Sales of non-alcoholic beverages are surging thanks to better technology, expanded shelf space and a wave of innovation – but new NielsenIQ research reveals most consumers aren’t giving up alcohol completely, which creates a more complicated competitive landscape and requires a more nuanced marketing strategy.
Consumers’ “both-and” approach is a double-edged sword for the nascent non-alcoholic category. One on side, it dramatically expands their potential consumer base beyond sober or sober-curious consumers to include all shoppers. On the other side, it also intensifies competition – not just from sodas, sparkling waters and juices, but also from heavy-hitters in the beer, wine and spirits category.
In this episode of FoodNavigator-USA’s Soup-To-Nuts Podcast, Kaleigh Theriault, director of beverage alcohol thought leadership at NielsenIQ, breaks down how the adult beverage landscape is shifting, who’s drinking what, when and why, and what this all means for non-alcoholic brands trying to stand out. She also unpacks common misconceptions that could be steering marketing and distribution strategies in the wrong direction, and offers tips for overcoming hurdles holding back the non-alcoholic beverage category.
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Non-alcoholic beverages break-free from key sober holidays
In the years leading up to the pandemic, non-alcoholic drinks primarily were consumed during popular sober “holidays,” like Dry January and Sober October – prompting the creation and application of the label “sober-curious” to be applied to those buying these products in these periods.
“There are a lot of assumptions being made around those non-alcoholic products, like that it is a sober consumer and people just aren’t drinking anymore. And those are not necessarily true, or full-truths,” she said.
She added most non-alcoholic beverage buyers are far from sober with a whopping 93% also buying alcoholic products and 47% of consumers drinking a mix of alcohol and non-alcoholic options when they drink in bars and restaurants.
She also notes that while sales of non-alcoholic beverages spike during so-called sober holidays, in recent years non-alcoholic beer, wine and spirits have become a staple during major drinking holidays – like July 4 – as well as an everyday-option for consumers looking to cut back – but not cut out – their alcohol consumption.
For example, many consumers now “zebra stripe,” which is alternating between alcoholic and non-alcoholic options in the same drinking occasion.
The pandemic’s play in non-alcoholic beverage’s rise
The mainstream adoption of non-alcoholic beverages beyond ‘sober holidays’ was turbocharged during – and immediately after – the pandemic when many consumers wanted to level-set their alcohol consumption, which for some spiked during lockdowns.
It was also during this period when advancements in technology to remove alcohol or mimic the flavor and feel of beer, wine and spirits minus the alcohol helped fuel a wave of innovation that captured the attention of a broader consumer base, said Theriault.
She explained that technology for making non-alcoholic beer is the most advanced, as is that category, while the technology for making non-alcoholic wine – and by extension the category – still has room for improvement.
“Non-alcoholic spirits is our smallest segment, but largest growing. And a lot of that growth is coming from different canned mocktails,” that do a better job of mimicking the flavor profile of cocktails, she added.
Gen Z is driving sales of non-alcoholic beverages but shouldn’t be taken for granted
The rise in non-alcoholic beverages’ popularity dovetailed with Gen Z coming of legal drinking age – leading some to believe that younger consumers are not interested in alcohol.
But Theriault says this also is a myth.
She acknowledges younger generations are a driving force behind the non-alcoholic industry’s double-digit year-over-year growth, but she also warns beverage players in this space should not take them for granted or ignore their older counterparts.
“We see a lot of things around Gen Z, those that are of legal drinking age just aren’t drinking at all. And that is also not true. Are there a set of Generation Z that have turned legal drinking age, that aren’t drinking alcohol yet? Of course, but that exists in every generation,” she said.
What is different about Gen Z is many came of age during the pandemic and did not have the experience of trying alcohol at the bar with their friends and so it plays a minimized role in their social scene. But they still drink alcohol.
“Gen Z, those that are legal drinking age, are definitely unique. … they are approaching things a little bit different by leaning into both non alcohol products, because they might not want to drink, but they’re still getting that social experience. We also see them leaning into high ABV products,” she said.
She explained: “What that tells us is that they have drinking styles that are based upon occasions, and so they choose an occasion to consume alcohol or not consume alcohol, and they are very intentional about those. They are not the generation that is, you know, pouring a glass of wine midweek or cracking open a beer during the middle of the week.”
She also noted that Gen Z is not the only generation drinking non-alcoholic beverages. Rather, consumption is across generations and demographics. And the reasons for drinking non-alcoholic are diverse – including dislike of the taste, a desire to be healthier, driving, fear of drug interactions or a preference for other mood-altering products.
A long-term trend
The numbers support the idea that non-alcoholic beverages are here to stay. According to NIQ data, sales of non-alcoholic beer, wine and spirits increased a “robust 31%” in 2024 to exceed $500 million in off-premise channels that it tracks – which is a trend that Theriault predicts will continue in the coming years.
While this may sound like a lot of money, she adds, it is less than 1% of the overall total beverage alcohol sales – which signals there is still plenty of runway for growth.
Overcoming hurdles
To seize the category’s full potential, non-alcoholic brands will need to overcome several hurdles that threaten to stunt its growth and limit its distribution.
Price premiumization is the most significant and immediate hurdle for non-alcoholic beverage sales, Theriault said. She explained that many US consumers consider alcohol to be a premium and may not understand that making non-alcoholic options takes just as much – if not more – work.
“There is more the non-alcoholic world can do around educating the consumer about how these products are made,” which would help shoppers understand the prices, she said.
Another hurdle is obtaining sufficient and consistent shelf space in store. Currently many on-alcoholic beverages are sold DTC, which comes with hefty shipping fees and an inability to cash-in on the impulse nature of non-alcoholic beverage sales and usage, she said.
Looking forward, Theriault says non-alcoholic beverages can also capture consumer interest and more shelf space by continuing to innovate and launch new flavors and formats.
At some point, Theriault says, the category will reach maturity, but before that happens she predicts there are still several more “turning points” that will reveal new drivers and opportunities for savvy players that don’t limit their target demographic or take them for granted given the steep competition for share of liquid occasions.
