Here’s something many people don’t know. In the United States, non alcoholic beverages are not alcohol free. According to US standards, the term “non alcoholic” applies to any beverage with an ABV (alcohol by volume) below 0.5%. Alcohol free labels are reserved for malt beverages containing no alcohol1. The distinction between non alcoholic and alcohol free beverages is a salient one. The non alcoholic (or NA) beverage market is developing rapidly and verging on becoming a mainstream industry. Consumer intelligence data has revealed an expanding NA market along with a steadily increasing demand for non alcoholic beverages; non alcoholic beverages (as a percentage of total alcoholic beverages sales) nearly doubled from 2018 to 2021. The real question is why? The answer is highly relevant as it affects both wholesale and retail establishments. One of the main reasons, according to NeilsenIQ, has to do with health concerns and changing demographics2. Younger consumers are in general less interested in drinking alcohol and consumers of all ages are increasingly concerned with health and wellness. Shifts in culture and lifestyle choices, particularly amongst Gen Z consumers, have fueled an unprecedented demand for alcohol free beverages and related products. One obvious example of this is the rise of the CBD industry and related beverages and products. Not unexpectedly, NA or non alcoholic beverage products have likewise risen in popularity. A quiet revolution is happening amongst consumers driven to improve their overall health through lifestyle and diet modification.
The beverage industry has responded to changes in consumer preferences while simultaneously promoting education related to the shift in demand. I recently attended a lecture at the Bar Convent Brooklyn on this topic; it was highly informative and educational. Offered as part of the 2024 education program3 on June 11th, the session was called “NA everywhere: bringing nonalcoholic drinks to pop-ups, classes and events!” The lecture began with a discussion on inclusivity by quoting a recent statistic on alcohol abstinence – more than 50% of Gen Z adults have abstained from alcohol in the past six months. Alcohol abstinence has become increasingly more common (as well as socially acceptable) resulting in a burgeoning demand for non-alcoholic beverages. The educational panel included several excellent speakers, including the founders of Positive Damage Inc (Derek Brown) , Absence of Proof (Elizabeth Gascoigne), the founder of Sans Bar (Chris Marshall) and the founder of Third Place Bar (Sam Bail). The lecture began with relevant statistics on adults of LDA (legal drinking age). Gen Z consumers were mentioned as one of the most interesting demographic groups as the majority seem to be actively moderating their alcohol intake, if not abstaining from alcohol entirely. The lecturers agreed: the alcohol free trend is rapidly accelerating with at least 50% of adults of LDA attempting to moderate their alcohol intake in some form.
The recently shifting trend away from alcoholic beverages is partly due to post-pandemic cultural shifts affecting multiple industries. Following COVID-19 lockdowns, there was an overwhelming demand for new ways to gather and socialize. The pandemic also raised general awareness for health related issues, which might partially explain the trend away from alcoholic beverages. The long term effects of the pandemic had many influences on behavior and culture that we are only beginning to appreciate. In certain industries, effects were more immediately seen. As soon as the lockdowns were lifted, people wanted to get out and socialize and to be part of a community. One way to meet and socialize was (and still is) a local bar or restaurant. Such venues provide a convenient place to form connections and establish a sense of community. But not everyone wants to drink alcohol or if they do, they may limit themselves to no more than one alcoholic beverage. If someone decides they either don’t want to consume alcohol or have had enough, what are the alternatives? People seeking to socialize want to feel included and “part of the crowd.” The paucity of non alcoholic beverages at social events is an issue for non drinkers. Clearly, there’s a gap in the kinds of beverage options available; offering alcohol free alternatives is one way to access an undervalued market, with the side benefit of expanding sales and increasing profits. Customer satisfaction is a potential additional benefit; offering high quality non alcoholic drinks can serve as a draw by offering unique products. The demand for nonalcoholic beverages can be good for business in unexpected ways. It allows customers to drink more, consume more, and to have a better experience overall.
In response to the trend towards NA beverages, many bars and restaurants now offer nonalcoholic drinks on their menu. Alcohol free venues still remain a rarity however. Attempts to establish alcohol free bars have been met with both success and failure. In 2017, Chris Marshall pioneered the first nonalcoholic bar in the United States. A former substance-abuse counselor, he opened up Sans bar in Austin, Texas. His goal was to build a sober community where people could connect without feeling pressured to drink alcohol. The concept was designed to be all inclusive by allowing people to socialize minus intoxication. The success of Sans Bar is a clear indication of the need for more nonalcoholic and all inclusive spaces.
