Brands that assume the alcohol-free category is simply for people who don’t drink are setting themselves up for failure: research from UK mindful drinking movement Club Soda, published in June, highlighted the complex variety of reasons consumers turn to the category (read more in part 1 here).
Now, a newly-published survey from The New Consumer and Coefficient Capital - which surveyed more than 3,000 US consumers – has found that 22% of US adults aged 21+ plan to drink less alcohol over the next year. And like in the UK, there’s a variety of reasons that people aren't drinking alcohol or looking to cut back.
Feeling good - both physically and mentally
Health and wellness is the predominant factor: 45% identified physical health as their main motivation while 18% specifically said they were keen to lose weight. Meanwhile, 25% identified mental health as their motivation to cut back.
Interestingly, 30% of consumers said they fundamentally aren't interested in alcoholic drinks (17% said they don’t like the way it makes them feel while 13% don’t like the taste). And 15% said they had quit drinking entirely.
Around 30% identified their motivation as wanting to save money. And 9% of consumers said they were more interested in exploring cannabis or THC than alcohol.
While there might be a variety of reasons people cut back on alcohol, that’s not really a surprise, says Dan Frommer, founder and editor in chief of The New Consumer.
“It tracks logically that people would have different reasons for wanting to drink less alcohol — some for physical health reasons, some for mental health reasons, some for financial health reasons, and some for other reasons," he told us.
"We asked our panel 'what does the term ‘wellness’ primarily mean to you?' For both Gen. Z and Millennials, they picked 'feeling good physically' and 'feeling good mentally' almost equally, whereas older generations picked 'feeling good physically' at a much higher ratio over 'feeling good mentally.'"
Honing in on the all-important Gen Z, it's tempting to assume they're driving the moderation movement. But again, it's a case of not making assumptions that all consumers are the same.
Research from opinion research company Civic Science which highlights mixed perspectives from Gen Z (aged 21-24) around alcohol consumption. A total of 27% of Gen Z consumers say they never drink alcohol; and yet Gen Z consumers who do drink do so more frequently than older levels.
Civic Science also suggest health and wellness as a motivation varies according to the age group: a quarter of Gen Z report being concerned about the impact of alcohol on their health; older millennials and Gen Xers were the least concerned.
“Gen. Z is the generation most likely to say that drinking alcohol will become less popular in the next few years, but also — and even more so! — the generation most likely to say that alcohol will become more popular," says Frommer, gesturing to the Civic Science report. "So I don’t expect some blanket decline in alcohol consumption immediately — it’s more nuanced than that.”
Where do people consume alcohol-free beverages?
The picture is equally mixed when it comes to consumption occasions. Around 21% of consumers said they were interested in replacing alcohol with non-alcohol alternatives at parties, according to The New Consumer / Coefficient Capital report: although this rose to 28% for millennials.
Meanwhile, 19% highlighted a restaurant setting and 18% identified a work social event, with a similar percentage looking for drinks at home during an event.
As the most established category, non-alcoholic beer is naturally the category that US consumers know most about: 42% said they were family with the concept. Among these, 47% had taken the next step and tried a product.
While a lot of new innovations enter via the on-trade, the low/no movement has been making its mark most strongly in the off-trade.
But in the US, 15% of Gen Z are discovering alcohol-free brands via TikTok: almost as many as 17% in grocery stores.
Meanwhile, 29% of respondents said they were familiar with non-alcohol RTD cocktails, of which 41% had tried them.
26% of respondents were familiar with non-alcoholic wine, translating to 42% of this group who had sampled the category; and 24% were familiar with non-alcoholic spirits, with 36% of these trying products in the category.
Launched in 1990, O’Doul’s is easily the most recognizable non-alcoholic beverage brand. But newer brands are gaining pace. While 35% of those surveyed recognized this brand, a host of newer brands – many under five years old – still are familiar to a chunk of consumers.
In the US survey, 30% of consumers said they wanted to drink less to save money – the second biggest motivator behind health and wellness.
And that translates to how much they want to pay. 45% agreed that a non-alcoholic product should cost less than an alcoholic one; while 23% were prepared to pay an equivalent amount.
Interestingly, 17% simply didn’t know how much they should value a non-alcoholic alternative: being unsure how to compare it to an alcoholic drink.
Getting pricing right, agrees Frommer, is a big challenge for alcohol-free brands.
“One big thing is that challenger brands aren’t nearly at the same scale as the big, established, alcoholic (or even non-alc) incumbents. So everything they do costs more — ingredients, production, packaging, shipping — because they don’t have scale and the efficiency that scale can get you.
“Furthermore, some of these non-alc challengers appear to be using better quality ingredients than the big, old booze brands. I think that part does appeal to consumers.
“But it’s still going to be a real challenge because people have always assumed it should cost more to get intoxicated, especially at bars and restaurants.”
Research from Mintel, published earlier this year, also paints a similar picture with its survey reporting that 35% of US consumers state they were cutting back on alcohol to save money. However, this survey suggests consumers have a clear idea that alcohol-free beverages should cost less than alcoholic beverages: with 73% agreeing this should be the case.