NA BEERS FREE FROM ALCOHOL, FULL OF FLAVOUR

NO-ALC (NA) BEERS, WINES, COCKTAILS, AND SPIRITS ARE MORE THAN BUZZ! GROWTH ACROSS NA SEGMENTS BUBBLED UP AT TWICE THE RATE OF ALCOHOLIC COUNTERPARTS IN 2022, AND 2023 PROMISES INCREASED OPPORTUNITIES FOR BREWERS AND DISTILLERS. HERE, FLAVORSUM SHARE SOME INSIGHTS TO SPARK NO-ALC BEVERAGE INNOVATION.

ielsenIQ reports robust gains across the NA category in the U.S. through August 2022: with less than 0.05% ABV, we focused survey respondents on beverages with less than 0.5% alcohol by volume (ABV).

Š Non-alcoholic beer is the largest segment, representing 85.3% of the market and generating $329 million, a gain of +19.5% over the prior year.

Š Non-alcoholic wine accounted for 13.4% of revenue at $52 million, up +23.2%.

Š The small but mighty non-alcoholic spirit segment holds 1.3% of the category, generating $5 million and a significant gain of +88.4%.

Nielsen’s perspective excludes the NA cocktail segment that grew +10% last year and could represent $100 million in the U.S. by 2027, according to estimates from Market Research Future. Although the almost one-half billion-dollar market is less than 1% of U.S. alcohol sales, the more than 20% increase in value makes the no-alc space worth considering.

Despite being only about one-tenth the size of the U.S. market, the Canadian NA market is growing at a faster pace, according to IWSR (International Wine & Spirit Research). The research organization estimates NA beverage volume sales in Canada will increase by +35% annually through 2025.

The LCBO (Liquor Control Board of Ontario) began offering NA drinks in 2018 and recently expanded the assortment to 16 beverages, including beer, wine, a spirit, and a mixed drink. Food in Canada reports the LCBO plans to launch five more wines and two more beers in 2023 and says sales of NA beverages grew 20% in 2022.

Sales momentum reflects a growing demand for alternatives to alcohol. According to the 2022 Bacardi Cocktail Trends Report, 58% of global consumers drink more non-alcoholic and low-ABV cocktails than a year ago.

To learn about the quickly evolving market, especially the rapidly expanding NA cocktail and spirit segments, FlavorSum gathered insights from North Americans buying or planning to buy no-alc beverages. Our investigation into who’s buying, how NA fits into their drinking patterns, and the taste experience they expect can fuel innovation in the category.

WHO’S BUYING NO-ALC COCKTAILS AND SPIRITS?

Although category definitions continue evolving as producers explore alcohol-free

Familiarity with no-alc cocktails is highest among GenZ and Millennials (people between 18 and 40 years old), an audience that represents almost 45% of the North American population. Nearly 90% say they know about NA cocktails, and more than one-third are buying. Adoption rates among purchasers are high, with about two-thirds buying NA cocktails monthly, a frequency comparable to their usage of alcoholic cocktails.

GenZ and Millennials are also more actively engaged with no-alc spirits, but the audience is smaller than the NA cocktail group. About 80% are aware of NA spirits, with two in 10 buying products. The purchase frequency is heavier for NA spirits than mocktails, though, with more than 72% of no-alc spirit purchasers buying monthly.

What about folks over 40? Most GenXers and Boomers know about NA cocktails (80%) and spirits (65%), but only some buy the beverages. Less than 20% have tried a no-alc cocktail, and only 6% have purchased NA spirits. For those who have yet to buy NA options, most said they don’t have a need, are uncertain about the benefits, and are wary about the taste.

Purchasers of no-alc RTD cocktails and Spirits are more likely to be beverage “dabblers” or experimenters. They drink 3 or more types of beverages on average during a 30-day window, opening the door for trial-enticing flavour innovation.

In contrast, those aware of NA options but have yet to buy are likely to stick to 1 or 2 types of beverages. Converting awareness into a first purchase may require brands to offer education, assurance about taste, and flavours that link to familiar cocktails or spirits.

WHEN ARE PEOPLE CHOOSING NO-ALC COCKTAILS AND SPIRITS?

People buying NA beverages and those who express interest say they choose (or would choose) a non-alcoholic option to have a different, livelier, and healthier drink. The absence of alcohol and the potential excitement of the drinking experience creates a versatile appeal for many people.

Roughly half of North Americans like the idea of NA beverages for relaxing and see them as a good fit for the end of the day. NA drinks fit equally well with daytime/ lunch and social settings where people may not want to drink alcohol.

The desire for something different and more exciting than soda or juice are primary drivers leading people to select NA cocktails or spirits. But the sober curious movement and pursuit of healthier beverages contribute to the growth rate, too. Seven in 10 North Americans say they’ve engaged in a period of sobriety in the last year, and about 40% say they’ve either participated in or want to engage in Dry January. Among participants, 80% are re-upping their pledge.

Outside of dry January or sober October, about one-third say they’d drink less if they had more no-alc choices. And more than 20 percent are actively trying to cut back on drinking, with Millennials and Gen Z expressing higher interest than older generations.

