Each year we present the latest trends happening in the beverage alcohol industry. Some of them have simmered while others have been quick to boil. For example, over the last decade, we’ve seen the steady growth of tequila, the adoption of new technologies and the quick ascent of non-alcoholic beer, wine and spirits.
But the industry landscape is ever-changing. What was once easier to predict has quickly become an industry ripe with sudden shifts. Remember, for a moment, when everyone and their mothers were ordering Negroni Spagliatos? Thanks to social media, microtrends in bev-alc can spontaneously combust into viral sensations overnight. It makes predicting tomorrow’s trends nearly impossible much to the chagrin of alcohol brands’ marketing teams.
So what trends, if any, can we safely say will define bev-alc in 2024? While there will almost certainly be “it” moments, we can look at some of last year's trends as an indicator of what to expect this year, albeit with more finetuning. Let’s get into it.
Non-Alcoholic Alternatives Continue Their Extraordinary Growth
In short, the popularity of non-alcoholic beer, wine, and spirits is expected to continue growing. More breweries and distilleries will expand their non-alcoholic product lines to cater to health-conscious consumers and those who abstain.
Popping up beside NA Heineken and O’douls will be more and more macro brewery offerings. Take Guinness for example. Their Guinness 0.0 is showing up in stores and bars around the country and for good reason. It tastes nearly identical to its alcoholic counterpart. Which gets to our next point.
Non-alcoholic beer is growing because brewers are getting better at making it. It comes down to flavor. Alcohol is what powers much of the flavor in beer, wine and especially spirits. But through new technologies and experimentation, producers are now offering non-alcoholic options that stand up to consumer’s taste expectations.
But it’s not just beer. Wine and spirit producers are also getting into the mix, introducing new product lines meant to grab a slice of the growing pie. Last year, the Lucas Bols brand acquired Fluère, a leading non-alcoholic spirits brand based out of the Netherlands. Another example is in Germany, where producers there have a long history of producing non-alcoholic wine. By focusing on quality and technological advancements, producers such as Weingut Leitz have become leaders in the U.S. market, particularly in California, where it has been heavily supported. Even hard seltzer has recently entered the chat. In December of 2023, White Claw introduced its newest product, White Claw 0% Alcohol, a premium seltzer for adults. This begs a bigger question: have we come full circle?
According to IWSR forecasts, the non-alcoholic category will record a volume compound annual growth rate (CAGR) of +8 percent between 2021 and 2025. And in a similar analysis, found that volumes have grown on average 20 percent per year in the U.S. since 2017, now constituting a business segment worth $1.8 billion a year.
With alcohol-free bottle shops opening nationwide and consumers extending “Dry January” throughout the year, expect to see a lot more non-alcoholic offerings in 2024.
Sustainability and Environmental Responsibility Becomes More Important for Both Consumers and Producers
While we won’t harper on the unconscionable findings that 2023 was the hottest year on record, sustainability and environmental responsibility are top of mind for both consumers and producers. The truth is that the global alcohol industry is not environmentally friendly. It takes a ton of natural resources to produce and ship beer, wine and spirits worldwide. And while many producers have taken the necessary steps to reduce their carbon footprint, more needs to be done. And it’s consumers demanding the change.
A 2022 IWSR consumer report shows that 48 percent of U.S. alcohol drinkers say their purchase decisions are positively influenced by a company’s sustainability or environmental initiatives; rising to 72 percent among Brazilian alcohol drinkers, and 70 percent of urban affluent Chinese alcohol drinkers.
That’s why we expect to see more sustainability initiatives in 2024. Whether it’s globally recognized brands or local startups, increasing environmental awareness from their consumers will drive producers to adopt more sustainable practices everywhere in the supply chain. This could include eco-friendly packaging, reduced water usage, implementing renewable energy sources, and efforts to reduce the carbon footprint from shipping.
Take Absolut Vodka and Appalachian Gap Distillery, for instance. Two vastly different brands in terms of economic output yet striving toward similar goals. The Absolut company (which is owned by Pernod Ricard, is also on a similar timeline to reaching carbon neutrality across all of its brands) is on track to be 100% carbon neutral by 2030 by implementing more renewable energy into production, using recycled glass for its bottles, and introducing more circularity in the entire process, among many more initiatives.
Whereas Appalachian Gap Distillery uses new technologies such as a closed-circuit system to chill the water that cools the distillate. By doing so, the distillery has used the same water they started with, storing it in specially insulated tanks. Additionally, the steam required for vaporizing the mash is partially produced by utilizing the distillery's spent grain and stillage. The waste is transported to a nearby biogas plant that converts it into renewable energy, which is then supplied back to the distillery. The result is a distillery that produces less waste than the standard home.
Both Consumers and On- and Off-Premise Beverage Buyers Seek The Convenience Ecommerce Marketplaces Provide
The alcohol industry has seen a continued shift toward ecommerce and digital marketing in recent years. With the growth of online platforms and delivery services, consumers have embraced alcohol delivery for the same reasons as they have with meal delivery. For them, convenience is key.
