7 Predictions For The Non-Alcoholic Category In 2021
New beverages, new tools, new challenges, and an ethics decision for an entire segment
As the figures continue to pour in from what is expected to be the best performing Dry January in history, in terms of individual participants and non-alcoholic beverage sales, many are asking what comes next for this emerging category.
For Dry January participants, some, the Sober Tourists, a term coined by Tawny Lara to describe those who use Dry January to “try on sobriety”, will most likely return to drinking, mindfully. For others, the curious, who choose to continue wearing sobriety, or its lighter sibling the alcohol-free lifestyle, will find that a lot is still to come in the world of non-alcoholic beverages.
A brief history of the non-alcoholic beverage category
The emergence of a beverage category doesn’t happen overnight, especially one that has had to overcome public stigma. It’s been years in the making. If your arrival to the category is only weeks old, allow a moment to self-educate with a brief history of the non-alcoholic beverage category.
From 2017 to 2018 worldwide alcohol consumption declined 1.6%, in 2019 nearly 40% of global consumers reported a desire to decrease alcohol consumption for health reasons, a recent Nielsen report shared that 66% of millennials want to reduce alcohol consumption, Berenberg called Gen Z the Generation of Sobriety, and a Morning Consult poll revealed that 46% of adults have purchased a non-alcoholic beer or cocktail and 40% of drinking-age adults said they’re drinking less than they were five years ago. Last year, market research company IRI reported that the overall nonalcoholic beer market grew almost 39% to around $187 million. Today, several reports forecast that the global market for nonalcoholic drinks will grow by 32% to $30 billion by 2025.
As consumer attitudes shifted, so have the positions of major players in beverage.
AB InBev has pledged to increase no or low-alcohol beer to 20% of its global beer volume by the end of 2025. A quarter of Distill Ventures portfolio, the venture-capital arm of Diageo, is now devoted to non-alcoholic beverages. Bacardi, the family-owned spirits company predicts the growth of the no and low spirits category to reach $500m RSV in Western Europe by 2024. A Distill Ventures report found a 506% year of year growth in the category since 2015, and that in the U.K. alone last year, sales of non-alc spirits grew by 30%.
Then there is what’s happened culturally.
First with mainstream endorsements.
Non-alcoholic drinks have caught the attention and investment of NFL players J.J. Watt and Justin Tuck, Momofuku founder David Chang, and bicycling legend Lance Armstrong, as well as Tom’s Shoes founder Blake Mycoskie, all of whom are invested in Athletic Brewing Company. If that’s not enough, consider that Whole Foods listed Zero-Proof Drinks on their Top 10 Food Trends list, and Food Network included Buzz-Free Beer on their list of 2021 Food Trend Predictions.
And second, with consumer preferences.
Alcohol is beginning to be viewed as an agent of both escapism and oppression, as well as an anchor of poor health. A 2012 study found that 5.8% of all cancer deaths worldwide were estimated to be attributable to alcohol, a 2016 study concluded that the more a person drinks, the greater their risk of developing cancer, and in June 2020, for the first time in 20 years, the American Cancer Society updated its guidelines to remove alcohol consumption in any moderation. This, paired with several other studies, brought the Medical community to identify that as an intoxicating, addictive, toxic, carcinogenic drug, alcohol is not a good choice as a therapeutic agent, and we need to begin informing the public that drinking alcohol is very unlikely to improve their health.
These alarming announcements had divine timing for the non-alcoholic category, whose beverages are health-promoting. The abundance of electrolytes, antioxidants, and polyphenols with anti-inflammatory properties in non-alcoholic beer are great for recovery, in addition to the improved mood, sleep, spending habits, and relationships that come from eliminating alcohol.
Consumers are beginning to recognize that what’s being presented to them is not elimination, but rather the replacement of a harmful product, with a health-promoting one.
It’s an upgrade.
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7 Predictions for the non-alcoholic category in 2021
The stories we tell are often pieced together by previous experiences, hindsight. The non-alcoholic category's successful exit of the last decade benefits its stories. The challenge for the category now becomes consistency and continued growth. Already advancing at speeds multiple of the plant-based food category, 2021 has set the stage for a massive year in the world of non-alcoholic beverages.
Something is brewing and it’s not beer
Still in their infancy, Hopped Teas and Waters are what happens when one brews tea or water like a craft beer, with the hops, and without sugars, fermentation, or additives. The result is a calorie-free, gluten-free, carb-free beverage.
There are two recognizable brands in this branch of the category, Hoplark and HOP WTR, with two more emerging, H2OPS and Hoptonic Tea. As we move through 2021 look for this space to get competitive as new hopped tea and water brands emerge, or as existing non-alcoholic players extend their line into this space as Athletic Brewing did with DayPack Seltzer in January.
The biggest challenge for this segment isn’t in brewing, it’s in consumer education. Most people don’t know what a Hopped Tea is, yet. The brands within the world of hopped tea and water have double the challenge of overcoming consumer hesitation to alcohol-free options and educating on a brand new product.
