No/Low Alcoholic Drinks: Evolution, Drivers and Future

October 2021

The no/low segment achieved booming volume growth on a global level; an intoxicating performance and the exact opposite of the severe declines faced by the industry. As the post-pandemic era is dawning, the no/low segment is going mainstream at the same time that the forces of indulgence, the macroeconomic ripple effects of the extraordinary past couple of years and still lingering but evolving health and wellness undercurrents all make for a heady cocktail.

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Key Findings

Low and non alcoholic adult beverages are coming of age

While the rise of no and low alcoholic adult beverages predates the tectonic cultural, societal and lifestyle shifts exacerbated by the pandemic, the historic event did act as a catalyst and accelerant, bringing the segment under the spotlight and into consumers’ homes. Even though beer has been the pioneer in innovation within the segment, it is non alcoholic spirits that show the greatest dynamism.

The shape of drinks to come: flavour, functionality and new occasions

Lifestyle undercurrents favouring health - driven moderation initiatives, Gen Z’s propensity for personal brand curation via social media and the demand for sophisticated alcohol alternatives when visiting the on-trade are already evolving into an interest in novel occasions, functional cues, ingredients and value-added formulations - they will inform the segment’s next stage of evolution.

Moderating moderation: the downside risks faced by an intoxicatingly booming category

While non and low alcohol varietals are expected to continue making significant gains as they enter the mainstream, contextualising that performance - and its limitations - is essential. The segment still only accounts for statistically insignificant volumes across the vast majority of markets and while that underscores the untapped upside potential, it is also a reminder that any claims of it being a sign for it being an existential threat for alcohol are largely exaggerated.

Going green: cannabis cross-pollination?

Cannabinoid infusion can provide a plethora of opportunities within the no/low arena, becoming the holy grail for innovation bridging recreation and wellness while sidestepping alcohol’s downside risks. While still in its infancy and facing inevitable teething problems, non alcoholic cannabis beverages can seize the mantle of functionality and lead the category to fresh heights.

Introduction

Scope
Key findings

Low abv: Intoxicating Performance

Low ABV, high expectations
Flavour versus functionality
New occasions: new channels
Culture, lifestyle and drinking rituals determine no/lo focus
Performance beers? Rec League by Harpoon Brewery
Hop flavoured water with a twist; WTR by Constellation Brands
Natural high? spirited Euphoria by the Endorphin Dealer Institute
No/low and cannabinoids: the holy grail?

Moderating Moderation?

COVID-19 merely accelerated pre-existing mindful drinking habits
Premiumisation peaks?
Avoiding intoxicatingly irrational exuberance; no/low in context
Hard seltzers’ moderating performance: a cautionary tale?
The new roaring 20s? the rise of “revenge convivialité ”
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