November 23, 2022 — As the holiday season approaches, the beverage industry is anticipating sales growth as consumers stock up on alcohol. However, producers are increasingly responding to consumer demands for zero percent alcohol options as Gen Z leads the way in the “moderate drinking” space. Younger generations are still demanding full flavors, but with less ABV, as health priorities outpace the levels of alcohol consumption often associated with older generations.
As the desire for low and alcohol-free alcohol opens up, the industry is taking notice and investing in products for consumers willing to celebrate on their own terms.
Some of the biggest players in the industry are getting into the zero percent market.
Earlier this month, Keurig Dr Pepper, the beverage conglomerate that owns 7UP, Snapple and zero percent alcohol cocktail makers Atypical, made a minority investment in alcohol-free brewery Athletic Brewing.
This purchase marks an expansion of Keurig Dr Pepper and the growing interest of the beverage industry in general in low and non-percentage alcohol.
Talk to FoodIngredientsFirstChris Furnari, director of communications for Athletic Brewing, points to the impacts of the current low-alcohol trend.
“A growing number of drinkers are cutting back on their alcohol intake, largely because they too often discover the harmful side effects of alcohol consumption. A recent Gallup poll found that 71% of Americans think alcohol has a negative impact on them,” he says.
“We’ve also seen recent data suggesting that nearly half (46%) of American drinkers are actively trying to cut back. Nevertheless, 80% of our consumers still drink alcohol. They are simply more attentive when they decide to drink.
This reduction in alcohol consumption is contextual but also generational.
“In particular, younger consumers — especially those in Gen Z — are choosing to reserve their drinking occasions for special events and weekends,” Furnari concludes.
Christmas is still a lucrative time for beverage makers, although demand has shifted from traditional seasonal drinks to tasty non-alcoholic offerings. The NPD aiming to develop this market is proving effective.
Keurig Dr Pepper is keen to tap into this consumer market. It presents strong data to support this direction.
“Non-alcoholic beer in the United States has grown nearly 20% in retail dollars over the past year, with the craft segment, where Athletic Brewing has a 55% market share, far outpacing the category’s total growth,” he said.
Keurig Dr Pepper supports its direction toward the zero percent market knowing that consumers still want to drink, just in moderation.
“Alcohol-free beer represents more than 85% of total sales in the fast-growing non-alcoholic beer, wine and spirits category as more consumers moderate their alcohol consumption,” the company notes.
Keurig Dr Pepper Executive Chairman Bob Gamgor confirmed the company’s leadership. “Our investment reflects our interest and ability to move into exciting white spaces, including the blurring of alcoholic and non-alcoholic categories,” he says. “We look forward to partnering with the Athletic Brewing team to help them scale the business.”
Recent data and research from Innova Market Insights supports Keurig Dr Pepper’s analysis. The numbers show how Gen Z is pushing growing beverage sales to zero percent.
Market research highlighted the potential of this space, noting the particularly high number of consumers demanding non-alcoholic options. He also notes that this growing market still presents significant opportunities as consumers demand flavored beverages without the alcoholic effect.
There has been an increase in NPD in the weak and non-alcoholic sphere, including
Kerry is launching a line of premium zero percent botanicals for the high-end market of the teetotal crowd, hoping to claim its own stake in the expanding zero percent space.
Earlier this year, FoodIngredientsFirst spoke with Vicky Berry, Senior European Business Development Manager at Synergy Flavors, on International Beer Day. At the time, she wanted to see the rise in power of launches at 0%.
“2022 has seen big launches in this space, such as Guinness 0:0 and Peroni Nastro Azzuro 0:0% – the non-alcoholic counterpart of Peroni Nastro Azzuro, in which the Asahi Group has reportedly invested 20 million euros (20 .4 million USD) in development,” she said.
By James Davis
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