Alcohol-free World #1: The World vs Japan

Hello, Market Shakers! 

Let’s jump in right away to the latest emerging trends happening overseas and in Japan in the non-alcoholic beverage category. We hope you are thirsty for soft information! 

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Summary of this edition

  • Trends in the world

  • Trends in Japan

Trends in the world

The non-alcoholic category is on a roll with innovation and exciting new products coming out every year. According to Nielsen data, the sector has grown by 506% since 2015. While it only snatched 3% of the global alcohol beverage market in 2020, experts project a 31% increase by 2024

Interestingly, the non-alcoholic option is doing better than the low-alcohol one, with 66% and 34% of market share in ten key markets (Australia, Brazil, Canada, France, Germany, Japan, South Africa, Spain, United Kingdom, and the United States). In our research, we opted to focus specifically on the No in the ‘NoLo’ movement. 

The consumption of non-alcoholic drinks closely tails conventional alcoholic beverages: in the evening (except for cultures with daytime drinking), on social occasions, and to unwind, sober, at home. That last point explains how well the category could withstand the pandemic’s impact. 

The enthusiasm goes across age categories, but the sensible generation (the 18-24 of today) are particularly “sober-curious,” with little interest in having alcohol in their lives. They’re “more likely to be found in the university library than the local pub” in the United Kingdom. The same can be said about the youth in other countries as well. Alcohol-free lifestyle is trending, with recurring “no-alcohol” events around the world: 

  • Dry January (originated from the UK; became a worldwide phenomenon)

  • February Fast (Australia)

  • Dry July (Australia)

  • Sober October (UK) 

Some markets naturally turned toward non-alcoholic products for they have strict laws against alcohol use (Middle East) or solid religious beliefs forbidding alcohol consumption (Malaysia, Indonesia). But, overall,, the demand is fueled by growing consumers’ awareness of alcohol's ill effects. Therefore, they do not shun alcohol but seek to consume it in moderation. For instance, they can switch from a conventional alcoholic beverage to a no or low-alcohol one on the same occasion. 

The beer category dominates the market.

Beer is probably the oldest contender in the No category, with alcohol-free brew going back to medieval times. But the first ‘modern’ non-alcoholic beer appeared in 1919, during the Prohibition era in the United States. Since then, the industry has changed, driven by early innovation and investment, and has room to grow even further. In 2020, the combined beer and cider category held a 92% market share of the total no/low alcohol segment. Global Marketing Insights projects that this segment will exceed $29 billion by 2026 (with $6.4 in North America only). If major beverage manufacturers and brands dominate the category, smaller craft products will be the ones to bring diversity to the market in the future. Due to many players, doing a round table of the brands out there was mission impossible. So we did a quick tour of the regions and listed up some relevant names. 

North America

In the United States, the sales of non-alcoholic beer jumped from $27 million in 2016 to $151 million in 2019. During the pandemic, the US saw the launch of Boisson, its very first alcohol-free “liquor” retail store in New York, with a large selection of alcohol-free spirits, beers, and wine. In Canada, millennials and generation Z drive the sales, with the 19-34 years old accounting for 64% of the consumption. The sales increased by 50% between 2012 and 2018 and by 12% in 2019. If the market share is only 1.2% of the total beer market, the growth potential is there. 

Europe

Germany, Spain, the United Kingdom, and France are critical markets for no and low alcoholic beers in the region. In 2019, non-alcoholic beer accounted for 7.3% of the overall beer sales, and the market counts over 500 different brands. In the United Kingdom sales more than doubled between 2016 and 2019. While the category represents only 2% of the total market, the British Beer and Pub Association estimates a 25% yearly increase. In comparison, the conventional beer market is slightly declining. However, the pandemic did not slow down the category’s momentum. “Non-alcoholic beer is now part of the British beer landscape.” Spain is another big market, dominated by the Lagers type, with 13% of beer sales being non-alcoholic.

Middle East and North Africa

Religion is one prominent key driver for embracing sobriety, especially when alcohol consumption is strictly prohibited. So it shouldn’t come as a surprise to hear that the MENA region is taking a keen interest in non-alcoholic beverage innovation. In 2019, Saudi Arabia was the world's sixth-largest market for alcohol-free beer consumption, with volume doubling between 2015 and 2019. However, the category in the region excludes malt beverages. Iran isn’t far behind, and Dubai supermarkets “are filling their shelves with alcohol-free beers and spirits.” The area mainly imports foreign brands. However, they do have producers of their own. 

