Once but a sliver of the global beverage alcohol market, NoLo beer/cider, wine, spirits and Ready-To-Drink products grew by more than 6% in volume in 10 key global focus markets in 2021 and now command a 3.5% volume share of the industry according to the new study.
For the 10 focus markets examined in IWSR’s 2022 NoLo Strategic Study (Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, the UK and US) the market value of NoLo alcohol in 2021 was put at just under $10 billion, up from $7.8 billion in 2018.
But IWSR forecasts that NoLo volumes will grow by a Compound Annual Growth Rate of 8% between 2021 and 2025 compared to regular alcohol volume growth of 0.7% CAGR during that same period.
“While January has become a popular month for people to cut back or abstain from alcohol, interest in No- and Low-alcohol drinks has increasingly become a year-round trend among consumers across the world,” says Emily Neill, Chief Operating Officer for IWSR Drinks Market Analysis, “To meet that demand, beverage alcohol companies have invested heavily to introduce a number of innovative new products and many established mainstream brands have recently crossed over to develop NoLo alcohol versions of their popular beer, wines, and spirits.”
No-Alcohol is growth driver over Low-Alcohol
Beer/cider is the largest NoLo category (at 75% volume share), with No-alcohol beer projected to drive growth at more than 11% CAGR over the study’s 2021-2025 forecast period. No-alcohol RTDs and No-alcohol spirits are both expected to post about 14% CAGR volume growth.
The wine category is the exception as the taste of Low-alcohol wine is perceived by many consumers to be superior to that of No-alcohol wine. Low-alcohol wine is expected to grow almost 20% CAGR 2021-2025 vs No-alcohol wine (projected at 9% CAGR).
By volume, Germany dominates NoLo alcohol, followed by Spain, US, Japan and UK
The volume of NoLo products in Germany is more than three times that of the next-largest NoLo market, Spain. Both Germany and Spain clocked volume increases of about 2% in 2021 while the US grew by 31% and the UK by 17%. Total volume of NoLo products in Japan registered a small decline (down 1%) last year.
While Germany and Spain are the larger and more mature markets for NoLo alcohol, the UK and US are two of the most dynamic ones and are growing at a faster rate. The NoLo alcohol segment in the US is forecast to grow by 28% volume CAGR 2021-2025 and by 6% in the UK.
Who is the No/Low consumer?
Moderation is the most common use for NoLo products, with significant crossover between NoLo and alcohol consumers. According to IWSR’s research, 43% of adults across the focus markets who’ve purchased NoLo-alcohol beverages say they’re substituting those products in place of full-strength alcohol for certain occasions rather than abstaining from alcohol altogether. The majority of NoLo drinkers also enjoy standard strength alcohol too – only 17% of people report they’re drinking NoLos to avoid alcohol completely.
The country with the largest proportion of alcohol abstainers is the US, with 23% of NoLo drinkers avoiding alcohol completely.
Why Do Consumers choose NoLo Products?
Among adults who’ve purchased NoLo alcohol, 37% say the reason for doing so is to avoid the effects of drinking alcohol. A third of drinkers buy NoLo alcohol because they enjoy the taste.
Demographics and occasions for NoLo alcohol
While evening occasions at home – including socialising and mealtimes – are the most popular times for NoLo beverages across all demographics, millennials and higher-income consumers across markets are more likely to use NoLo products to unwind or post-exercise. The IWSR study found that only 5% to 6% of NoLo consumers drink it after 11pm, so many NoLo brands targeting late-night partying and dark spirits occasions have found it tougher to gain consumer acceptance, reports IWSR.
“The NoLo alcohol market is still very much in its early growth stage in many categories and geographies, as the sector continues to define itself,” concludes Emily Neill, “Brands that will ultimately dominate in the NoLo space are those that are successful in navigating the barriers of taste, price, pack format, availability and overall consumer education.”