The buoyant no-alcohol category in the US is poised for continued strong growth in the years ahead, fuelled by a combination of moderation trends, a well-established but expanding no-alcohol beer segment, recruitment of new consumers, and dynamic growth for zero-alcohol spirits, RTDs and alcohol adjacents. No-alcohol enjoyed a strong year in the US in 2023, with overall volumes rising by +29 percent versus 2022, according to IWSR Drinks Market Analysis data, well ahead of low-alcohol (+7 percent ). This growth was driven by no-alcohol beer/cider, which accounts for 81 percent of servings and rose in volume terms by +30 percent in the year. Meanwhile, no-alcohol wine volumes increased by +18 percent, with the smaller spirits and RTD segments showing dynamic growth, up +32 percent and +36 percent respectively. The emerging alcohol adjacents sub-category was up +15 percent on the year. “An increasing consumer focus on moderation, health and wellness is having a positive impact on all no-alcohol sub-categories, with growth rates higher than their full-strength equivalents,” says Susie Goldspink, Head of No- and Low-Alcohol Insights, IWSR. No-alcohol beer remains notably larger than other sub-categories, thanks to the relative maturity of the segment, availability of good tasting quality products, and the ongoing introduction of new brands from large and small breweries.
Meanwhile, alcohol-free RTDs have the smallest volumes, giving them the highest growth rates, primarily propelled by the demand for pre-mixed no-alcohol cocktails and the launch of new no-alcohol “hard” seltzers from some brands. The buoyancy of the no-alcohol category in the US is reflected in IWSR forecasts showing double-digit volume CAGRs covering the 2023-27 period for every sub-category. Notably, no-alcohol growth in the US is largely driven by higher price bands: premium-plus products accounted for 75 percent of no-alcohol beer volumes in 2023, and an even larger share of no-alcohol wine (87 percent) and spirits (93 percent). Demand for no-alcohol products in the US is particularly strong among younger legal age cohorts, with Millennials accounting for 45 percent of no-alcohol consumers in 2023; however, this figure is down on the 2022 figure of 51 percent, thanks to an increase in the share of LDA Gen Z consumers (17 percent in 2023, up from 11 percent in 2022). This in turn is driving an increase in the number of Substituters among no-alcohol consumers – those who replace full-strength with no-alcohol on a specific occasion.
“Legal aged Gen Zs are more likely to fall into the Substituters group than Abstainers. This means that increasingly, the new younger LDA recruits to no/low are not “all or nothing” – they switch between alcohol and other products, rather than avoiding alcohol altogether,” comments Goldspink. “This presents different kinds of opportunities for brand extensions, and we will likely see more blurring between products, such as hard seltzer brands increasingly offering no-alcohol versions of their full-strength ABV products.Consumers are becoming increasingly occasion focused – rather than category focused – and are looking for a drink that can fit into a traditional alcohol occasion.”
While product availability remains a significant barrier to increased no-alcohol consumption, perceptions of good taste and excitement around the category are improving in the US, according to IWSR consumer research. Availability is cited as the biggest barrier to increased consumption, with 47 percent of no/low buyers in 2023 mentioning it as a factor preventing more frequent consumption – up from 36 percent in 2021.