APAC

In this region, the growth is noticeable too, and for once, Japan is a major market with leading major beverage companies such as Asahi, Suntory, Kirin, and Sapporo. But we’ll come back to Japan later. A global market research company Euromonitor survey revealed that “over 60 percent of Asian millennials define themselves as mindful drinkers in 2020.” Health concerns are a critical factor in the youth shunning their elders’ drinking habits. In New Zealand, the non-alcoholic beer category grows year on year, and the launch of Heineken 0.0 in August 2018 went well. However, unlike Australia, it doesn’t seem the country brewers jumped on the trends (yet). In 2020, Singapore saw the opening of Free Spirit, the city-state’s first shop dedicated to bringing non-alcoholic beverages to Singaporeans. China is another booming market, with Tsingtao Brewery Co launching an alcohol-free lager in 2012. After a successful test in 2020, Japanese beverage giant Kirin started the exports of its line-up Kirin Green Free in China. 

Alcohol-free wines around the world

Wine has been lagging behind the beer category, with conflicting views on the concept in this noble industry. But things are changing, and new wineries rock the wine universe with innovative products, aspiring to be considered equal if not as premium as conventional wines. The challenge, however, remains to convince consumers with taste, so far, a key barrier for the wineries. The category is niche compared to the total wine consumption but on the rise, with non-alcoholic wines performing better than low-alcohol wines. The trend is likely to continue, though both segments show positive growth. The market “is predicted to be worth $10 billion by 2027.”

North America

The non-alcoholic wine market is projected to grow in the region with a predicted 8% growth over the next eight years.  

Töst Beverages (US)

Founded in 2014, Töst Beverages is an American company producing and selling non-alcoholic sparkling beverages. In March 2021, they announced a new Rose.  

Töst was created to be inclusive so that everyone can enjoy it together, whether at a casual lunch or at a Michelin star restaurant[.] Sophisticated, refreshing, meaningful, dry, and crisp—that’s what we’re going after. It has a ginger taste to it, but it has various citrus notes to it, also, to open it up. People are thrilled to have a non-alcoholic option, and our product offers sophistication.

CEO Brooks Addington, Töst's CEO Talks New Packaging and What Makes the Beverage Stand Out to Consumers

Europe

Home to many renowned wineries, it doesn’t come as a surprise to hear that the region is leading the non-alcoholic wine market (40% market share in 2018), with Italy and France having the highest volume consumption. 

Opia (France)

Opia is a phenomenon in France, Europe, and Asia, an organic French wine brand providing a wide range of options in the non-alcoholic wine category, starting with White and Sparkling Chardonnay, Rosé, and Cabernet Sauvignon. Opia distinguishes itself from other brands by a unique manufacturing process that doesn’t involve de-alcoholization of their wines—they’re free from alcohol from the start. 

Thompson & Scott’s (UK)

Founded in 2016, Thompson & Scott’s is a British wine producer offering a line-up of organic sparkling, alcohol-free chardonnay and rose named Naughty. The company started out providing healthier wines with clear labeling on sugar content and added alcohol-free options, later offering sophisticated guilt-free products. 

Empress (Norway) 

Empress is a family-owned Norwegian beverage company focused on producing alcohol-free beverages, including alternative wines and botanical brews. The company started back in May 2019 with kombucha-based products and has grown naturally since then. 

[Moon Brew is] an upcoming product line we have been developing and testing out in the market. Moon Brew is our take on sparkling wine, a champagne like kombucha where the tea is the star.  They don’t call kombucha the Champagne of life for nothing, we aim to create more exciting products as an alternative for wine and bubbles.

Anna Karenina and Christer, Empress founders, Since the lockdown Empress shifted their focus from business sales to private distribution

Jukes Cordialities (UK)

Launched in December 2019 by Matthew Jukes, a world-famous wine taster, and writer with 30 years in the wine industry, Juke Cordialities produces organic non-alcoholic wine limited in calories and sugar. 

Along with a great perfume, flavor and finish, it was critical for me to ensure that Jukes are very low in calories.   Most non-alcoholic drinks are sweet, confected or high in calories and so my two drinks are dry, tart, refreshing and perfectly suited to everyone conscious of their own wellbeing.

