This article has been available to Global Drinks Intel subscribers since August. For details on how to join them, please click here.
Zero-alcohol spirits is the rising star of the no- & low-alcohol category, which is forecast to grow at a five-year CAGR (2022-26) of 17%. As established spirits brands climb on board, however, concern is rising that smaller players will be knocked out.
The term ‘mindful drinking’ has established itself rapidly in the beverage alcohol industry’s lexicon, spawning widespread innovation and support, both from brands and sales channels – and particularly in the no- & low-alcohol sector.
No-alcohol spirits have dominated the headlines, with a swathe of new-generation brands and household big names jumping on board with 0%-ABV extensions of their own. Indeed, to 2026, IWSR Drinks Market Analysis estimates that no-alcohol spirits volumes will grow at 17% CAGR, having already leapt in 2022 by 33% on the year prior.
The largest no-alcohol spirits markets are the UK, France, the US, Germany and Spain. Of these, the US will provide the fastest CAGR rise between 2022 and 2026, according to IWSR.
These are the kinds of figures that the alcohol industry ignores at its peril, points out Laura Willoughby, founder of UK-based mindful drinking organisation Club Soda. “In terms of consumer behaviour,” she says, “over 60% of the UK population are looking to cut down how much they drink. That’s quite a sizable market.
“But people are still looking for quality of experience, and something that they like when they’re out for an evening.”
‘A pint of Coke from a hose is not an exciting drinks option’
To date, she says, non-alcoholic choices in bars haven’t really delivered the goods. “If you’re in a pub, bar or restaurant, a pint of Coke from a hose is not an exciting drinks option. People want more and better, but they’re definitely more health conscious.”
Club Soda was established in 2015, “before any of the alcohol-free spirits even hit the market”, and for Willoughby, “it’s all part of a particular set of things that are happening for people at the minute”.
She continues: “The biggest drivers of people cutting down their drinking are mental health, sugar-free diet and generally wanting to be healthier. So having organisations that can say, ‘Look, we’re here, we’ve got as much money as anyone else, what are you going to serve us when we’re in your pub, bar or restaurant to keep us coming back and, more importantly, to keep us bringing our friends with us?’
“When I started Club Soda in 2015, if you weren’t drinking, the choices in the pub for you were dire. It was a place that basically said, ‘You’re not welcome if you’re not drinking’. That’s changing, and it’s changing very, very quickly.”
Premium no-alcohol producers driving market expansion
Research from IWSR certainly backs this up. The company’s head of no/low alcohol, Susie Goldspink, says: “The UK is one of the most dynamic no/low markets, with new product launches continuing apace and growth forecasts outstripping many other countries. While most no/low innovation continues to come from smaller players, no-alcohol variants from established brands are helping to build sector credibility.
“No-alcohol products - particularly those with a more premium positioning - have almost single-handedly driven market expansion over the past five years, finally overtaking low-alcohol in 2022,” Goldspink adds. “With the bulk of product innovation and consumer demand focused on this area, further healthy growth is predicted in the years ahead.”
The UK lays claim to being the home of Seedlip, “the world’s first distilled non-alcoholic spirit”, launched by Ben Branson in 2015 and part of the Diageo stable since 2019. Myriad other small producers have since carved out a not-insignificant niche for the offering.
Beyond the UK - No-alcohol spirits boom now a global phenomenon
The boom in no-alcohol spirits is a worldwide phenomenon, recognised this year with the first 'World Alcohol-Free Awards', established by the co-founder of consultancy Brimful Drinks, Christine Parkinson, and drinks writer Chris Losh. “I felt that there was an enormous knowledge gap which needed to be filled by something reputable and dedicated,” says Losh. “So a year ago, I was doing some stuff at London Wine Fair, chatting to wine buyers across the drinks space - hospitality, independent retail, mass-market retail - and I asked all of them what trends they're seeing for the next few years. I expected them to say Greek whites or rosé, or cava, or whatever, and every single one of them said, low- and no-alcohol. But equally, all of them knew very little about it.
