A Closer Look at the Low-Cal, Low-ABV Trend

January 17, 2019 In Industry Trends

Younger consumers are taking hold of the beverage alcohol market and bringing their health-conscious preferences with them, fueling speculation that low and no ABV products will take off this year.

Early indications suggest this trend will play out across all categories. A panel of leaders in the bar world recently agreed that low and no ABV cocktails will be 2019’s biggest hit. Non-alcoholic beer sales are also expected to grow, with some researchers projecting $25 billion in total sales by 2024.

For many, these are the rumblings of a significant shift in the industry — one driven by the growing influence of millenials and Gen Z as they age up, and their desire to redefine social experiences and the alcoholic products that accompany them.

New Generations with New Preferences

Millennial preferences have made “health & wellness” a priority for many industries. And now, their preferences are being passed on to — even amplified — by Gen Z. These young adults care about everything that goes into their food and drink, from the quality of ingredients to the impact they will have on their health.

While Gen Z (born from 1996-2012) has only just reached the legal drinking age in the U.S., research indicates that they’re drinking about 20% less than millennials — a behavioral change that many believe will persist into their adult years.

Social media is also having a big impact on Gen Z preferences.

Digital connectivity allows people to interact without actually meeting in person — at, say, a bar — creating competition for activities and distractions that other generations traditionally fell back on.

But millennials and Gen Z’ers aren’t a lost cause for the bev-alc industry; they’re a challenge that requires a little innovation.

Millennials and Gen Z’ers still want the experiences of community and excitement that come with alcoholic occasions — just on their own terms. That means healthier products, marketed to them in their own digital language.

A New Crop of Products

Many brands are already rising to the challenge of these younger consumers, causing a wave creativity across categories as we head into 2019:

  • Sessionable beers are reemerging. You’ve probably heard that Michelob Ultra (which boasts a 4.2% ABV with 2.6 carbs and 95 calories per bottle) is experiencing huge market growth. In the last five years, it has averaged 16% growth year-over-year, while market staples like Budweiser, Miller Lite and Coors Light have either lost share or stayed steady.

    In their stead, Heineken and Pabst Brewing are both debuting low- or no-ABV beers in the U.S. this year. Craft brewers big and small are also following suit, changing focus from IPAs and imperial-everything to “crushable,” low-ABV beers as well as completely non-alcoholic options.

    Athletic Brewing, one of a handful of non-alcoholic craft breweries that have opened recently, wants to cater to the people who don’t drink alcohol: “We think that we’re going to add all of these occasions into the craft beer market rather than cannibalize them,” co-founder Bill Shufelt told BrewBound.

  • Major brands are putting out low-cal, low-ABV pre-mixed beverages. Just take Heineken’s “Strongbow 100-Cal Slim Cans”, which debuted this January.

    Other big plays include Miller Coors’ “Cape Line” canned cocktails, containing only six all-natural low-cal ingredients, and Constellation’s “Corona Refresca”.

    Mocktail bars are also popping up (and staying put). Listen Bar in NYC, which serves non-alcoholic beverages, is expanding and crowdfunding to open a permanent location.

  • Low-ABV wine is also emerging. But it’s a slightly different beast than low-cal pre-mixed beverages, mocktails and beer. The alcohol content differs between vintages and can’t be controlled as easily as with beer or mocked as easily as with spirits. In fact, many wines have seen an increase in ABV due to changes in the climate.

    But low alcohol wines do exist from certain variances and regions, and retailers should keep an eye on these stocks as the overall trend evolves.

2019: What to Expect

The last 12 months have seen a number of new low- and no-ABV beers from big brands. In addition to those we already mentioned from Pabst and Heineken, AB InBev stated that it plans to grow it’s alcohol-free offerings to 20% of its global volume by 2025. Currently, these offerings make up about 8% of its worldwide volume. Keep an eye on all of these new releases. Check your data to see if your consumers are trending toward lower-ABV products. If so, plan to experiment with more options.

What else to watch for:

  • A shift in the sale of liqueurs (like Aperol) and bitters to facilitate lower-alcohol, spritz-style cocktails at home.

  • The search for wines from regions that produce lower-ABV wines, like French Beaujolais and Portuguese Vinho Verde, among others.

As more of these products hit the market this year, we’ll be tracking sales, success and market response to determine whether or not the offerings actually land. And while the year progresses, this data will help categorize low and no ABV as a fleeting trend or a more solid shift in the industry.

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