CPG Playbook   //   January 3, 2024  ■  4 min read

Step aside seltzers, zero-proof is the new hot beverage category

Big names in the booze business are looking to cash in on sobriety. 

Diageo announced the launch of an alcohol-free version of its rum brand Captain Morgan in the U.K. in August and its non-alcoholic spirit brand Seedlip will also be launching a new product dubbed Seedlip Notas de Agave. Hard seltzer brand White Claw has also expanded its assortment with a line of 0% alcohol seltzer earlier this month. Molson Coors, which is known for its portfolio of beers, launched zero-proof canned cocktail brand Roxie in January.

Some of the largest beverage brands are vying to win the dollars of teetotalers, and for good reason. Sales for non-alcoholic beer, wine and spirits have climbed 32% this year, according to NIQ’s data from the 52-week period ending Oct. 7.

Nicholas Rowland, senior marketing manager for Seedlip, told Modern Retail in an email that the company had “strong double-digit growth” throughout all of its channels and markets. Diageo — the maker of Johnnie Walker, Baileys and Guinness — acquired a majority stake in Seedlip back in 2019. Seedlip is currently sold in 8,000 accounts in both on- and off-premise channels.

In contrast, the once hot hard seltzer category continues to cool. Sales of traditional hard seltzers fell 10.4% in a four week period around December 2022 to January 2023, analysts at Evercore ISI found. Molson Coors discontinued the production of its Coors Seltzer brand in the U.S. in 2021, less than a year after its debut. During its fourth-quarter earnings call, Truly hard seltzer parent Boston Beer Company said that “hard seltzer remains in decline.” 

With Dry January beginning, these non-alcoholic beverages could gain new customers. “One of the data points we have is that 29% of bev-alc shoppers are interested in switching to non-alc beverages,” said Rachel Dalton, head of retail insights at Kantar. “Many of them are still purchasing alcohol. They’re purchasing both. They just want to have the option to choose a non-alcoholic beverage when they want to.”

Indeed, there does seem to be an appetite for zero-proof refreshments. Seedlip’s Rowland said that the company is seeing growth particularly in its on premise channel — referring to establishments like restaurants, bars and hotels. 

“The long-standing trends around holistic wellbeing and mindfulness is the major driver for growth and purchase in the non-alcoholic category,” Rowland said in an email. “I also think consumers simply enjoy trying new and different products and experiences and non-alcoholic spirits fit that bill.”

But Seedlip isn’t the only brand seeing growing demand and expanding its product line.

Large players don’t want to miss out on the growth opportunity in emerging beverage categories, said Nik Sharma, CEO of strategic initiatives firm Sharma Brands. For example, White Claw has been inching into new categories this past year. White Claw’s 0% alcohol seltzers will be available in January. In addition to non-alc beverages, the brand also announced the launch of its assortment of regular and flavored Vodka in March.

Molson Coors has also been expanding to new categories, including canned cocktails and alcohol-free drinks. The company told CNN that its internal research shows that people didn’t just want to buy a non-alcoholic version of cocktails they already know. Its new non-alc brand Roxie is available in Passionfruit, pineapple and mango flavors.

“A lot of new brands have been coming out over the last few years, especially when they would launch online and sort of start to make a dent and then get into stores,” Sharma said. “I’m sure now they see the trend of non ALC and they’re thinking you know, we can’t not worry about this again and miss another wave.”

Mionetto, a popular brand of Italian prosecco, also released its own zero-proof sparkling wine, which will be available next year. Enore Ceola, CEO of Freixenet Mionetto USA, told Forbes that American drinkers drove the demand for a non-alcoholic version of its products. “We pride ourselves on listening to our consumers who have expressed interest in a low-alcohol and alcohol alternative sparkling wine from Mionetto,” Ceola said.

Sharma said the non-alcoholic beverage space is still relatively young. But once these young brands start to expand their revenue, he expects larger companies to acquire more zero-proof startups. 

“There are not a lot of brands in this space that I think are doing, you know, over $10 million a year,” Sharma said. “I think it’s still very early. But I do imagine that as soon as some of those get to $25 million-$30 million… some of them will start to get picked up.”