Dollar sales of non-alcoholic beer, wine and spirits at off-premise retailers have more than doubled in the last three years, according to market research firm NielsenIQ.
In 2019, non-alc versions of traditional beverage-alcohol products earned $178.7 million at off-premise retailers. In the 52 weeks ending August 20, their dollar sales reached $395.2 million, according to IRI.
That growth happened “despite slowing alcohol trends,” NielsenIQ wrote. The non-alc category has posted significant increases each year: +35.4% in 2020 vs. 2019, +35.5% in 2021 vs 2020, and +20.6% in the last 52 weeks compared to the prior period.
By comparison, sales changes within the broader beverage-alcohol category have varied. The on-premise shutdowns of 2020 resulted in +14.9% growth in the off-premise channel compared to 2019. In 2021, bev-alc off-premise sales increased +3.6% over 2020. For the 52 weeks ending September 3, off-premise dollar sales of beer, wine and spirits have declined -1.1% compared to the same period the year prior, according to NielsenIQ.
The non-alc segment accounts for just 0.4% of all off-premise alcohol sales on a 52-week basis, but its share spikes during key selling periods, similar to traditional beer. This year, non-alc sales reached nearly 0.5% of total alcohol sales during Dry January and steadily climbed back to that point throughout the summer selling season, nearly reaching the 0.5% crescendo again in late July.
Grocery stores make up the majority (61%) of non-alc sales by channel, and dollar sales there are growing: +24% in the 52 weeks ending August 20 compared to last year. Liquor stores are the next largest retail channel for the segment, but only make up 19% of non-alc sales, which are also growing (+22.1%).
Convenience stores account for 9% of non-alc sales and at +5.9% have recorded the smallest growth of any channel, except for drug stores, where non-alc sales declined -9%. However, drug stores account for only 1% of the segment’s dollar sales. All other outlets account for 10% of non-alc sales and increased +15.1%, according to NielsenIQ.
E-commerce sales increased +10.7% during the 52-week period ending July 30, compared to traditional beer, wine and spirits, which recorded a -14.4% decline in online sales as pandemic-driven restrictions were lifted and consumers began to return to pre-pandemic shopping patterns.
Sales of non-alc beer, wine and spirits tend to over-index on the coasts. States with higher ratios of non-alc sales to the adult population include Washington, Oregon, California, Florida, Virginia, New Hampshire and Maine, as well as Arizona, Iowa and Vermont.
Non-Alc Beer is Biggest; Craft and Domestic Premiums Lead Growth
Beer is the largest non-alc segment by far and accounts for 85.3% of all non-alc dollars, followed by non-alc wine (13.4%) and non-alc spirits (1.3%).
All three segments recorded growth in the 52-week period ending August 20 compared to the prior 52 weeks, led by non-alc spirits – the smallest piece of the non-alc pie – with +88.4% growth. Non-alc wine recorded +23.2% growth, followed by non-alc beer (+19.5%).
By comparison, the beer (-1.2%) and wine (-4.5%) alcoholic counterparts both declined in dollar sales during the period. Only alcoholic spirits (+0.3%) grew slightly.
In the non-alc beer space, craft (+101.9%) and domestic premium (+51.9%) lead the way in growth for the 52 weeks ending August 20 compared to last year. However, both segments pale in comparison to the growth they recorded in 2021. Last year, non-alc craft beer increased sales +287.9%, followed by domestic premium (+222.5%).
With 33.4% share, imports account for the plurality of non-alc beers, led by Heineken 0.0, which is also the largest brand in the space. Imported non-alc beer grew sales +25.8% in 2021, but that growth slowed to +6.5% this year.
Below premium is the second largest segment of non-alc beer, with a 24.4% share of the category, but is the only segment to decline in 2022 (-8.9%) and 2021 (-1.7%).
The third largest segment, craft, accounts for 20.5% of all non-alc beer dollars, followed by domestic premium (16.3%), super premium (4.4%), near beer (0.6%) and cider (0.2%).
All three non-alc categories (beer, wine and spirits) are top heavy, with 70% of dollars going to the top five beer brand families, 74% going to the top five wine brands, and 91% going to the top five spirits brands.
Anheuser-Busch InBev owns three of the top five non-alc beer brands: No. 2 Budweiser Zero, No. 3 O’Doul’s and No. 5 Busch NA. Heineken 0.0 is the best selling brand, and craft non-alc beer maker Athletic Brewing is No. 4.
Budweiser Zero, O’Doul’s, Athletic and Busch each hold nearly equal share, and all other brands account for 30% of the segment. Heineken 0.0’s share is roughly twice that of Budweiser Zero, its next closest competitor.
In the non-alc wine segment, category leader Fre holds a plurality of share, followed by Ariel NA, Stella Rosa, Kedem and St. Regis.
Share in the non-alc spirits segments is concentrated in its two largest brands, Seedlip and Ritual Zero Proof, followed by Lyre’s, Clean Co. and Dhos.
Who is the Non-Alc Drinker?
An overwhelming majority (82%) of buyers of non-alc beer, wine and spirits also purchase the alcoholic versions of those same products. These cross-buying shoppers also tend to spend more than consumers who only purchase alcoholic beverages.
Consumers who purchase both non-alc and bev-alc products spend $517 per year on average, “which is more than $157 LDA [legal-drinking-age] households who exclusively purchase alcohol-containing beer, wine or spirits,” NielsenIQ wrote.
There are 4 million LDA households that purchase non-alc beer, wine or spirits, which translates to a 3.2% household penetration rate across the country, according to Nielsen Homescan Premium for the week ending July 30.
LDA non-alc consumers tend to be between the ages of 45 and 54 and come from households with income of $100,000 or greater. Demographically, they over-index toward white (106 out of 100 index) and African American (101 out of 100), and are geographically concentrated in “prosperous cities and suburbs” (136 out of 100), according to NielsenIQ.
These consumers dine (75% compared to 66% of average consumers) and drink (43% compared to 31%) out weekly at higher percentages than average consumers and spend more when they do ($177 spent monthly in on-premise establishments, compared to $157).
In a survey, NielsenIQ found that 22% of consumers said they are drinking less alcohol. The most common reason for that was that consumers are going out less (37%), followed by a “lost interest in drinking alcohol” (36%) and “opting for a healthier lifestyle” (34%). Other survey responses included:
- “Spending less money on alcohol (18%);
- Don’t like how it makes me feel (16%);
- Drinking more non-alc beverages (14%);
- Tired of or don’t really like the taste (9%);
- Did a cleanse that required no alcohol (4%);
- Drinking other types of beverages instead (4%);
- Pregnancy (3%).”
Ten percent of respondents selected “some other reason.”
About a third of consumers who are drinking non-alc versions of traditional bev-alc products “do so to try something new,” NielsenIQ found.
“This highlights a key opportunity for growth within these specific health and wellness trends and shows the importance of having appealing drinks to turn trial into habit,” NielsenIQ wrote.
“To be healthier” (41%) was most common reason for trying no- and low-alcohol beverages, followed by “to try something new” (34%), “to save money” (25%), “because my friends/family were doing so” (23%), and “to lose weight” (23%).