The no and low alcohol category has experienced significant growth, reaching just under $10 billion in 2021 across key global markets. According to research from IWSR, this market is projected to continue growing at a compound annual growth rate (CAGR) of +8% between 2021 and 2025, compared to the +0.7% CAGR expected for regular alcohol volume during the same period.
This growth is indicative of a cultural shift in alcohol consumption, with the rise of mindful drinking and a focus on physical and mental wellness. Interestingly, 1 in 5 individuals from Gen Z now identify as teetotalers, reflecting this change in mindset.
However, it is important to note that the audience landscape for the no and low alcohol category is not as straightforward as it may seem. The binary approach of categorizing consumers as either drinkers or non-drinkers fails to capture the complex and emotional nature of their choices.
Motivations for abstaining from alcohol can be split between extrinsic and intrinsic factors. Extrinsic motivations include traditional reasons such as driving, medical conditions, or family commitments. Intrinsic motivations, on the other hand, stem from personal desires for self-improvement and better physical and mental health.
Even this seemingly clear split can be problematic, as many individuals use extrinsic motivations as a shield to avoid explaining their personal and emotional intrinsic motivations to others. Consequently, it is essential to recognize the diverse range of reasons behind consumers’ decisions regarding alcohol consumption.
Consumers in this category can be further divided into three groups: regular drinkers, non-drinkers, and those actively reducing their alcohol intake. The reasons for their decisions can vary greatly. For example, an “aging moderator” may be a retiree looking to cut down on alcohol for health reasons, with strong support from family and friends, while feeling a sense of loss for giving up something they enjoy. Conversely, a “non-drinker” may have no interest in alcohol due to health, taste, or religious reasons and may be tired of having to justify their choice. A “curious drinker” may be open to trying new things without necessarily committing to going alcohol-free but still expects the same quality experience they have with traditional alcohol. Lastly, a person on a “sober journey” may have a history of problematic drinking and seeks a community of similar individuals.
To tap into the immense market opportunity of low and no alcohol products, brands need to understand this complex consumer group. One way to begin is by identifying the specific type of consumers they want to target. Additionally, brands must decide whether to align with existing cues from alcohol or differentiate themselves completely.
Club Soda has found that while there is significant interest in low and no alcohol products, sales only represent approximately 1% of the market. Thus, there is immense potential for brands to capture this untapped market by developing successful products that cater to the needs and preferences of this consumer group.
