Dry beyond January: Why moderation will continue to grow
By Borja Manso
March 24, 2022
Dry January has often been viewed as one of these fleeting resolutions where people dip into abstinence briefly. However, consumers are as enthusiastic as ever to make moderation a regular part of their lifestyles. Even in the face of the pandemic’s immense disruption, 13% of Americans last year said they were giving up drinking in January 2021, compared to the 11% who said they have done so in previous years, according to research by Morning Consult. Estimates predict that number has only grown in 2022. And it’s not just Dry January that’s inspiring sales of no- and low-alcohol (NoLo) products — an increasing segment of “sober-curious” consumers are spurring growth in the category, too.
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While the pandemic may have contributed to this heightened focus on wellness, the prioritization of health is much more than a passing moment: It’s a movement that has accelerated over several years. “Dry stores” are cropping up, offering alcohol-free spirits and beer, while sober travel and mocktail demand is on the rise. And in the last year alone, non-alcoholic sales in the U.S. totaled $331 million — up 33.2% — while low-alcohol sales rose 8.1% to $2.77 billion, according to Nielsen data cited by Forbes.
In the U.S., non-alcoholic beer currently makes up 0.7% of total beer sales, according to Nielsen, but there’s no reason it can’t reach 5% market share over the next few years as it has in many similar developed beer markets. Heineken USA entered the NoLo market in 2019, when we introduced the alcohol-free Heineken 0.0. Since then, it has become the No. 1 brand in the category, capturing over 20% of the U.S. non-alcoholic beverage market, also according to Nielsen. This growth in NoLo demand is a testament to consumers’ desire for more health and wellness offerings that also fits into their social lives.
Heineken USA believes the key concept driving consumer demand is moderation. It is more than abstinence, and it is wider than health and fitness concerns. It is about being conscious and responsible about alcohol consumption in different occasions. For some, it means not drinking alcohol at certain moments, and for others it means consuming less alcohol and alternating with other adult social drinks to moderate your intake. As people continue to seek out options for moderation, we can expect the NoLo category to continue growing well beyond the 31 days of January. This includes a few key trends:
Increased cross-industry collaboration. Soft drink brands are popping up in a different section of the grocery store, with companies like Coca-Cola putting out premium mixers and Mountain Dew launching a hard seltzer version of its sodas. The lines between these beverage categories will continue to blur, as companies on both sides seek out new opportunities to collaborate and learn from each other. These partnerships provide many benefits, including the ability to collaborate on distribution, which was a challenge even before the supply chain issues ushered in during the pandemic. Of additional benefit, each of these beverage companies also has a unique perspective on potential customers in the NoLo space. After all, venturing into new territory can be challenging in any product category, but these types of partnerships can help by blending the best of a beloved brand, creating something new and familiar at the same time.
Low in calories but high in flavor. With many consumers seeking out NoLo beverages as part of their health and fitness plans, it’s no surprise that options with lower calories, carbs and sugar continue to be popular. But it’s not just about the nutrition numbers: Health-conscious consumers are reaching for beverage options that are made with natural or real ingredients and that cater to adult flavor palates.
Many consumers are also drawn to more creative flavors inspired by local and traditional cuisines. This was evidenced by our launch of Dos Equis Ranch Water, a hard seltzer spin on the popular Texas cocktail. Our team in Texas saw the popularity of Ranch Water drinks in on-premise locations and believed a canned version had the potential to succeed in Texas and elsewhere. From regional specialties to hard coffees, kombuchas and beyond, the industry has several less-explored categories that are begging to be further developed.
Beverage premiumization. This focus on complex, sophisticated flavors also speaks to consumers’ desires for products that feel “premium.” For example, nearly a third of all premium beer, cider and flavored malt beverages are sold in slim cans, which consumers see as more exciting and modern. This is not a new trend — consumers have been pushing towards more premium products in wine and spirits for well over a decade. In fact, an analysis of the alcoholic beverage industry by The IWSR estimates that the market share of premium or “super-premium” alcoholic drinks will account for 13% of the global volume market by 2024, indicating that customers will continue to choose quality over quantity.
What’s notable though is the vast influence that premiumization has and is expected to have on the NoLo space, where differentiation can mean life or death for new innovations competing for attention. It will be the products that can tell a successful and authentic story with their packaging and ingredients that will go on to build out the NoLo category.
Where we go from here
As consumers can safely shift from at-home consumption driven by pandemic lockdowns to out-of-home experiences, we will see a growing focus on bringing NoLo beverages to the on-premise space — a market that is still dominated by more traditional alcoholic beverages. While the beer, wine and spirits industry is no stranger to fads in flavors and styles, the interest in NoLo beverages is poised for more growth. Today’s consumers want a variety of beverages that fit into more moments of their life, and we believe they should always have a choice — whether that is an alcoholic, no- or low-alcohol option. The key is finding something that fits both the moment and their lifestyle.
One thing is certain: With interest in no- and low-alcoholic beverages only continuing to grow, there’s plenty of room for everyone. Competition in this space will increase, but this is an exciting time for beverage companies big and small because it pushes us all to deliver the best and most innovative offerings to consumers. Offering a path to moderation provides new opportunities for consumers to make safe, smart and responsible decisions, which is a good thing for all.