Close Menu

Alcohol-adjacent market value nears $100m

The ‘alcohol-adjacent’ category is valued at US$98 million in the US and is expected to grow in volume by 12% annually from 2021 to 2025, according to IWSR Drinks Market Analysis.

Three Spirit range
Alcohol-free brand Three Spirit offers a range of functional drinks

The IWSR defines the ‘alcohol-adjacent’ sector as non-alcoholic drinks that offer mood-enhancing or functional benefits, such as CBD, nootropics and adaptogens, while excluding THC products.

Alcohol-adjacent products include non-alcoholic malt beverages; bitters; wine replacements; kombuchas that target alcohol or apéritif occasions; and nootropic and adaptogenic drinks.

The IWSR noted that the total no- and low-alcohol segment in the US is currently valued at approximately US$2.2 billion, with volumes expected to continue to grow.

As of 2021, 33% of the US adult population identify as buyers of low-and-no products. Of these, 30% are no-alcohol buyers, while 32% buy both no- and low-alcohol products, the IWSR revealed.

The CBD segment currently holds the largest volume share of the alcohol-adjacent market in the States, the IWSR found. Furthermore, the IWSR said the segment is expected to develop quickly due to the passing of the Farm Bill in 2018, which legalised the sale and distribution of hemp (with a THC concentration of no more than 0.3%).

The IWSR said the future of CBD-derived beverages is complex due to their regulation in the US. Certain states are trying to regulate and sell these products without the permission of the federal government, including the Food and Drug Administration (FDA), the IWSR noted.

Looking to the future of the alcohol-adjacent category, the IWSR said product innovation will be focused on using naturally produced ingredients to create mood-altering effects.

Consumer education around what these products are, the ingredients used and their resulting effects will be crucial for category growth, the IWSR noted, as understanding of the category is low.

The no- and low-alcohol sector will outpace the total alcohol category by 2025, according to a new report from IWSR Drinks Market Analysis.

It looks like you're in Asia, would you like to be redirected to the Drinks Business Asia edition?

Yes, take me to the Asia edition No