Alcohol-free drinks have made it into the mainstream. Consumers now accept alcohol-free drinks as a socially-acceptable choice, and availability is increasing across bars, restaurants and in retail.
And as the category grows, more and more brands are exploring the functional edge of the category. That means adding in functional ingredients: specifically those that can mimic the buzz of alcohol; or help replicate its calming effects.
It’s an exciting area to explore – but do these products have mass potential?
Functional beverage boom
Functional beverages are arguably the most innovative and exciting area of today’s beverage market. From gut health to protein, and from mood boosts to cognitive benefits, functional beverages are meeting consumers where they are and pack a powerful punch.
But the alcohol-free category has its own dynamics, and the success of functional beverages among wellness enthusiasts doesn’t necessarily translate directly into alcohol-free.
For a start, it’s a very different occasion. Alcohol has always been about relaxation and enjoyment – and certainly not a wellness fix.
Nor are consumers necessarily the same wellness enthusiasts that are driving the functional beverage category forward.
They’re everyday consumers who simply know they need to cut back on alcohol, and are looking at alternatives to help them do so.
Mood boost
‘Functionality’ in alcohol-free, therefore, tends to focus more around mood benefits and short-term effects. The key, for most brands, is to replicate either the euphoria of alcohol, or the relaxation component.
And an increasing number of brands are exploring this space.
There’s Ken Euphorics, De Soi, Smiling Wolf, Hiyo, and Three Spirit, to name but a few.
But it’s taken decades for alcohol-free drinks to reach the mainstream. Do they understand this complex new world of ingredients and ideas, and are they ready for the next functional generation?
This functional edge can be a big challenge – but also a big opportunity, says Adam Simpson, drinks expert at product intelligence company Vypr.
“Unfamiliar ingredients can create hesitation, especially if the language feels too niche or overly wellness-heavy if consumers are not actively seeking this out,” he said.
“But functional benefits also help answer one of the main alcohol-free questions, which is what people are getting beyond just no alcohol.”
In the wider functional beverage category, consumers are deeply engaged: taking the time to understand new ingredients and the science behind them.
But the alcohol-free category can’t expect standard beer, wine or spirits drinkers to show the same level of enthusiasm. The key, says Simpson, is not to rely on the ingredients themselves: but more on the effects they can bring.
“If the benefit is explained simply, for example it helps you to unwind or helps you switch off, then it will offer a more considered evening option for consumers which could definitely help with trial,” he said.
“If brands lean too hard into ingredient science, they risk feeling less accessible and could add to consumer confusion or distrust.”
Is the price right?
Consumers don’t always understand the high price tags of alcohol-free drinks.
And again, functional alcohol-free drinks hold a double-edged sword. The higher cost of functional ingredients may push up the cost of production and ultimately result in high price tags that put off consumers.
But at the same time, the functional component helps consumers understand the value of drinks and the premium benefits they can offer – something they may indeed be willing to pay more for.
The big question, then, is how much they’d be willing to pay.
Around 32% of UK consumers say they’d only pay up to £10 for a non-alcoholic spirit bottle (500-750ml), according to research carried out by product intelligence company Vypr. Another 14% would be willing to pay up to £15. But after that, interest drops off dramatically.
And 38% of consumers surveyed simply said they wouldn’t buy a non-alcoholic functional spirit at any price.
Again, said Simpson, it’s about selling the benefits of the product in a clear and targeted way.
“If the functional angle feels vague, the price becomes harder to justify,” he said. “If it’s clearer, then the premium part starts to feel more understandable.”
Halo effects
Functional beverages remain a niche area of the alcohol-free category. But their potential is huge. As functional beverages make their mark across all aspects of the beverage industry, consumer interest could see an uptick.
“As functional foods and drinks become more normalised in everyday routines, that familiarity is likely to have a halo effect on alcohol-free categories too,” said Simpson.
“Consumers may not immediately connect with ingredient science, but they do increasingly understand benefits linked to unwinding, focus or mood support, which makes those propositions feel more accessible in alcohol-free formats.”