Understandably, there has been some push back against the NA movement. The main concern is that nonalcoholic beverages may reduce profitability via lost sales of alcoholic beverages to their nonalcoholic versions. In fact, this may not be the case at all. Offering nonalcoholic cocktails in conjunction with their alcoholic versions may be beneficial in several ways. One main advantage is by providing nonalcoholic drinks, a venue can appeal to both drinkers and non-drinkers, thereby allowing them to socialize freely and inclusively. Additionally, by serving nonalcoholic options, customers can stay longer and drink more as they aren’t limited by the effects of alcohol. Or they can alternate and begin with an alcoholic cocktail followed by a non-alcoholic one. By creating alcoholic versions of the standard cocktails, perception of the drink is the same, but obviously the effects are different. The alcohol free consumer no longer feels awkward or out of place; instead, they feel included by being able to consume a non-alcoholic drink made with the same level of sophistication as its alcoholic version.
From a liability perspective, correctly identifying & serving nonalcoholic cocktails is vitally important; clearly you do not want to risk serving an alcoholic beverage to someone requesting a non-alcoholic one. This point was emphasized during the lecture as part of staff education; training to prevent accidentally serving alcohol to someone requesting a non-alcoholic beverage is vital. When successful, the net effect of a high-quality non alcoholic cocktail menu is the benefit of incremental sales or sales that would not have occurred otherwise. In other words, offering high-quality non-alcohol cocktails can potentially increase profits by producing additional sales without lowering the bottom line.
This actually makes a lot of sense. As far as pricing nonalcoholic cocktails, there’s no reason they should be cheaper than their alcoholic versions. In fact, one could argue that the non-alcoholic cocktail should be more expensive since it requires production of an alcoholic spirit plus an added step to remove the alcohol. In this way, some non-alcoholic products are actually more expensive to produce. Therefore there’s no reason why a nonalcoholic cocktail should be always priced below that of its alcoholic cousin. If anything, the pricing should be variable based upon the ingredients — some nonalcoholic cocktails are probably relatively cheap to produce, whereas others might actually cost more.
Ultimately pricing comes down to what the consumer is willing to spend. Some (myself included) are willing to spend more for a high-quality NA cocktail. Especially when the cocktail is paired with food and clearly involves creativity and artistry, a higher price is justified. Likewise, when the nonalcoholic drink is simple (something like a Shirley Temple for example), it should be priced accordingly. Whatever one decides, a nonalcoholic cocktail menu offers consumers a greater variety of choices and opportunities to consume more drinks. It also allows them to remain longer, socialize more and purchase more food, snacks, etc. If you really want to look at it from a business standpoint, the non-alcoholic bar movement probably won’t have much effect on alcohol sales, people who want to consume alcohol are going to consume it. Those who don’t drink alcohol will still abstain but may feel more included and have a better overall experience.
Finally, as mentioned earlier, it’s important to make the distinction between nonalcoholic and alcohol free. Non-alcoholic beverages do contain a small amount of alcohol, up to 0.5% ABV. So if you really want to avoid alcohol, you have to specifically request an alcohol free drink4. In fact, there have been some cases where so-called nonalcoholic beers have exceeded the 0.5% ABV limit. In some instances, the limit has been significantly above the 0.5% ABV, with one as much as 1.8% ABV. Individuals consuming nonalcoholic beverages must take this into consideration but it’s probably just simpler to request an alcohol free drink if you want to avoid alcohol completely.
On a more serious note, several scientific studies have called into question the safety of consuming any amount of alcohol at all. The World Health Organization has issued an official statement in The Lancet Public Health that as far as alcohol consumption is concerned, “there is no safe amount that does not affect health” WHO cited the classification of alcohol as a known carcinogen5 to support its “no safe level” position in a news release from 2023 stating: “It is the alcohol that causes harm, not the beverage. Alcohol is a toxic, psychoactive, and dependence-producing substance and has been classified as a Group 1 carcinogen by the International Agency for Research on Cancer decades ago – this is the highest risk group, which also includes asbestos, radiation and tobacco. Alcohol causes at least seven types of cancer, including the most common cancer types, such as bowel cancer and female breast cancer. Ethanol (alcohol) causes cancer through biological mechanisms as the compound breaks down in the body, which means that any beverage containing alcohol, regardless of its price and quality, poses a risk of developing cancer.” More on this topic may be found at the WHO website’s section “No level of alcohol consumption is safe for our health.”
References:
- https://www.ecfr.gov/current/title-27/chapter-I/subchapter-A/part-7/subpart-E/section-7.65#p-7.65(f) ↩︎
- https://nielseniq.com/global/en/insights/education/2022/non-alcoholic-beverage-trends-in-the-us/ ↩︎
- https://www.barconventbrooklyn.com/en-us/education.html ↩︎
- https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9506306 ↩︎
- https://www.who.int/azerbaijan/news/item/04-01-2023-no-level-of-alcohol-consumption-is-safe-for-our-health ↩︎