Mindful Drinking: The Rising Trend of Better-For-You Beverages

August 22, 2024

In 2005, Ted Flem­ing, Founder of Par­take Brew­ing, a Ground­Force Cap­i­tal port­fo­lio com­pa­ny, was diag­nosed with Crohn’s dis­ease.

Nav­i­gat­ing a new land­scape for his health inspired him to explore bet­ter-for-you drink­ing options and becom­ing a dad in 2010 was a tip­ping point. Ted decid­ed to give up alco­hol.

While his deci­sion was firm, it wasn’t an easy one. Ted quick­ly real­ized how slim the options were for non-alco­holic (NA) brands at restau­rants, bars, and vir­tu­al­ly every social set­ting. In an inter­view with Dry Atlas, Ted said:

“When I’d go out with friends […] I’d say, ‘Hey, what do you have that’s non-alc?’ If I was lucky, I’d get a Shirley Tem­ple. One ques­tion stuck with me: why can’t I have a good craft beer with my friends in this sit­u­a­tion?” 

Ted called this ques­tion a “nudge” – one that sparked his entry into the NA space with Par­take Brew­ing. Ted’s ini­tial goal was to solve a prob­lem for him­self. Ulti­mate­ly, he cre­at­ed a solu­tion for many oth­ers.

Since Ted’s jour­ney began, the growth in alter­na­tives to alco­holic bev­er­ages has con­tin­ued to gain momen­tum. Today, con­sumers want to make health­i­er choic­es with­out com­pro­mis­ing their social lives, and inno­v­a­tive com­pa­nies like Par­take are step­ping in to fill this niche.

Why NA beverages?

Trans­par­ent dia­logues from celebri­ties and influ­encers shar­ing health ben­e­fits from their sober-curi­ous jour­neys have become com­mon­place on social media. As a result, an increas­ing num­ber of peo­ple want to tap into NA health ben­e­fits. To name a few: 

• Improved men­tal health: Alco­hol alters our brain chem­istry and can increase stress and anx­i­ety in the long run.
• Bet­ter sleep: Cut­ting back on alco­hol could improve REM sleep, com­bat­ting brain fog.
• Improved heart health: Alco­hol can dis­rupt heart health, con­tribut­ing to high blood pres­sure, strokes, and car­diac arrhyth­mia. 
• Height­ened focus: Going alco­hol-free enhances the func­tion­ing of the pre­frontal cor­tex which is respon­si­ble for deci­sion-mak­ing and high­er-order think­ing.
• Strength­ened immune sys­tem: Reduced alco­hol con­sump­tion has a marked impact on gut health that con­tributes to increased immu­ni­ty.

While health is one part of the equa­tion, drink­ing is a huge part of West­ern cul­ture, and it isn’t going away any­time soon. 

Peo­ple like Ted are look­ing for some­thing that can replace soft drinks and soda with­out revert­ing to alco­hol, instead of being per­sis­tent­ly asked, “Where’s your drink?” at par­ties.

Low- and non-alco­holic bev­er­ages that repli­cate the fla­vor, and taste of alco­hol give peo­ple these inclu­sive alter­na­tives. Instead of replac­ing the mar­ket for alco­hol, the mar­ket could be aug­ment­ed by cater­ing to a group that nev­er had options in the first place. 

This is evi­denced by Ted’s sto­ry and Par­take Brew­ing, a Ground­Force Cap­i­tal port­fo­lio com­pa­ny craft­ing award-win­ning non-alco­holic beers with nat­ur­al ingre­di­ents that are low on calo­ries, too. 

Sim­i­lar­ly, Liq­uid Death, anoth­er Ground­Force Cap­i­tal port­fo­lio com­pa­ny now val­ued at more than $1.4 bil­lion, was mar­ket­ed as “the health­i­est thing you can drink”, to con­cert-goers who were look­ing to quit drink­ing. 

How young consumers are leading the charge

For younger gen­er­a­tions, cut­ting back or com­plete­ly abstain­ing from alco­hol is a ris­ing trend. Mil­len­ni­als form the largest con­sumer group for low/no alco­hol drinks, dri­ving the demand for alter­na­tives. 

Accord­ing to BCG, “23% of Gen Z and 24% of mil­len­ni­al respon­dents report­ed drink­ing non-alco­holic beer, wine or spir­its often, while only 6% of Gen X and 1% of boomers said the same.”

As a result of this high­er demand, inno­va­tion with­in the space is accel­er­at­ing. The val­ue of the glob­al mar­ket is now at $13 bil­lion, and the no/low-alco­hol cat­e­go­ry is expect­ed to grow annu­al­ly by 7% (CAGR) between 2022 and 2026. The cat­e­go­ry is grow­ing sig­nif­i­cant­ly faster in the U.S. than it is glob­al­ly at the moment. From 2019 to 2023, the low/no alco­hol mar­ket in the U.S. grew vol­ume at a 25% CAGR and is fore­cast­ed to grow vol­ume by 15% from 2023 to 2027.  