Matthew Jukes, Jukes Cordialities Launches in the US on November 5, 2020

Kolonne Null (Germany)

Kolonne Null (“Zero”) offers six alcohol-free wines at the moment. The German startup was founded in September 2018 and aimed to produce de-alcoholized wine from premium wineries. 

Group Elivo (Spain)

The Galician winery Elivo has developed a series of dealcoholized products for their line-up Elivo Zero Zero. On top of their regular line-up, they offer consumers the possibility to personalize their alcohol-free wines based on their genetic analysis—for sure a unique offer in the wine world. 

APAC

In the region, non-alcoholic wines had been left behind. Still, there’s room for growth, in particular in Singapore, New Zealand, and Hong Kong, according to the Global SOLA wine opportunity index 2019 produced by Wine Intelligence. Australia, home to two leading producers in the country, seems to be catching up with the trends in 2020 and 2021

Edenvale (Australia)

The Australian-owned and operated company Edenvale leads in the alcohol removed wine category. They have developed a range of alternative premium wines, including Pinot Gris, Pinot Noir, Cabernet Sauvignon, Rosé, Sparkling Shiraz, and Sauvignon Blanc. 

NON (Australia)

Launched in 2019, NON is a brand of alternative wine born in Melbourne. William Wade and Aaron Trotman teamed up to bring a “restaurant-calibre beverage” to the Australian gastronomy scene. 

  • Funky Monkey Blanc de Blanc, by winemaker Corey Ryan (Australia)

  • Plus and Minus (Australia)

What’s happening with spirits?

Spirits are no longer bound to be alcoholic—new options are coming to the market for the joy of non-partakers. The category holds only a 0.6% share of the NoLo market, but sales volume increased by 32.7%, and experts project a CAGR of 14% between 2020 and 2024. In 2020 alone, 12 new brands launched in the United States and 11 in the United Kingdom, one of the most mature markets for this category. The category was lagging, but the demand for quality mocktails has fueled innovation and stimulated brands to enter the market. But to compete in the spirit category, brands will have to aim high with excellence to offer a drinking experience on par with conventional spirits. Some of the companies we find in this category are also playing in the RTDs segment. 

North America

The Free Spirits Company (US) 

New entrant in the sector (2020), the Free Spirits Company focuses on alcohol-free bourbon, gin, and tequila.

Ritual Zero Proof (US)

Chicago-based spirit company Ritual Zero Proof (2019) produces botanical alternatives to gin, whiskey, and tequila. In 2020, the company had a record growth of 241%, and in 2021, they launched a new non-alcoholic rum. Ritual Zero Proof received investment from Diageo-owned Distill Ventures.   

Aplos (US)

Aplos aspires to recreate the experience of unwinding with a cocktail. But without the alcohol and with hemp for a soothing touch. 

Consumers want alternatives. And we really want to be a part of leading a culture shift that I think is already underway and helping people rethink the way that we drink.

David Fudge, Founder, Hemp-Infused Alcohol Alternative Aplós Aims To “Reimagine The Adult Drinking Experience”

Sexy AF (Canada)

Created by Calgary-based entrepreneur Jo-Anne Reynolds in 2019, SEXY AF is a new brand of alcohol-free spirits designed for great-tasting mocktails. 

Ghia (US)

Ghia is an American non-alcoholic aperitif brand launched in 2020 by Melanie Masarin. In 2021, the brand launched its first RTD

Europe

Lyre's Spirit Co (UK)

The brand is available in 43 countries, including Mainland China, and has partnerships with Weight Watchers, British Airways, United Airways, and placements in top bars, restaurants, and hotels. In 2021, the non-alcoholic spirits brand completed seed-plus funding round, valuing the business at over £100 million. In addition, Lyre’s announced partnering with importer Northeast Wines & Spirits for its distribution network in Hong Kong.

Caleno Drinks (UK)

Caleno is a British non-alcoholic spirit inspired by the Colombian city of Cali and launched in 2019. 

I’ve cut down my drinking massively over the years as I want to live more of a healthier/ balanced lifestyle. Caleño’s audience is therefore in a similar age bracket to me and my friends, 18-30-year-olds, who want to make the most of their lives, but don’t want the hangover to go with it.

