The market value of low and no alcohol surpassed $11 billion in 2022, up from $8 billion in 2018, global beverage insights provider IWSR revealed. Showing no signs of slowing down, the alcohol alternatives sector is expected to increase by a third by 2026, with no-alcoholic drinks propelling this growth.

No and low-alcohol products are gaining prominence due to global factors. Consumers prioritising health and wellness and seeking a more balanced lifestyle propel the trend forward. Elevated by the Covid-19 pandemic, people are more conscious about their health and what they put in their bodies.

Health and wellness-led alcohol reduction and avoidance is particularly true for millennials and Generation Z consumers, who are more mindful of their alcohol consumption.

Previously, alcohol-free options mainly contained glycerine, flavourings and preservatives. New developments are widespread, ranging from brands creating products to mimic the taste and experience of alcoholic beverages to those that include functional ingredients.

These functional drinks aim to offer additional health benefits and create the desired effects of relaxation, mood enhancement and boosted energy levels that consumers associate with alcohol, without alcohol.

“It is all about elevating the drinking experience, providing the same or better experience without alcohol,” says Aksana Fitzpatrick, co-founder of PiQi, a UK-based gut health drink that promotes the probiotic benefits of kefir.

The category is also seeing a resurgence in traditional fermented drinks like water kefir, kombucha and switchel, which offer a satisfying mouthfeel with digestion benefits. Kombucha, in particular, has become quite mainstream, paving the way for currently lesser-known beverages.

Reducing or eliminating alcohol intake and opting for alcohol alternatives is also linked to health benefits including better sleep, better mental health and lessened hydration, Horwell says. The connection between health and fitness is also prevalent, with consumers aware and conscious of their calorie intake, alcohol’s contribution to it and alcohol’s negative health effects.

“The rise of mindful drinking is also contributing, as consumers are more curious about non-alcoholic options and the wholesome ingredients that go into them, away from artificial ingredients and sugar,” notes Fitzpatrick.

Richard Horwell, managing director of Brand Relations says that alcohol alternatives have also become more affordable and more attainable. “There is a wider market because it may attract people who drink alcohol but also people who don’t drink alcohol.”

Barriers to expansion

Consumers are often unfamiliar with many newcomers and might prioritise a familiar alcoholic or a simple soda brand, so there needs to be a focus on sampling, educating customers about the benefits of the drinks, and providing more opportunities to try products on more occasions.

“One of the main barriers to expansion is the perception that non-alcoholic beverages are less sophisticated and lack the depth of flavour that alcoholic beverages offer,” says Fitzgerald.

Manufacturers must explore flavour profiles as some flavours and aromas don’t come out as they would in ethanol. “Non-alcoholic spirits in bigger packaging, for example, 500 ml and up, need to contain preservatives.”

The organoleptic properties of alcohol alternatives are under the spotlight. Taste is a primary area, as products are often “missing the intense and complex flavour of alcohol”, Horwell says. De-alcoholised wine, for example, cannot deliver on taste, Horwell adds. A lack of quality mocktail options is also driving new formulation launches.

Price is also a primary factor. Non-alcoholic alternatives can be around the same price as alcohol. “People are unconvinced that they should pay the same price or more, especially if there are decreased or no taste and mood benefits,” says Horwell.

Function, flavour, and overall experience

Today’s alcohol alternative brands must also explore how best they can create sought-after formulations consumers want in various settings. “Brands need to leverage at-home experiences,” says Horwell.

Similarly to how producers have honed plant-based proteins that mimic meat, fish and non-vegetarian and vegan food products, the alcohol alternatives segment is doing the same. Manufacturers “still need to work on their recipes to improve the taste and mouthfeel”, Horwell says.

From using simple ingredients to mimicking the taste and mouthfeel of alcohol, companies are looking to incorporate more functional ingredients like nootropics and adaptogens to offer extra health and mood benefits. Flavours are also becoming more complex and sophisticated to create unique flavour profiles and experiences and give consumers more choice.

“We can also expect to see more collaborations between alcohol and non-alcohol brands,” says Fitzpatrick. More investment in this space is also anticipated as consumers seek to balance their desire for social experiences with their health and wellness goals. “Mindful drinking is here to stay,” Fitzpatrick adds.