Indus­try lead­ers are tak­ing note as well. Anheuser Busch InBev, the world’s largest brew­er in the world, aims for its no and low-alco­hol beers to account for one-fifth of sales by 2025. This shift par­al­lels Coca-Cola’s expan­sion into health­i­er low-sug­ar bev­er­ages and could be the alco­hol indus­try’s reck­on­ing with the growth in health and well­ness trends.

Low-to-no alcohol adoption

Mar­ket insights point to unique trends for low-to-no alco­hol adop­tion, which nich­es are explod­ing, and what we can expect to see for con­sumer adop­tion. 

Here’s how the num­bers break down:

• Low-to-no beer cider, wine, and spir­it prod­ucts grew “over 7% in vol­ume across 10 key glob­al mar­kets in 2022”, accord­ing to IWSR Drinks Mar­ket Analy­sis. 
• In 2018, the mar­ket val­ue of these prod­ucts was $8 bil­lion. In 2022, this val­ue sur­passed $11 bil­lion. 

The growth is occur­ring at a faster pace too. From 2018 to 2022, the CAGR grew by 5% in the top 10 mar­kets. From 2023 to 2027, vol­umes are fore­cast­ed to grow at a CAGR of 6%. 

NA bev­er­ages are spear­head­ing this, with an expect­ed growth of 7%, and low-alco­hol would expand by 3% over the same timescale. 

With­in these nich­es, some bev­er­ages are more pop­u­lar than oth­ers:

• No-alco­hol accounts for two-thirds of no/low-alco­hol cat­e­go­ry vol­umes, with 72% of these made up of beer or cider (as of Decem­ber 2023).
• Inter­est in options like kom­bucha and agave has spiked. 
• The glob­al kom­bucha mar­ket was esti­mat­ed at $2.97 bil­lion in 2024 by Mor­dor Intel­li­gence and is expect­ed to grow at a CAGR of 9.48% in the next 5 years. 

Ground­Force Cap­i­tal’s port­fo­lio com­pa­ny, SYSTM Foods, recent­ly acquired Humm Kom­bucha, and it’s posi­tioned to tap into this growth.

Anoth­er indi­ca­tor of the adop­tion of no/low alco­hols is the dif­fer­ence in mature and devel­oped mar­kets. Pen­e­tra­tion of no/low-alco­hols in mature mar­kets like Ger­many and Spain is as much as 10%. But in devel­op­ing mar­kets like the U.S., Brazil, Cana­da, and Aus­tralia, the fig­ure is less than 2%. 

Growth fore­casts in mature mar­kets are only a CAGR of 2% from 2023 to 2027. In con­trast, new entrants from devel­op­ing mar­kets are high­ly like­ly to be repeat cus­tomers.

The mindful drinking initiative

The trend is also being dri­ven more by “sub­sti­tuters,” or mind­ful drinkers, who switch between full-strength alco­hol and no/low alco­hol. Their pres­ence is grow­ing:

• 82% of non-alco­holic bev­er­age con­sumers also con­sume alco­hol, show­ing a pref­er­ence for mod­er­a­tion over absti­nence. 
• Sub­sti­tuters have grown from 43% to 45% as com­pared to “abstain­ers”, who have declined from 19% to 17%. 
• In the U.S. and France, sub­sti­tuters have reached pro­por­tions of 45% and 50% respec­tive­ly. 

There is evi­dence to sug­gest that even when peo­ple do drink, they are opt­ing for options with health ben­e­fits. Accord­ing to OI-Glass research: 

• 44% of alco­hol drinkers in the U.S. try to select the “health­i­est alco­hol option.” 
• 57% of 22 to 54-year-olds review nutri­tion­al infor­ma­tion before drink­ing. 

Brands like Fly­ing Embers and JuneShine which eschew arti­fi­cial fla­vors, sweet­en­ers, and sug­ars are cap­tur­ing this mar­ket as well. Fly­ing Embers is renowned for its pio­neer­ing work in nat­ur­al car­bon­a­tion and adap­to­gen blends, while JuneShine has estab­lished itself as a fron­trun­ner in spir­it-based cock­tails.

Com­pa­nies like these are feed­ing into the mind­ful drink­ing move­ment while prov­ing indul­gence and nutri­tious alter­na­tives can coex­ist in a sin­gle bev­er­age.

The bottom line

Although low-to-no alco­holic bev­er­ages may nev­er ful­ly replace alco­hol, one thing is clear: bet­ter-for-you bev­er­ages are here to stay and will con­tin­ue to take share of the mouth and wal­let of the con­sumer.

The shift in drink­ing pref­er­ences is an oppor­tunis­tic time for emerg­ing com­pa­nies. Some might be inspired to make health and lifestyle improve­ments like Ted Flem­ing. Oth­ers will be look­ing to tap into new mar­kets that reflect con­sumer pref­er­ences for health­i­er alter­na­tives. 

Brands that solid­i­fy their posi­tion in the space will emerge as mar­ket lead­ers in one of the most promis­ing bev­er­age cat­e­gories today.