Elli Webb, Caleno founder, Caleño is latest non-alcoholic ‘spirit’ to launch

Seedlip Drinks (UK)

Founded in 2014, Seedlip is a British startup producing plant-based alcohol-free spirits. Today, the company has an annual revenue of $3 million and is owned by the multinational alcohol beverage company Diageo since 2019. The company is “on a mission to change the way the world drinks” and stands as a pioneer in the category in the United Kingdom and growing in the United States. 

Æcorn drinks (UK)

Seedlip’s sister’s brand, Æcorn drinks (2019) focuses on making alcohol-free aperitif drinks. 

Since Seedlip’s launch, the world of non-alcoholic [drinks ]has shown itself to be dynamic and exciting, and we hope that the introduction of Æcorn Aperitifs to Waitrose & Partners will now give everyone who is not drinking, a seat at the table[.]

Claire Warner, Managing Director, Waitrose launches Seedlip’s aperitif sister brand, Æcorn

Stryyk (UK)

Founded in 2017, Stryyk is an alcohol-free rum, vodka, and gin brand. In 2019, the company raised £1 million in a corporate round from A.G. Barr. 

Gordon’s Gin (UK)

Renowned gin producer, Gordon’s Gin entered the no-alcohol spirit category in December 2020 with Gordon’s Alcohol-Free Gin

Tanqueray (UK) 

The London distillery came up with a Tanqueray 0% earlier this year

Martini (Italy)

In 2020, Martini launched a non-alcoholic alternative to its vermouths. 

In the past, deciding not to drink alcohol meant a fizzy water while everyone else enjoyed cocktails, or staying at home on a Friday while your friends go out and enjoy aperitivo time. But times are changing, and consumers don’t want to feel like they are missing out when they are being more mindful about their drinking.

Nick Stringer, Martini Global Vice-President, Martini has launched non-alcoholic Martini Vibrante

Alavie Drinks (France)

Alavie is a French startup producing a natural, calorie and alcohol-free distilled aperitif. In fall 2021, the brand won the Best premium drink category award at the World Beverage Innovation Awards 2021.

The flourishing RTD category

The category is flourishing and resonates with consumers amidst a trend for functional alcohol-free RTDs. Leading beverage companies have made their entry in this category with new product launches. In 2020 alone the global consumption grew by 43%. Both consumer trends and the need for healthier products and innovation are behind the category’s success. If convenience used to be a driver, it is no longer enough for consumers seeking better-for-them products, organic, natural, sugarless, or sugarfree. The trend pushed brands to embrace premiumization for RTDs and to launch high-quality cocktails for home consumption. In 2019, the Asia Pacific region held the most significant global market share (35.87%), followed by Europe and North America. 

North America

Molson Coors (US)

The beverage giant is making its way in the category with several product launches, notably Huzzah, a probiotic seltzer. In addition, the company plans to diversify its non-alcoholic beverage portfolio through innovation and partnerships. 

Truss Beverages (US/Canada)

Joint-venture between Molson Coors and Hexo, Truss launched a line of no-alcohol cannabis-infused beverages in 2020.

Molson Coors has been innovating in beverages for centuries. As it broadens out beyond beer, non-alcohol cannabis beverages are an exciting new frontier in Canada, and Truss has developed some incredible brands and beverages that are sure to be leaders in that marketplace.

Pete Marino, member of Truss’ board of directors and president of Molson Coors 

Europe

CleanCo (UK) 

Star Spencer Matthew launched CleanCo, a non-alcoholic brand, in 2019. In 2020, the startup received a $2 million boost from a US investment fund. 

Caleno (UK)

The British non-alcoholic spirit brand Caleño launched a canned RTD made with its Light & Zesty non-alcoholic ‘spirit’ in April 2021

Stryyk (UK)

The non-alcoholic spirit brand launched two RTDs in 2021. 

Gordon’s Gin (UK) 

After launching a low-RTD in 2018, the brand unveiled an alcohol-free version in spring 2021

APAC

Lyre's Spirit Co (Australia)

The startup Lyre’s Spirit Co was founded in 2019 and is today an awarded non-alcoholic spirits company. In 2021, the company launched six new RTDs developed exclusively for the United Kingdom’s market. 

For the first time since we’ve been recording alcohol consumption, we have a generation that’s approaching the category and either consuming far less and in moderation, or not coming into the category at all.

