with experts’ calls for no- and low-alc brands to better engage bartenders: Around one in seven of all on-premise visitors drink non-alc alternatives, rising to a quarter of visitors age 21 to 35. When deciding on non-alc products, nearly half of non-alcohol drinkers have a mixture of alcoholic and non-alc drinks during their visits, with over half avoiding alcoholic options completely.
That data point highlights the opportunities for non-alcoholic options in restaurants, bars and non-traditional on-premise venues as the various subcategories grow in popularity.
Non-Alc Buyers Not Loyal
Just as bar-goers are switching from full-proof cocktails to sober options, across the board, over 94% of non-alc buyers are also purchasing alcohol-containing beer, wine, and spirits, meaning these buyers are providing more value to total alcohol.
To zoom in, non-alc buyers over 21 are likely to be among the ages 45 to 54, with incomes of $100,000 or higher, and white or hispanic. Non-alc is also providing an entryway into the larger category for Gen Z: the dollar value change for that group (over 21 in age) is up 29.2% since last year.
Competition Up, Wellness Perks May Help
As growth continues upwards, so do the number of new entrants and innovations. Non-alc beer and spirits are driving new UPCs compared to wine, and total UPCs including wine are nearing the 700s in the last four weeks. Cutting through the clutter to get listed at retail may get harder to do, but aligning with health and wellness trends could help.
The top trending attributes experiencing large growth rates in comparison to total non-alc are claims of sustainability, B-Corp certified, carb and sugar free, as well as organic.