Consumers turn to mood-elevating zero-proof beverages, as product launches slowdown, SPINS finds

14-Oct-2024 - Last updated on 14-Oct-2024 at 13:27 GMT

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Sober-curious and -conscious consumers are pushing the non-alcoholic alternative market to new heights, creating market sub-categories focused on functionality, despite recent slowdowns in product innovation, SPINS shared in a recent report.

Non-alcoholic (NA) alternatives sales reached $493 million for the year ending Aug. 11, growing 33% year-over-year, according to SPINS data. Despite the growth, NA beverages accounted for less than 1% of the total alcohol department sales, which totaled $74 billion for the same time period, per the same period.

NA beer is the largest sub-segment of the market at $383 million, with dollars growing 24% and units by 21%, for the year ending Aug. 11. NA hard cider, flavored malt beverages and ready-to-drink (RTD) cocktails saw the largest unit growth, growing by 480%, 83% and 105%, respectively, for the same period.

The emerging ‘euphoric’ category focuses on a functional buzz

Consumers are still seeking out a buzz when they are drinking NA beverages, which is increasing demand for functional ingredients. SPINS dubbed this category of functional NA beverages the “euphoric” category and includes brands like Kin Euphorics and hiyo.

Ashwagandha, reishi mushrooms and magnesium are among the top functional ingredients, with $10.8 million, $6.6 million and $3.9 million in sales, respectively, for the year ending Aug. 11. Additionally, hemp seeds and derivatives, chaga and zinc are among the fastest growing ingredients, growing by 605.6%, 366% and 146%, respectively, for the same period.

NA cocktail launches dip, while malt beverages tick up

Despite NA’s growth, beer brands that quickly innovated in the category in 2022 and 2023 have pushed back on new products, while brands early to the market continue to expand their share, SPINS explained. The NA category released 86 new products this year ending Aug. 10, compared to 213 releases for 2023.

Recently, Mintel found that 65% of new product releases so far in 2024 were reformulation, relaunches, line extensions or new packaging and not net-new products.

NA RTD cocktails saw the biggest decline in new product launches, only launching 16 for the year ending Aug. 11, compared to 72 launches in 2023 and 33 in 2022. However, the sub-category more than doubled in dollar sales, with NA dollar sales reaching $10.2 million for the year ending Aug. 11, compared to $4.8 million in 2023.

NA malt beverages were the only subcategory to see an increase in new product launches, with NA hard seltzers growing in popularity due to brands like White Claw, Quirk, Happi and Unspiked, SPINS shared. Hard seltzers accounted for 14% of the NA flavored malt beverage category for the year ending Aug. 11, up from 1% in 2023.