02/05/2024

No-alcohol innovation trends

IWSR's innovation tracking highlights the key trends shaping NPD across no-alcohol beer, wine and spirits

An ever more diverse range of no-alcohol products and flavour innovations are coming to market – including extensions of established brands, agave alternatives, alcohol adjacents, and no-alcohol craft beer and sparkling wine.

The wave of new launches comes as consumption of no/low products combined rose by +5% in 2023 in the world’s top 10 markets. No/low volumes are expected to rise at a CAGR of +6% between 2023 and 2027, according to IWSR forecasts, with growth spearheaded by no-alcohol (CAGR of +7% over the same timescale).

“The growth in volume consumption of no-alcohol products may be moderating, but innovation remains vital to the category,” says Susie Goldspink, Head of No- and Low-Alcohol Insights, IWSR.

“Our data shows that LDA Gen Z and Millennial consumers in particular are more interested in trying new no-alcohol alternatives than older cohorts – and NPD is emerging in a range of segments and formats to suit different occasions and demographic groups.”

Established brands

The extension of established full-strength brands into no-alcohol can be an effective means of attracting consumers into the category, thanks to their pre-existing equity and familiarity.

In Spain, for example, zero-alcohol spin-offs of popular gin brands, such as Tanqueray 0.0 and Seagram’s 0.0, are transforming a no-alcohol market previously dominated by legacy products.

“No-alcohol spirits are in a state of transition in Spain, as the focus shifts from traditional liqueurs towards big brand propositions, principally in gin,” explains Dan Mettyear, Research Director EMEA, IWSR. “These products are marketed well, have a good distribution network and are increasingly accepted by consumers.”

A similar approach to NPD is seen in Japan, where Suntory has launched a number of no-alcohol canned products recently under the Nonaru sub-brand – including red, white and rosé wines, a ‘whisky’ highball and a no-alcohol gin-and-tonic.

Agave

The increasing popularity of no-alcohol agave spirit alternatives mirrors the wider tequila and agave spirits growth trend in North America and beyond, encompassing RTDs and celebrity associations.

“Interest in new no-alcohol agave alternatives has grown rapidly, and remains relatively high in markets like the US, driven by younger legal drinking age groups, particularly Millennials,” says Goldspink.

“European markets and Japan show the least interest, influenced by their higher proportion of Boomers, who tend to be less open to new beverages, and also by the full-strength agave category being under-developed.”

The recent spate of no-alcohol agave RTD launches reflects the huge popularity of the Margarita and Paloma cocktails. For example, Ole Cocktail Co in Canada has launched a range of tequila-based mocktails, including Paloma, Margarita and Chilli Mango variants.

As in the full-strength agave category, celebrities are also getting involved with no-alcohol agave: Formula 1 driver Lewis Hamilton launched Almave – a zero-alcohol drink made with blue agave – in October 2023, while actor Danny Trejo is involved with a no-alcohol ‘tequila’ named Trejo.

Alcohol adjacents

Alcohol adjacents or functional beverages contain active ingredients that hint at health benefits, stress reduction, mood alteration and pleasure, as well as effects such as a buzz or acting as a social lubricant.

Ingredients include CBD, adaptogens (natural substances believed to help reduce stress) and nootropics (natural, semi-synthetic and synthetic molecules claimed to aid cognitive function).

In Canada, alcohol adjacent volumes increased by +75% in 2023, according to IWSR data, and are forecast to grow at a CAGR of +45% between 2023 and 2027, although off a small base. Alcohol adjacent volumes in France are also predicted to expand at a CAGR of +45% over the same timescale, after growing by +35% in 2023.

“Abstaining from alcohol does not have to mean ‘going without’ any more,” says Goldspink. “There is clear momentum for products offering an alternative to the effects of alcohol.

“NPD in mood-altering products is on the rise – although regulation needs clarification to enable further category growth.”

Examples of innovation in alcohol adjacents include Hiyo social tonic and Moment meditation drink. Meanwhile Peak cocktails claim to help you recover from workouts.

Craft beer

While big brands continue to dominate global no-alcohol beer volumes, established craft beer producers are expanding into the segment, extending their portfolios to meet wider consumer needs.

This dynamic is evident in markets such as Canada, where independent brewer Partake has a core range of no-alcohol beers, supplemented by special releases to pique consumer interest; and in South Africa, where craft brand Devil’s Peak has launched no-alcohol spin-off Devil’s Peak Hero, including a number of flavour variants.

“Artisanal producers in Brazil have begun launching no-alcohol beer products, broadening the number of options available and keeping consumers interested,” says Luciano Anavi, Senior Market Analyst for South America, IWSR. Launches in Brazil include those from Cervejaria Dádiva and Doktor Bräu’s Isotonic Fruitbeer, amongst others.

Sparkling wine

While the core full-strength wine category remains in long-term structural decline, no-alcohol wine brand owners are aiming to tap into the success of sparkling wine with a number of new product launches.

In Brazil, for example, launches include Aurora 0.0%, Gotas D’Or 0.0%, and Espuma de Prata 0.0%.“No-alcohol sparkling wines in Brazil are exhibiting a notable dynamism, with local brands increasingly establishing a significant presence,” says Anavi.

Elsewhere, no-alcohol sparkling wine producers are trying to tap into the huge popularity of Prosecco with launches like Nozeco in Canada and the UK, a French zero-alcohol sparkling wine.

Similarly, in Australia, Not Guilty spans wine and RTDs, including a ‘prosecco’ and ‘prosecco rosé’ in bottles and flavoured wine spritzes in cans.

Zero alcohol sparkling also has good growth potential in markets where alcohol sales are banned or restricted, such as in the Middle East. In Saudi Arabia, there is established demand for sparkling grape juice sold in packaging that resembles sparkling wine – and for ‘Saudi Champagne’, a mix of fruit juice and soda water.

“Consumers in dry or semi-dry markets who have never tasted alcohol will not have the same expectations of taste for their no-alcohol beverage needs,” explains Goldspink. “These recent innovations are catering to those diverse tastes.”

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