This may not be as hard as one might think though.
Tea is an all-day option, and its free-from-most nutrition facts invite in drinkers and non-drinkers alike. Pair this with the ability to brew caffeine and caffeine-free options, and offer a robust menu of flavors, things get exciting.
Dean Eberhardt, Founder of Hoplark shared, “When we thought of the concept, we immediately realized the expansiveness that tea allowed for, especially as we open up to some of the more unique “teas” we have used like Spruce Tips and Butterfly Pea Flowers. This realization has allowed us to expand our creativity around what counts as “HopTea”, even doing some SKUs without tea.“
And don’t just take Eberhardt’s word either, by the sixth day of 2021, Hoplark had already passed their total E-Comm sales from all of 2019.
Nick Taranto, the founder of HOP WTR, sees hopped waters as the healthy alternative to beer. As someone who loved the taste of beer, and the celebration of cracking a cold one, he no longer wanted the calories, the alcohol, or the gluten.
“We started HOP WTR to be the healthy alternative to beer.” — Nick Taranto, HOP WTR
Hopped teas and waters are round-the-clock options, packed with flavor, and void of sugar, calories, and gluten. This new line of alcohol-free beverage, as Eberhardt shared, is defining itself as it grows and consumers are beginning to subscribe to these functional flavored drinks.
Consumer demand for gluten-free options
Last decade we came to learn why we feel like such garbage when eating gluten: celiac disease. For some, it’s a medical diagnosis, for others, it's a preference. For members of the non-alcoholic beverage category, it’s an opportunity.
A 2020 Grandview Research report shared that the increasing incidence of Irritable Bowel Syndrome (IBS) and celiac diseases are expected to drive the demand for gluten-free products across developed as well as developing countries. Globe Newswire, in late 2020, projected a compound annual growth rate (CAGR) of 8.5% from 2020 to 2027, for the global Gluten-free products market.
Several brands already offer gluten-free non-alcoholic options: Athletic Brewing, Glutenberg, Big Drop, Ambar, Drop Bear, and Jump Ship. For the rest, it would be foolish and devastating to not pursue gluten-free versions of their products in 2021.
The process is and isn’t complex. With most beers being brewed with malted barley and other gluten-containing ingredients, the options are to either brew with gluten-free ingredients such as corn, rice, sorghum, or quinoa. Alternatively, brewers can use gluten-containing grains, then apply an enzyme treatment such as Brewers Clarex to the beer at the fermentation stage, which can break down the gluten in the beer to less than 20 parts per million (PPM), the accepted definition of “gluten-free” in many regions, including the UK and US.
After production, the only barrier remaining will be creative marketing to bypass restrictions in getting the word out. Athletic Brewing Company’s award-winning Upside Dawn is crafted to be gluten removed and lab-tested to be under 5 Parts per million, however, they can’t explicitly say that due to TTB restrictions.
At this point though, the amount of creative talent in the space will find ways to get the word out. Trust that.
An embrace of ready to drink options
In the summer of 2019, Whiteclaw took over the $1 billion hard seltzer industry, as sales were up 250% since its introduction in 2016. This makes sense, representing a generation’s graduation from 12 packs of La Croix to 12 packs of hard seltzer. The drink itself, a canned sibling of the Vodka-soda, wasn’t the result of mixology R & D. It was a process improvement, reducing assembly and offering a simple one-action vehicle for consumption, it asks very little of a behavior change from its consumers.
An observational and anecdotal truth is that outside of the occasional opportunity to impress dinner guests, no one really wants to be a mixologist 7 nights a week. We’re a culture of convenience. The message that should be received by non-alcoholic spirits brands this year is that investing in ready-to-drink versions of your product will complement, not cannibalize, your current range.
Boreal Botanical, Curious Elixirs, Mocktail Club, and Kul Mocks are several brands native to the RTD model. Sea Arch and Seedlip, who first went to market with bottled non-alcoholic spirits, have extended into offering RTD options, with Lyre’s appearing to follow suit. Kin, who since inception straddled this offering, offers two unique spirits and a canned RTD Kin Spritz.
This year, it’s expected that the non-alcoholic space will continue to introduce new ready-to-drink options. Like the above, some will be native, some will transition, and some will simply split their line. All will likely see higher average order values (AOV) and lifetime values (LTV) from consumers, in addition to first-time-buyers brought in by the familiar convenience and curiosity of a category indistinguishable from the real thing.
An ethical decision to be made on sugar
America’s deadly sugar addiction has reached epidemic levels. In 2019, the NYT’s reported that over the last 30 years, the rate of Americans who are obese or overweight grew 27% among all adults, to 71% from 56%, and during the same period, diabetes rates overall nearly tripled.
What’s clear is that the human body wasn’t designed to process the levels of sweeteners it is being asked to today, as is evident by the rising tide of diseases including type 2 diabetes, heart disease, obesity, cancer, and non-alcoholic fatty liver disease.