“And I thought, well, the trade know this is a thing, but don’t know anything [much about it]. Consumers are interested but don’t really know where to start. What would be really useful is a competition that’s properly dedicated to this area and judged by experts. So that’s what we did. We just had our first results - the medals came out in April and the trophies came out in June.”
The number of entries exceeded expectations, falling just short of 400 when Losh had anticipated around 300, with no-alcohol wine dominating, but a hefty showing from ‘spirits’ too.
“There are lots of producers absolutely everywhere,” says Losh. “Aussies and Kiwis are taking it very seriously. There are a lot of people in Europe as well, doing a lot with it, so that was probably the biggest in terms of numbers. Spirits was pretty big overall and quite a vibrant part of the competition.”
The 'Best Spirit' award went to UK-based Myth Drinks for its Coconut White Cane Spirit, but Losh notes there are many different styles of no-alcohol spirits, from gin-type products - for which Losh gives a lot of credit to French brand Djin - to dark spirits.
Two approaches to alcohol-free - Flavour and burn replication
“Interestingly, there are two different styles with spirits. There are people who are making drinks that are about alcohol-free with flavour, and there are people trying to replicate some of the burn of spirits, so they put a little bit of spice in it, particularly for darker spirits. This is quite a controversial approach, as some people are not drinking because they’re triggered by that. So, for people who are giving up, things that are very like alcohol could be quite triggering.
“But then, for people who are moderating, who want to drink bourbon one night and then drink alcohol-free bourbon the next, that approach can work. It’s an interesting split within the alcohol-free space.”
The double-edged sword of zero-ABV extensions for established brands
That’s not the only area of controversy in no-alcohol spirits - Diageo’s launch of zero-alcohol versions of gin brands Tanqueray and Gordon’s in 2021 and 2020, respectively, is seen as a double-edged sword by both Willoughby and Losh.
On the one hand, they say, such launches ‘normalise’ alcohol-free and make it easy for consumers to try the category. But, on the other, there’s a fear 0% ABV brand extensions of big brands could stifle consumer exploration and elbow out smaller players.
Earlier this year, Club Soda conducted some research - prompted by a Scottish government consultation on restricting alcohol advertising - which included a section on alcohol-free drinks. "Part of the reason we did the research is because the Scottish government thinks it’s about getting people on to alcohol," says Willougby. "But that’s not how alcohol works. You learn to like alcohol because of the effect it has; it doesn’t actually work the other way around.
“People understand brands, they build a relationship with them, and [big brands] going into zero gives them the ability to try it. It also normalises alcohol-free.”
Willoughby has become increasingly frustrated by big brand owners that move into no/low, launching zero extensions of established brands and then making them a requisite of any deal they do with a bar or chain. As a result, these brand extensions “knock off some of the small entrepreneurs who started much longer ago and have been working in this space for a long time”.
She adds: “Worse than that, it’s a product on the bar that the bar staff resent because they’ve been forced to have it in order to get the other things they wanted. And as we know, bar staff don’t sell things that they don’t like very well. So it’s really important for the growth of no/low that bars have the freedom to pick the products they want, and they can begin to explore with things they find easy and build relationships with brands.”
Key to no/low longevity is giving consumers chance to explore
According to Losh, there’s a danger that the release of big-name brands in the category could limit consumer exploration. “It’s going to be easy [for big brands] to get listings,” he says. “I’m not entirely sure it’s good for the category… it depends on the retailer. If the retailer thinks that by putting in a Gordon’s 0.0% and a Tanqueray 0.0% that’s ticking the box on alcohol-free spirits, then that’s not good for the category, because there’s no choice.
“Retailers need to think about alcohol-free as more than just a little add-on, because there’s a massive appetite for people to go out and experiment. There’s so much really interesting drinks creation going on in this space that it’s underselling it to think that just three or four big names are going to tick the box. There needs to be that level of ability to experiment in alcohol-free that there is with alcohol.”
Alcohol-free spirits shows no signs of slowing down globally in terms of innovation and creativity. The bottom line, however, is that retailers and the on-premise need to be able to create a space where consumers can explore the many options that are out there.
This article has been available to Global Drinks Intel subscribers since August. For details on how to join them, please click here.