Mark Livings, Lyre’s Co. co-founder, and CEO, How the founder of non-alcoholic spirits brand Lyre’s spotted a ‘tectonic shift’ to take on the world

AF Drinks (NZ)

Founded in December 2020 by Eat My Lunch founder Lisa King, Curious AF drinks is now available in 350 stores nationwide. In August 2021, they launched their brand in Singapore and are eyeing Southeast Asia, Japan, and South Korea. 

Finery (NZ) 

Premium vodka soda RTD brand Finery launched alcohol-free RTDs in 2020. In summer 2021, they entered the Australian market. 

With more people looking for non-alcoholic drink options than ever before, we wanted to offer a delicious drink without the sugary calories often associated with non-alcoholic drinks. Since launching Finery cocktails earlier this year, we’ve had great feedback on the flavours. We wanted to offer people the same great taste but without the alcohol. By removing the alcohol content we’ve made it even healthier than before, ensuring non-drinkers get to enjoy the taste of the original Finery, without the calories associated with alcohol.

Jane Allan, Finery Founder, The summer drink you need to try!

Altina (Australia)

Altina (2018) has for ambition to shake Australia’s drinking habits. On top of producing delicious alcohol-free cocktails, the company provides workshops for employers to maintain a healthy workplace drinking culture. 

East Forged (Australia) 

Founded in 2020, East Forged is a brand of ice tea looking to stand as an alternative to beer, infusing cold-brew with Pitaya, Calamansi, and Yuzu fruit flavors.

Monday Distillery (Australia) 

Monday Distillery is another Aussie non-alcoholic beverage company ready to fight peer pressure with the world’s first ready-to-drink mezcal product. The brand was very successful and sold half a million bottles in 2020. They’re now looking at one million bottles for 2021. Monday Distillery also backed up hard seltzer RTD brand Wise Craic

Others

Trends in Japan

Japan stands as a sizeable non-alcoholic beer market, the largest non-alcoholic RTD market in the APAC region, and a low- and no-alcoholic wine consumer, even though the category is still niche. In the past few years, the market expanded, fueled by the rise of health-consciousness, offering a wide range of new products, including beer, wine, spirits, chuhai, cocktails, plum wine, and sake. 

The beer category largely dominates the Japanese non-alcoholic market, but RTDs are garnering attention.

Kirin launched Japan's first non-alcoholic beer with a 0.00% alcohol in 2009. After that, the recognition of non-alcoholic beverages expanded rapidly as people intolerant to alcohol, drivers, and pregnant women could join the sober fun. In the same year, Asahi, Suntory, Sapporo, and other companies released similar products one after another, establishing the non-alcoholic beverage genre. The following year, in 2010, non-alcoholic beverages other than beer (RTD-taste beverages) such as cocktails, chuhai, and umeshu (plum wine) joined the list. 

Japanese consumers are aware of non-alcoholic options.

One of the reasons behind the significant expansion of the non-alcoholic beverage market in the last decade is the influence of the increasing number of people concerned about their health. More and more people adopt non-alcoholic beverages because they are worried about their health when they drink and want to moderate their consumption. In other words, non-alcoholic options come in as an excellent compromise to enjoy a drink in social situations or at-home to relax, without giving up on alcohol entirely. 

According to a 2015 consumer survey, 96.6% of consumers are aware of non-alcoholic beverages; 67.6% of those who drink at least once a month said that the amount they drink has "increased" compared to three years ago.
"The Non-Alcoholic Beverage Boom: Now and in the Future” (In Japanese)

Though the same could perhaps be said of other regions, Japanese consumers used to seek alternatives to alcoholic beverages for their functional aspect. But with the category expansion and brands investing more in communication, the wind turned. Today, the emotional dimension of non-alcoholic drinks speaks to the new generation of sober-curious consumers. Furthermore, innovation brought up drinks compatible with food and bringing a new social dimension to the mix.

As a result, the category is outgrowing its substitute characteristic. It may be on the verge of becoming an independent one, catering to people’s need to embrace moderation and sobriety as a lifestyle. The Japanese younger generation, the millennials, and next to them, the generation Z, like alcohol, but they aspire to enjoy their time without getting drunk.

See you next week! 

We’ll take a closer look at Japan’s drinking culture.


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