Traditionally, alcoholic beverages have an indulgent reputation, but as alcohol attitudes shift, many are getting a healthy makeover. One key shift is younger consumers in particular opting for low- and no-alcohol takes on spirits, beer and wine, with NPD keeping pace with these growing demands. Takes a closer look at what is behind the rise of low- and no-alcohol beverages and what is coming next. Meanwhile, in the short-term, the COVID-19 outbreak is hitting the foodservice sector, which could lead to challenges for the alcoholic beverage space.

“There are ever more non-alcoholic alternatives to alcoholic beverages on the market. Although increasing numbers of consumers want to avoid alcohol, they still want beverages with a convincing ‘adult’ sensory profile. The taste, smell, consistency, mouthfeel and color of the non-alcoholic variants should hardly differ from the ‘original’ alcoholic beverages and provide consumers with comparable levels of enjoyment,” says Jens Birrer, Head of Market Segment Beverages at Döhler.

According to a study by Döhler Sensory & Consumer Science, 48 percent of consumers want more alcohol-free alternatives to wine or beer, as well as to cocktails and long drinks. According to Innova Market Insights, China is the top country for consumers to purchase low- and no-alcohol, with 28 percent of respondents to a 2018 survey saying that they would typically buy a product on a grocery trip. Brazil, Mexico and Germany followed with 25, 19 and 18 percent respectively. Meanwhile, just 9 percent of UK consumers and 8 percent of US consumers are regularly purchasing low- and no-alcohol beverages.

Each country also has differing reasons for purchasing low- and no-alcohol beverages. In Brazil, Germany and the US, the top reason is taste. However, in China and Mexico, people seek these beverages to help them relax and wind down. Finally, in the UK, low- and no-alcohol beverages are chosen to quench consumers’ thirst. Clean label is also a major consideration across many top markets.

Meanwhile, Floor van Aerde, Communications Manager of Nederlandse Brouwers, notes that the top reasons for people drinking non-alcoholic beer is the need to drive, people liking beer and people not wanting to drink alcohol at the moment. The umbrella organization represents 14 Netherlands-based breweries, which account for over 95 percent of Dutch beer production. However, she adds that as alcohol gives beer its flavor, it can be a challenge for breweries to get the same taste without alcohol.

Flavor ingredients supplier Treatt notes that alcohol consumption across several pillars in multiple regions is falling as consumers seek out healthier lifestyles. As people are increasingly pressed for time, consuming excessive alcohol is inconvenient and discordant with their busy lifestyles.

Spirits have also been an area of development, with UK high-end grocer Waitrose launching a non-alcoholic “NOgroni” made with aperatif Æcorn and a distilled non-alcoholic spirit, Seedlip. The retailer has noted that sales of low- and non-alcoholic drinks have gone from strength to strength, up 64 percent compared to last year.

A change driven by younger generations

Young people seem to be driving the low- and no-alcohol trend, with van Aerde stating that the biggest growth of drinking non-alcoholic beer was under Millennials. Treatt also flags Millennials and Generation Z as being the “sober and sober-curious” forces driving brands to include low- and no-alcohol.

“Many consumers from Generation Z expect to drink alcohol less frequently when they grow older, thereby constituting another reason why the demand for alcohol-free alternatives is growing rapidly. Consumers in general are paying more attention than ever before to what they eat and drink and what is good for their bodies. For many, this also means limiting the amount of alcohol they drink or even going without it entirely,” explains Birrer.

He predicts that with regard to product development, breweries and the spirit industry will increasingly invest in non-alcoholic beverage concepts, such as non-alcoholic gin or non-alcoholic beer in order to exploit their growth potential. “In this sector, an improved nutritional profile will be the focus not only for non-alcoholic beverage concepts but also for alcoholic beverages.”

Other better-for-you offerings

The search for healthier beverages doesn’t stop at just having less alcohol. Birrer states that alternative options should also have optimized nutritional values, such as containing less sugar and providing functional added value. “Greater awareness of healthy living has resulted in increasing demand for beverages with optimal nutritional profiles, as well as those geared to the individual needs of the consumer. This includes the reduction of sugar and calories in alcoholic beverages, such as spirits, cider, wine and beer-mixes,” he states.

He continues that today’s consumers want their products to be consumable at any time, taste good, provide added value for body and soul, offer something special and stand out from the mainstream. In this context, plant-based nutrition provides a balance between the intake of nutrients and calories, while simultaneously having a significantly more positive impact on the planet than animal-based foods.

Addressing these needs, Döhler offers a portfolio of health ingredients including botanical extracts, vitamins, fibers, plant-based proteins and innovative sweetening solutions to optimize nutritional value. Meanwhile, Treatt also notes that beverage producers are incorporating ingredients with enhanced health benefits into their formulations in order to appeal to the health-savvy consumer. Key examples ingredients like fruit juices, waters, botanicals, teas and other functional solutions appearing in innovative new alcoholic product launches.

Meanwhile, Birrer notes that innovative concepts such as brewed soda and crafted lemonade are causing a stir on the market alongside non-alcoholic beers, ciders, wine and spirits. “Brewed and fermented sodas are the ideal drink for adults who are not only looking for particularly natural refreshment, but also less sweetness. Fermented fruit juices, malt and tea, such as kombucha, are all conceivable for these concepts,” he details.

Individualization is also another key theme as people have less time for healthy food, yet expect food and beverages to fit in with this non-stop lifestyle. Birrer continues that six-packs, holiday or seasonal packs – products need to be consumable at any time, taste good, provide added value for both body and soul – offer something special and stand out from the mainstream.

Challenges ahead as COVID-19 shuts bars

In addition to mainstream alcohol products being cast aside in favor of low- and no-alcohol offerings, Treatt notes that the devaluation of ‘craft’ is also posing challenges, particularly in the beer and premium spirit sectors. This makes it quite difficult to do something new that will be widely accepted.

Meanwhile, Birrer flags that industry has to rethink packaging caused by new regulations and due to the increased environmental awareness of consumers. “Society as a whole is moving towards greater sustainability in day-to-day life. The concept of sustainability covers the entire life cycle of a product, from procurement of raw materials to packaging designs and materials, up to disposal or re-use. Consumers are looking for products that are less processed and as natural as possible.”

“The international beer brewing industry has experienced massive changes over the last decade. Industry concentration has increased dramatically, and the leading brewery groups have globalized their operations across virtually all continents,” Birrer reflects.

In the short-term, the spread of COVID-19 could also place alcohol manufacturers in a difficult position as bars and restaurants are forced to close and consumers are encouraged to keep socializing to a minimum. Nederlandse Brouwers notes that the breweries will continue to operate for the time-being to ensure enough beer will be available. “However, these are tough times with festivals canceled, orders stalled and the catering industry closed. We must all solve this. Especially in these difficult and uncertain times, the breweries are doing everything they can to stand side-by-side.”

In the Netherlands, individual brewers are looking on a case-by-case basis for possibilities to serve their catering customers. In addition, they have voiced their support for the catering industry while the government comes up with appropriate measures as soon as possible.

In January, when COVID-19 began to hit China, Carlsberg flagged concern that it could impact beer sales. “The virus will affect our business negatively. We had a very good start in January up to the New Year but then the outbreak happened,” said Carlsberg CEO Cees ’t Hart at the time.