According to DoorDash’s 2023 Alcohol Online Ordering Trends Report, 42 percent of alcohol shoppers use alcohol delivery services because of the convenience, time-savings and comfort they provide. 20 percent of the respondents mentioned that they found the ease of not having to carry drinks home as the main benefit of delivery services. Moreover, 67 percent of those surveyed stated that they order alcohol online as a treat. Additionally, some people are attracted to online ordering for its affordability, with 18 percent stating that they use on-demand alcohol delivery to save money. The report also states interesting purchasing behaviors, with 57 percent of orders placed for same-day delivery of which 15 percent are classified as last-minute or urgent. This convenience is why the industry is poised for growth.
An IWSR Drinks Market Analysis found that total beverage alcohol ecommerce sales were poised to grow 66 percent by 2025, reaching $42 billion annually, with the U.S. expected to lead that growth.
Drizly, a B2C alcohol delivery service via its mobile app and website, was acquired by Uber in 2021 to integrate into its Uber Eats ecosystem. While its recent announcement to shut down may have implications for the Drizly brand, the service itself isn’t going anywhere. More so, a centralized way to order alcohol, alongside other common goods such as groceries or meals via Uber Eats, will become even easier for consumers through its high visibility in the market.
But convenience isn’t just important to consumers, it’s valued by businesses, too. On- and off-premise retailers have been looking for ways to streamline their ordering processes for decades. Exacerbated by the pandemic, a shift to online ordering for on-premise bars and restaurants and the implementation of delivery for off-premise retail stores, became commonplace — essential even. That’s why many distributors have implemented digital ordering platforms to connect their customers with sales reps.
Of course, here at Provi, we’re in the business of connecting all three tiers of the industry, which is why our marketplace is even more efficient for on- and off-premise buyers, making searching and discovering new products easier, streamlining communication with sales reps, placing and managing orders with all your distributors simple and getting suppliers in front of more retail buyers — all in one place.
As more on- and off-premise buyers find out the benefits of ecommerce marketplaces and consumers rely on them for convenience and ease, the digital transformation in bev-alc will continue in 2024. Create your account today to get started!
Consumers Opt for Functional Beverages, Driven by the Growth of Health & Wellness Movements
Health and wellness have been trending in bev-alc in recent years. Part of it is rooted in the rise of the low- and no-alcohol movement as consumers become more conscious about their consumption. Part of it is also rooted in health movements, in particular, the rise of functional and low-calorie beverages. The hard seltzer category has benefitted from the last point, but also, driven this segment of the industry forward, capitalizing on its value proposition of being low in calories, low in sugar and low in carbs.
There appears to be a significant shift in consumer behavior, as individuals now prioritize their overall health and well-being. This trend is gradually transforming the market landscape. A perfect example of this can be seen in the growing popularity of plant-based meats. Similarly, the demand for no- and low-alcohol beverages seems to be following a similar upward trajectory.
Beyond Dry January and Sober October, consumers are spreading teetotalism throughout the year which creates more space for non-alcoholic beverage brands to sap market share from big alcohol. But it’s not just about abstaining entirely. According to a NielsenIQ 2024 trend report, 94 percent of non-alcoholic beverage buyers also purchase beer, wine and spirits containing alcohol.
This growing segment is led by Gen Z and Millennial consumers. Forty-one percent of this segment say a top reason for choosing a non-alcoholic beverage is to be healthier and 35 percent choose to save money.
But it’s not just non-alcoholic beverages that consumers reach for. Known as functional beverages, these prepackaged drinks are blended with ingredients such as herbs, adaptogens, nootropics, mushrooms, electrolytes, vitamins, minerals and probiotics. They also have low sugar content and few artificial ingredients which appeal to health-conscious consumers as well.
Functional beverages are big business. The functional beverages market size was valued at $110,148.9 million in 2020 and is estimated to double by 2030, registering a CAGR of 5.9% from 2021 to 2030, according to a report from Allied Market Research. So what exactly are these functional drinks and what do they do? Let's start with one of the leading segments in the category: adaptogens.
Adaptogens are nothing new. The term was first coined in 1947 by Nikolay Vasilievich Lazarev, MD, a Soviet and Russian scientist and toxicologist and refers to herbs and other plant materials that help the human body adapt to stress. Types of adaptogens that show up in this segment include hemp and CBD, compounds found in marijuana that do not contain THC. Other adaptogens include Ashwagandha (sometimes called Indian ginseng) which has been found to reduce anxiety in adults, Turmeric which has been shown to regulate cortisol levels and reduce stress, and Kava root, which studies show may naturally reduce anxiety. Nootropics, which are designed to enhance brain function, are also a popular segment of the industry. When blended and packaged for consumption, these drinks are marketed as healthy alternatives to alcohol.
Prebiotics is another growing segment. Riding on the heels of Kombucha’s popularity, beverages containing prebiotics and probiotics are becoming widely available, with more product lines entering the market each year. Prebiotics and probiotics are known to promote a healthy gut microbiome and are marketed as such.
As more consumers opt into this growing movement, expect to see more product lines entering the market, taking their fair share from declining alcohol sales.