The net is that no-alc beverages are becoming part of an acceptable set that includes alcoholic choices. NA cocktails and spirit brands with strategies aligned with lifestyle needs and stories that showcase NA drink versatility as standalone beverages or mixers will capture attention and trial.

Understanding the who, why, and when of no-alc beverages helps establish a business case and market plan for NA cocktail and spirits brands. But when it’s time to start formulating in the no-alc category, having insights about the tastes people want will be a game-changer.

WHAT DO PEOPLE EXPECT FROM THE NA COCKTAIL AND SPIRIT DRINKING EXPERIENCE?

Brewers and distillers have significant upside in meeting taste expectations in the no-alc category. FlavorSum’s exploration into desirable characteristics of NA cocktails revealed the highest level of satisfaction with current drinks is that they are ‘available in familiar flavours.’ And only 33% of North Americans agreed with the statement! For NA spirit drinkers, the strongest satisfaction occurs with the idea that the beverages ‘offer something I can’t make at home,’ an important characteristic that only 45% agree is true.

Most important to no-alc beverage buyers is getting an away-from-home drinking experience at a good value. They’re seeking complex flavours without artificiality and want the health-boosting characteristics of lower sugar and calories. Surprisingly, what’s least important are the attributes that define the alcoholic beverage experience – the aroma and dry, sometimes bitter, burn of alcohol.

Delivering the complex mouthfeel and taste people crave in a no-alc cocktail or spirit requires formulation expertise. Techniques and ingredient solutions that create desirable mouthfeel are available, such as more intense sweeteners, glycerin, gums, or starches. But finding the right balance often requires partnership with knowledgeable applications experts.

Taste in alcoholic cocktails or spirits include attributes such as aroma, beginning, middle, and linger, and flavours can give brewers and distillers a robust toolkit in the no-alc space. Flavour systems can create layering effects that mirror the notes that intertwine and expand while consuming traditional alcoholic beverages. The result? People wonder what makes your NA cocktail or spirit so delicious, leading them to crave one more sip.

WHAT ROLE DOES FUNCTIONALITY PLAY IN THE NA COCKTAIL AND SPIRIT NPD?

People are currently skeptical that NA cocktails or spirits could deliver some of their most desired functional benefits, like support for their immune system or brain. Conversely, they believe all their nutritional desires, including sugar-free, carb-free, or organic are possible for brands to offer. Desirable supports beyond nutrition or baseline health include relaxation, an inherent alcohol attribute that people want in NA alternatives, and energy, a high-demand benefit across foods and beverages.

Breaking the question of functionality by type of no-alc beverage reveals a stronger fit between no-alc cocktails as a source of mood enhancement or energy. Most attributes that fit with NA cocktails also align with spirits, although more people responded positively to the idea of gluten-free in spirits than in cocktails.

WHERE TO START WITH YOUR NA COCKTAIL OR SPIRIT?

North Americans expressed interest in various non-alcoholic versions of popular https://discover.flavorsum.com/non-alcoholic-guide-download-0?utm_campaign=No%20 Alcohol%202023&utm_source=BrewersJournal-January%202023-NA&utm_medium=Editorial

RTD cocktails. The most often mentioned cocktails people want in NA form include margaritas, pina coladas, daiquiris, mojitos, and Long Island iced teas. Flavours provide an innovation pathway for adding new combinations to recognizable cocktail formats, like a Caramel Apple Old Fashioned or a Cucumber Gin Martini.

On an unaided basis, desirable flavour profiles outside the classic cocktail tastes include sweeter, fruit-forward tastes like strawberry, pineapple, lemonade, mango, and lime. For dual taste experiences, more men than women (20% vs. 9%) found the idea of a spicy NA cocktail appealing. And younger generations are more likely to respond to sour flavour profiles (28%) than GenX (16%) or Boomers (7%).

For NA Spirits, whiskey emerges as the most often unaided wish, but when given a list of choices, popular clear spirits like vodka, rum, and tequila round out the top favorites. Canadians are more interested in NA gin than Americans. Flavours are essential supports when creating non-alcoholic spirits since they can bring in the slight saltiness of vodka or the toasted sweet notes of rum. Botanicals rounded with olive juice or brine can replicate gin.

Expectations for flavoured NA spirits mirror experiences with alcoholic counterparts. Almost 50% would like a sweet profile in a clear vodka, rum, or tequila no-alc style, with 30% calling out savory options. More Americans gravitate toward sweet flavours than Canadians (48% vs. 42%). Within fruit families, most people agree that berry, citrus, tropical fruit, and melon profiles are a good fit with no-alc spirits. Melon flavours, like watermelon, cantaloupe, or honeydew, have stronger appeal in the U.S. than in Canada (51% vs. 37%.)

NA gin aligns more strongly with botanical flavours than other clear no-alc spirits, while NA whiskey and rum pair best with spicier and indulgent flavour families. Non-alcoholic rum flavoured with tropical fruits or citrus also makes sense. Spicier NA spirits appeal to more men than women (29% vs. 13%), and men are also more likely to respond favorably to unflavoured NA spirits (29% vs. 17% for women).

Next on the horizon? Functional benefits that transform NA cocktails or spirits into purposeful beverages.

Use the URL address below to download FlavorSum’s e-book that explores the NA cocktail and spirits market!