Companies that continue to prioritize profits over the health of their consumers are unethical. Plain and simple.
“If we wanted a replacement for alcohol why not make it low in sugar as well.” -Paul Eschbach, Betera
Consider this an olive branch wrapped in caution tape to the non-alcoholic spirits, wines, and ready-to-drink brands currently going-to-market with 8–12+ grams of sugar per 250 ML or less.
The tide is shifting and consumers, especially the health-conscious members of the non-alc consumer base, simply won’t tolerate it.
What’s to be celebrated are the early adopters, or pioneers of low-sugar non-alc, like Betera. Founder Paul Eschbach shared that “When we developed Betera, sugar was the last ingredient I added to each beverage, just enough for balance. I did go into it thinking if we wanted a replacement for alcohol why not make it low in sugar as well. Being 40 and conscious of what we are putting into our bodies now more than ever it seemed like the right move.”
Beyond business, a brand should want to reduce the sugar content volumes of its product. We know how dangerous alcohol is as one of the three current leading causes of preventable death, along with smoking and poor diet and lifestyle. To reject alcohol only to replace it with a core contributor to another top 3 leading cause of preventable death is unethical.
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Innovation in the alt-wine category
Critics have been compassionate towards the non-alcoholic wine category, look for this to end in 2021. Outside the public eye of paid press and digital ads, difficult conversations are being had on review pages and in 5,000+ member Facebook groups. The truth is that quality options in the non-alcoholic wine category are light.
Offerings of fruit juice, sugar, and carbonation have exhausted themselves, enough so that the desperate consumer still isn’t returning. Outside of Hill Street and Rock Grace, few quality options exist. Compare this to the 100’s of non-alcoholic options in beer and spirit and one should see opportunity.
The consumer demand is there. The products are not. This intersection should birth innovation. And when it does, there are thousands of ready-to-buy consumers, if you know where to look.
Open borders and international options
Most of the leading or established non-alcoholic spirits are in Europe. Many of the craft non-alcoholic beers are brewed domestically in the United States. Consumer populations on each side of the Atlantic have access to one, not the other. Look for these barriers to be removed in 2021.
The Zero Proof, a non-alcoholic community, and shop, is quickly becoming the go-to online resource for hard-to-find European products such as Gnista and Lyre’s, and in conversation with their founder, the intention to expand their import menu was confirmed.
Outside of marketplaces, brands will deliver their products internationally themselves. In 2020, Athletic Brewing announced an expansion into Canada, and created some buzz when their @AthleticBrewingEU Instagram account went online.
As reports surface, the consumer appetite for non-alcoholic is rising globally. South Africa, Australia, Japan, India, and regions in Western Europe all have an equal if not more advanced appetite for alcohol alternatives and the opportunity for brands to reach these audiences knows no limits, as does the inverse for domestic importers of hard to find products.
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A matured marketing lever has come into view
Instagram is dead, and other social media platforms have proven resistant to growing a brand organically. Relying on unpaid social media is not a business model. Email marketing is still the leader, yet few websites have installed contact capture forms on page landing or at intent to exit, nevermind finding a voice that will stand out and motivate a prospect to hand over their contact info. But, that’s outside the scope. There’s a member of the royal family of marketing that has matured in recent years: Text.
Successful text-based marketing is not as simple as discount codes and product drops, and brands have less wiggle room and characters than email. With text, replying STOP is easier than finding a hidden whiteout unsubscribe button.
Still, that’s not a reason to hold off. It’s a challenge to your marketing team.
Every brand has a voice, text is a way to exercise it and build unbreakable bonds with your customers, which in time, lead to both increased AOV’s and LTV’s.
The how is simple: Authenticity.
Smart Insights 2021 digital marketing trends reported that 72% of consumers now only engage with personalized marketing messages tailored to their interests.
Any person on your text list has already expressed a shared interest in your brand, lean into that. If you’re only communicating with your customers to sell them something, you’re missing opportunities to connect with them and build brand loyalty. As Textedly shares, relationship building is a long game.
Not to be underestimated is the data collected with text. Specifically, location.
Each cell phone number has an area code, and most text-marketing platforms can filter to only send to certain area codes. Consider this as an advantage for events, activations, and geo-specific discounts. Text also can supply content for digital ads — you know those ads where you read customer reviews? Yep, text conversations with customers can write your copy for you.
The truth is, companies inside the non-alcoholic category can ignore every prediction made above, and still find success at scale. This category is simply that young and exciting. But, the window of establishing oneself as the Coca-Cola, the default, of the non-alcoholic category is closing.
For the well-led, clever, audible ready brands in the category, the message is clear: There is a global population waiting for a text-message to tell them about your sugar-free, gluten-free, ready-to-drink product, your hopped tea or water, or even your newly imported South African alcohol-free wine, this year.
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