The zero percent alcohol market is expanding ahead of Christmas

11/23/2022 — As the holiday season approaches, the beverage industry expects sales to increase as consumers stock up on alcohol. However, manufacturers are increasingly responding to consumer demand for zero-proof alcohol options as Gen Z leads the way in “drinking in moderation”. Younger generations still demand full flavors but with less ABV as health priorities outweigh alcohol consumption often associated with earlier generations.

As the desire for low-alcohol and non-alcoholic beverages arises, the industry is taking note and investing in products that cater to consumers who are keen to party on their own terms.

Some of the biggest players in the industry are pushing into the zero percent market.

Earlier this month, Keurig Dr Pepper, the beverage conglomerate that owns 7UP, Snapple and non-alcoholic cocktail maker Atypique, took a minority stake in non-alcoholic brewer Athletic Brewing.

This purchase marks an expansion of Keurig Dr. Pepper and the broader beverage industry’s growing interest in both low and non-alcohol alcohol.

Increasing consumer demand for zero-proof alcohol options continues to grow in the beverage market. Speak with FoodIngredientsFirstAthletic Brewing communications manager Chris Furnari points to the impact of the ongoing trend towards low alcohol levels.

“A growing number of drinkers are reducing their alcohol consumption, largely because they are discovering the harmful side effects of drinking too much alcohol. A recent Gallup poll found that 71% of Americans believe alcohol affects them negatively,” he says.

“We’ve also seen recent data suggesting that nearly half (46%) of American drinkers are actively trying to reduce their consumption. Despite this, 80% of our consumers still drink alcohol. They just pay more attention to when they choose to drink.”

This reduction in alcohol consumption is contextual, but also generational.

“Younger consumers in particular — particularly those in Gen Z — are choosing to save their drinking opportunities for special occasions and weekends,” Furnari concludes.

Christmas is still a lucrative time for beverage manufacturers, although demand has shifted from traditional seasonal beverages to flavorful non-alcoholic offerings. NPD to develop this market is proving to be effective.

growing need
Keurig Dr Pepper is very interested in penetrating this consumer market. It presents robust data to support this direction.

“Non-alcohol beer has grown nearly 20% in retail dollars in the U.S. over the past year, with the craft segment, where Athletic Brewing has a 55% market share, far outpacing growth for the overall category,” it said.

Keurig Dr Pepper supports its focus on the zero percent market with the understanding that consumers still want to drink, just in moderation.

“Alcohol-free beer accounts for over 85% of total sales in the fast-growing alcohol-free beer, wine and spirits category as more consumers moderate their alcohol consumption,” notes the company. Largely fueled by Gen Z moderation, consumers are showing they are happy to buy non-alcoholic options.

Keurig CEO Dr. Pepper, Bob Gamgor, confirmed the company’s direction. “Our investment reflects our interest and ability to penetrate exciting white spaces, including blurring the alcoholic and non-alcoholic beverage categories,” he says. “We look forward to partnering with the Athletic Brewing team to help them scale the business.”

generation 0%
Recent data and research from Innova Market Insights supports Keurig Dr. Pepper. The underlined numbers show how Gen Z is driving increasing sales of zero percent drinks.

The market researcher emphasized the potential of this area and referred to the particularly high demand from consumers for non-alcoholic options. It also notes that there is still significant opportunity in this growing market as consumers demand full-bodied beverages with no alcoholic effects.

There has been increasing NPD within the low-alcohol and alcohol-free spheres, including

Kerry releases a line of premium zero percent botanicals for the upmarket teetotaler market, hoping to claim their own share in the expanding zero percent space.

earlier this year, FoodIngredientsFirst spoke to Vicky Berry, Senior European Business Development Manager at Synergy Flavors during International Beer Day. At the time, she was keen to notice the increase in 0% starts.

“2022 has seen some major launches in this arealike Guinness 0-0 and Peroni Nastro Azzuro 0-0% – the non-alcoholic equivalent of Peroni Nastro Azzuro which the Asahi Group has reportedly invested 20 million euros ($20.4 million) in developing,” she said.

By James Davis

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