The UK’s no- and low-alcohol beverage market has seen remarkable growth in recent years, with 2024 standing out as a pivotal year.
According to preliminary data, the total market size more than doubled in 2024 compared to 2023, driven by a combination of regulatory changes, consumer trends, and innovation.
Duty changes and beer-focused ABV (alcohol by volume) realignments have delivered a significant, albeit temporary, boost to low-alcohol beverage volumes in the past couple of years. However, industry experts predict that these sales may stabilize in the longer term. Despite this, the no-alcohol category, particularly beer, continues to enjoy organic growth, largely fueled by increasing consumer demand. In 2024, no-alcohol beer experienced a 20% growth compared to 2023, solidifying its role as the leading driver of this segment. As a result, no-alcohol beer now accounts for over 2% of the UK’s total beverage alcohol market sales.
Looking ahead, the overall no-alcohol market is forecasted to grow at a compound annual growth rate (CAGR) of 7% from 2024 to 2028. Meanwhile, no-alcohol spirits, despite experiencing a slowdown, are projected to have grown by 7% in 2024 compared to the previous year. Contrastingly, low-alcohol wine saw a decline of 5% in 2024, while no-alcohol wine grew by 8%, highlighting a shift in consumer preferences.
Premiumisation Trends
Premiumisation continues to shape the no/low alcohol market, especially in the beer segment. Premium-and-above brands account for two-thirds of the no-alcohol beer market, underscoring their importance as a growth catalyst.
The no-alcohol wine market, while still dominated by value-oriented legacy brands, is also witnessing a shift. Standard and premium brands, although growing from smaller bases, are driving innovation and attracting a more discerning consumer base. These premium offerings are setting new benchmarks for quality and are expected to play a crucial role in the market’s evolution.
Consumer Attitudes and Demographics
Consumer recruitment into the no/low category has increased significantly over the past year. Improved quality, greater availability, and the continued rise of the wellness trend have encouraged more buyers to explore no- and low-alcohol options. Interestingly, the consumer base is skewed towards younger legal drinking age (LDA) groups, with an even gender split. Moreover, no/low buyers are more likely to be higher earners compared to non-buyers.
While younger generations are driving adoption, Boomers make up one in four no/low buyers. However, their engagement with the category is often limited to occasional consumption, indicating that they are more likely to be Triallers. Boomers are also more price-sensitive, often expecting no-alcohol products to cost less than their full-strength counterparts.
Notably, no-alcohol beer and cider have less appeal among Gen Z, with only 22% of this demographic purchasing these beverages. Much of the marketing effort has focused on no-alcohol beer, which resonates more with Gen X and Boomers. This poses a challenge for brands aiming to attract trendsetting younger audiences.
Barriers to Growth
Despite the progress made, several barriers continue to hinder the no/low alcohol market. Availability remains a significant challenge, with many consumers reporting difficulty finding no- and low-alcohol products. Retail shelf space is increasingly competitive, especially given the dominant presence of no-alcohol beer. This crowding effect can limit the visibility and availability of other categories, such as no-alcohol wine and spirits.
Innovation Driving Growth
Innovation remains at the forefront of the no/low market’s growth. Recent product launches have expanded the boundaries of traditional segments, introducing unique alternatives crafted with natural ingredients and offering health benefits. For example:
- Botivo: A botanical aperitivo blending aged apple cider vinegar, botanicals, and honey.
- Collider: A no-alcohol beer infused with functional mushrooms and botanicals.
In the no-alcohol wine segment, innovation is shifting towards premium offerings. Brands are focusing on advanced production techniques, such as:
- Bolle’s Double Fermentation: Enhancing the wine’s complexity.
- Nozeco’s Dealcoholisation Process: Using advanced technology to retain flavor.
- Kylie Minogue’s Sparkling Blanc: Incorporating green tea in fermentation to achieve a unique profile.
The Road Ahead
As the no/low alcohol market continues to evolve, its success will hinge on addressing key barriers, particularly availability and marketing to younger demographics. Premiumisation, innovation, and a focus on consumer wellness trends are likely to sustain momentum. With the market projected to grow steadily over the next several years, opportunities abound for brands willing to adapt and innovate in this dynamic space.
Source: IWSR