US and Germany to lead alcohol-free ‘spirits’ growth

The US, Australia and Germany have been highlighted as markets where non-alcoholic ‘spirits’ are expected to grow by double digits between 2023 and 2027.

IWSR Drinks Market Analysis expects non-alcoholic ‘spirits’ to grow by a compound annual growth rate (CAGR) of 14% in the US, 12% in Australia and 11% in Germany over the next five years.

Between 2022 and 2023, Australia reported volume growth of approximately 17% for the segment, while the US and Germany soared by a third, increasing by 33% and 34% respectively.

Other markets to report substantial rises last year include Spain (up by 33%), South Africa (up by 21%) and the UK (up by 13%). The IWSR notes that the UK will grow by approximately 4% over the next five years (2023-2027), while South Africa is expected to post 8% growth.

IWSR’s recent report on the no/low category revealed that the sector is expected to increase by a CAGR of 6% between 2023 and 2027 in 10 key markets. The category’s growth will be driven by no-alcohol, as opposed to low-alcohol (defined as 30% ABV and under), the IWSR estimates. No-alcohol is predicted to increase by 7% with low-alcohol rising by 3% over the same period.

The IWSR looked at 10 key markets – Australia, Brazil, Canada, France, Germany, Japan, Spain, South Africa, the UK and the US – which together account for around 70% of global no-and-low volumes.

Susie Goldspink, head of no- and low-alcohol at IWSR, told The Spirits Business last month that low-and-no reached its peak in 2021. Speaking specifically about spirits alternatives, Goldspink said the sector’s growth has plateaued to an approximate 4% mark after growing by double digits in 2021.

Growth in the low-alcohol ‘spirits’ segment last year was led by countries such as France (up by 7%) and Germany (up by 4%), with the majority of key markets reporting declines.

Goldspink singled out France as a growth market for the category, driven by younger drinkers. “We’re seeing a bit of a shift in France in terms of younger consumers and new types of products,” she explained. France is expected to report a CAGR increase of approximately 11% for low-alcohol ‘spirits’ over the next five years, while no-alcohol is due to drop by 1%.

Over the next five years, only Brazil, France and the UK are expected to post growth for low-alcohol ‘spirits’.

Goldspink believes that the no-alcohol category offers a “more simplified proposition” as consumers can get confused about the ABV of a long drink that is mixed with a lower-ABV product.

She highlighted that one barrier to growth for non-alcoholic ‘spirits’ is its price, with smaller bottle formats providing sampling opportunities.

Within the 10 key markets analysed by the IWSR, the no-alcohol category has a split of: 15% on-trade, 70% off-trade and 15% e-commerce.