In 2020 the category grew at around 1% - maintaining a positive trajectory despite the impact of the pandemic – and took a market share of 3% across the total beverage alcohol market.
Released this month, IWSR’s No-and Low-Alcohol Strategic Study 2021 bases its data on 10 focus countries, which together represent 75% of global no and low alcohol consumption: Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, the UK and the US.
No or low?
Broadly, no-alcohol products are outperforming low-alcohol beverages: in 2019-2020, the ‘no-alcohol’ subcategory increased volume by +4.5%, while ‘low-alcohol’ decreased by -5.5%.
The decline was driven by the poor performance of traditional low-alcohol beer brands in the high-volume markets of Germany and Spain.
However, newer low-alcohol products like spirits and RTDs are resonating with consumers in markets such as the US who are becoming more mindful of what and how much they consume.
IWSR research shows that people are often choosing to drink no/low beverages to ‘avoid the effects of drinking alcohol,’ yet also highlights a preference for moderation over abstention.
While this may seem at odds with the popularity of no-alcohol products, it’s down to the occasion they are drunk in. More than half (58%) of no/low consumers report that they choose to switch between no/low and full-strength alcohol products on the same occasion, while only 14% state they do not drink alcohol at all.
Total global average alcohol declines for 2020 are around 8% as a result of the pandemic. But against this, the low and no alcohol categories remain relatively stable.
“The most popular occasion to consume no/low products is when relaxing at home (64%), and the category’s suitability to low-tempo occasions is a key reason why it has been so resilient during the pandemic,” says IWSR.
“Our research also indicates that consumers are consistently pointing towards taste as key to drinking no/low alcohol, which underscores a finding that consumers are generally willing to pay a similar price for a no/low beverage as a full-strength one.”
Category breakdown: beer
As the most established sector, the no/low beer and cider category dominates the overall no/low market with a 92% share.
“Thanks to the investment in the category from the major brewers, consumers are becoming more familiar and accepting of no/low beer as a quality product," notes IWSR. "While several key beer players continue to steer the category, the market is fragmented with a number of smaller brands vying to establish themselves as market leaders in this space.
"The segment is likely to become even more of a focus for smaller craft producers who are able to bring a diverse range of products to the market in future.”
But it is the spirit sector that is expected to see the most growth – albeit off a small base of just 0.6% of the no/low market – thanks to increased experimentation with drinks and cocktails at home during the pandemic.
Volume sales rose 32.7% in 2020: compared to beer’s flat performance of +0.5%. It is also predicted to see the largest volume CAGR, 2020-2024, at around +14%.
Wine and RTDs
No/low wine increased by +4.9% last year, having made strong gains in the US and the UK. Meanwhile, no/low RTD volume grew by +10.2% in 2020, largely driven by a trend for functional alcohol-free RTDs in Japan. Both categories will continue on their growth trajectory through to 2024, each expected to command a 7-8% volume CAGR 2020 to 2024.