What does the global low/no alcohol market look like in 2024?

The no/low alcohol category is forecast to grow at a volume CAGR of 6% between 2023 and 2027, according to the latest data from alcohol data and analysis firm IWSR.

That actually represents more modest growth than in prior years, but is typical of a market that is becoming more established. However, growth and category share varies dramatically between markets.

Grow rate slows - but expect 'robust gains' in the coming years

IWSR’s analysis is based on data from the world’s leading 10 no/low alcohol markets: which make up around 70% of global no/low volumes (These are: the US, UK, Australia, Brazil, Canada, France, Germany, Japan, Spain, South Africa).

Consumption of no/low alcohol across these markets grew 5% in volume in 2023, with the market now worth over $13bn.

Looking forward, the no/low alcohol category is forecast to grow at a volume CAGR of 6% between 2023 and 2027. That's led by no-alcohol at 7%, and with low-alcohol expanding by 3% over the same timescale.

Although this marks a slightly slower growth rate from previous years (no-alcohol grew at a volume CAGR of 8% between 2019 and 2023), the no-alcohol category is continuing to attract new recruits and thus keeps its growth potential looking promising.

“As no- and low-alcohol becomes a more established part of the beverage alcohol landscape, growth is slowing after a peak in 2020 to 2021 – but the category is poised for robust gains in the coming years, spearheaded by no-alcohol and persistently strong recruitment levels,” says Susie Goldspink, head of No- and Low-Alcohol Insights, IWSR.

No over low?

Non-alcoholic is proving to be a bigger market both in size and growth potential: now accounting for two-thirds of total no/low-alcohol category volumes.

Within that, beer and cider take the lion’s share: representing 72% of the category.

IWSR sees non-alcoholic drinks continuing to take share from traditional alcoholic beverages: predicting it will take nearly 4% of total beverage alcohol volumes across the top 10 markets by 2027.

However, interpreting that as an outright consumer preference for abstaining could be a mistake. People may be increasingly looking to switch between no and low alcohol products and full strength drinks – rather than avoiding alcohol altogether.

Categorized as ‘substituters’ – those who happily switch between full strength, low and alcohol-free depending on the occasion – these consumers accounted for 43% of no/low consumers in 2023 (45% in the millennial category), up from 41% in 2022.

The no-alcohol market in the US is now worth over $1bn​

There are significant differences, of course, between each market and consumer group.

In the US, the low/no market is expected to grow at a volume CAGR of 25% between 2019-23, and looking forward is predicted to see growth of 15% CAGR, 2023-27.

Consumers tend to be younger here: they're much more likely to be moderating alcohol than older cohorts and often have wide repertoire of no/low repertoires favorites.

In the UK, there are signs the market is maturing: however, the no/low category is still forecast to grow at a strong 8% volume CAGR from 2023-2027.

Non-alcoholic beer is the main driving force of volume growth. However, the UK’s revamp of alcohol duty in August is likely to encourage growth in low-alcohol products (as part of the biggest reform of alcohol duty in the last 140 years, drinks below 3.5% ABV now qualify for a new lower rate of duty​ – which, per liter of alcohol, is typically less than half than that imposed on drinks over 3.5% ABV). 

In the UK, millennials make up the highest percentage of no/low buyers and tend to drink no- and low-alcohol products more frequently than other groups.

In Germany and Spain, a much more modest CAGR of only 2% is expected in the no alcohol market from 2023 – 2027. But that’s in the context of a much more mature market where no and low alcohol beers have been core products for decades: and where the category already boasts a share of more than 10% of the total beverage alcohol category (compare that to the US and Canada, where the category share of total beverage alcohol is 2%).

Future markets to watch are those less developed no alcohol markets – such as Canada, the US, Australia and Brazil, says IWSR.

“In terms of growth opportunities, there is now a clear disparity between more mature and lower-penetration markets,” notes Goldspink. “Countries that are more established in no/low tend to skew towards older consumers, higher alcohol avoidance rates and lower no/low repertoires.

"Higher-growth markets generally have lower no/low penetration, and a greater share of younger legal drinking age consumers who have a higher tendency to moderate and participate more in no/low categories.”

The demographics of drinkers, too, vary between markets.

As already seen, millennials remain the largest age cohort among no/low consumers in general.

But in more developed markets - such as Japan, Spain, Germany and France - consumers skew older.

That shape how products are purchased, consumed and the type of beverages that resonate with consumers.

"Consumers in these more mature markets drink no/low beverages predominantly at home and tend to have one or two drinks per occasion,” says Goldspink.

“On the other hand, markets with the highest proportion of Millennial and Gen Z no/low consumers – such as South Africa, the US and Brazil – have more varied consumption settings, from home to wellness occasions, on-trade, and at festivals and sporting events.

"In these locations, they are more likely to have more drinks per occasion.”

Availability and social acceptance

So what's holding back even further growth? 

Taste is the first problem: with many consumers still saying they don't like the taste of products. In fact, 50% say they simply prefer other drinks. 

And availability is the second big challenge: 40% cite that as the reason they don't drink low/no more. 

The category has long been plagued by perceptions of inferiority: often dragged down by consumers’ poor experiences - sometimes from many years ago. 

The good news is that younger drinkers – free from these preconceptions and with a strong drive towards health and wellness – are willing to give the non-alcoholic category a chance. Almost a fifth of no and low alcohol consumers in the past year were new entrants: and these have tended to be younger consumers.