Because the alcohol-free alcohol business will boom. Economist Report

Global sales of alcohol-free spirits reached nearly $20 billion in 2023, double the figure five years earlier. How much more will this market grow?

Dry January has begun. After the excesses of the holidays, nearly a third of Americans are expected to give up alcohol, or at least reduce it, this month. Many will save money. Some will lose weight. And a growing number will continue to drink their favorite drink, or at least something similar. Teetotalers and the “sober curious” are no longer limited to carbonated drinks, fruit juices or plain water. The non-alcoholic alcohol market, which includes beer, wine and spirits, has seen a surge in recent times. According to the latest data from research firm Euromonitor, global sales reached nearly $20 billion in 2023, double the figure five years earlier. The market grew about 20% in 2023, compared to 8% for alcoholic beverages. How big will it get?

THE DEMAND FOR NON-ALCOHOLIC DRINKS

Demand for soft drinks isn't limited to Dry January. A growing number of health-conscious young people are detoxing year-round. The percentage of Americans between the ages of 18 and 34 who drink alcohol has fallen to 62%, according to the latest data from polling firm Gallup, down from 72% two decades earlier. Many of those who drink alcohol consume less; “zebra-striping” is in vogue, i.e. the alternation of alcoholic and non-alcoholic drinks. America's surgeon general may join this trend toward sobriety. On January 3 he asked that alcoholic drinks be accompanied by a label warning of their carcinogenic effects.

ALCOHOLIC AND NON-ALCOHOLIC: TWO DIFFERENT MARKETS

Nadine Merahi of broker Bernstein believes that drinks companies are not cannibalizing their sales by producing non-alcoholic products. Some consumers see zero-alcohol alternatives as a substitute for carbonated drinks, rather than alcohol. According to data firm Nielsen, more than 94% of Americans who buy non-alcoholic products also go on to buy alcoholic beverages. Non-alcoholic alternatives also tend to be more profitable than alcoholic drinks, as they are priced slightly lower but are taxed more lightly.

However, it is not easy to create soft drinks that taste the same as the original ones. The beer industry, which began producing alcohol-free products in the 1970s, is the furthest along in this regard. That's partly why beer accounts for 89% of soft drink sales, while wine and spirits account for only 7% and 4%, respectively, according to Bernstein.

WINE WITHOUT ALCOHOL

Now the race is on to develop techniques for producing alcohol-free wine . While there are methods for removing alcohol from wine, including reverse osmosis, which involves filtering, and rotating cone technology, which uses centrifugal force, these often ruin the taste too. While beer gets its flavor from hops and carbonation, alcohol gives wine much of its flavor and mouthfeel. “We're 20 years behind beer,” says Moritz Zyrewitz, founder of Gentle Wine, a low- or no-alcohol German brand.

There are other challenges to further expand the non-alcohol sector. Some consumers object to the price of the products. Non-alcoholic aperitifs, which are mostly a blend of spices and botanicals, can sell for around $40 a bottle. In a recent survey of Americans conducted by the website The New Consumer and the investment firm Coefficient Capital, 38% of respondents said that soft drinks should cost "much less" than alcoholic ones. Social pressure also continues to be an obstacle. In a five-country survey conducted by brewer Heineken and the University of Oxford, 15% of respondents said they had been "reprimanded" by others for choosing a soft drink.

ALCOHOL SALES ARE NOT DECREASING

For now, alcohol sales, which will reach $1.8 trillion globally in 2023, are certainly not declining. Spending in many developing economies continues to grow along with incomes. And the overall percentage of Americans who drink alcohol has remained stable around 60 percent for the past two decades, according to Gallup. More intemperate older consumers are compensating for the sobriety of young people. Retail sales at beer, wine and liquor stores in America continue to climb steadily. Many consumers will celebrate the end of Dry January with a full-strength alcoholic beverage.

(Extract from the eprcomunicazione press review)

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/sanita/mercato-alcolici-senza-alcol-economist/ on Sat, 11 Jan 2025 05:24:02 +0000.