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UK Alcohol Market Shifts Towards Low and No Alcohol Options
The UK alcohol market is undergoing a significant transformation, with a growing trend towards low and no alcohol drinks. This shift is driven by health-conscious consumers seeking quality alternatives, and the trend shows no signs of slowing down.
Diageo, the company behind Guinness stout and Johnnie Walker whisky, is one of the major players capitalising on this trend. The company views moderation as a "significant growth opportunity" and is thinking about how to appeal to consumers concerned with portion and calorie control.
According to Kantar's Fraser McKevitt, non-alcoholic drinks are gradually marching into the mainstream. Figures from market research firm show that nearly seven in every 100 households bought a non-alcoholic drink last month, pushing sales up by 21%. This growth is reflected in retail sales, with Ocado reporting a 28% increase and Waitrose a 32% rise in sales of non-alcoholic and low-alcohol drinks.
No and low alcohol beer remains the dominant category, but alternative spirits have also seen strong growth. In the last year, the value of these spirits grew by +13.3%. Supermarkets are also reporting surges in sales for these products, with low and no spirits sales up 85% and low and no beer sales up 50%. Online searches for non-alcoholic drinks have also increased dramatically, with non-alcoholic lager searches up 756%.
The industry is pushing for regulatory changes to further boost growth. One such change would be aligning the UK’s strict alcohol-free beer definition (max 0.05% ABV) with more lenient international standards, which would encourage more investment and innovation in these categories.
The overall beverage alcohol market faces volatility, but low and no alcohol categories experience cross-category volume growth. This growth is expected to continue, supported by increasing retail availability, consumer demand, and potential regulatory adaptations.
Popular non-alcoholic drinks in the market include Mother Root and Trip, a sparkling drink infused with CBD. BuzzBallz, a potent, pre-mixed cocktail that comes in a ball-shaped can, is also gaining popularity as an alternative to traditional aperitifs like gin and tonic.
Traditional aperitifs are being replaced by drinks like Hugo Spritz. Younger consumers, particularly those in the Gen Z demographic, are seen as more discerning and thoughtful about what they consume. Simon Dodd, the boss of pub chain Young's, stated that consumers are willing to pay a premium for good food and drinks.
Despite the increased uptake of weight-loss drugs, there is nothing that can truly suppress Brits' appetite for a night at the pub with friends. Terry Smith, a veteran fund manager, dumped his stake in Diageo due to the rise of these drugs, but Diageo's interim boss, Nik Jhangiani, views consumers who are moderating their drinking habits as an opportunity. Jhangiani also mentioned that Diageo is keeping a close eye on the impact of these drugs.
Merrille Kick, founder of Trip, a sparkling soft drink infused with CBD, stated that young people drinking less is not a problem. She believes that young people are more discerning and thoughtful about what they consume, and that this trend is a positive one.
In summary, the UK alcohol market is experiencing a significant and accelerating shift towards low and no alcohol options. This trend is expected to continue growing, supported by increasing retail availability, consumer demand, and potential regulatory adaptations.
- In response to the growing health-conscious consumer base, Diageo has identified moderation as a "significant growth opportunity," exploring ways to create quality alternatives in the food-and-drink sector, specifically focusing on low calorie and portion control.
- Science is increasingly becoming relevant in the health-and-wellness lifestyle, as evidenced by the growing interest in non-alcoholic beverages infused with CBD, such as Mother Root and Trip.
- As the UK alcohol market transitions towards low and no alcohol options, investments in the food-and-drink sector, particularly in the research and development of alternative spirits, are expected to see an uptick due to increased demand and potential regulatory changes.
