The NoLo drinks industry is having its moment and with booming growth rates and promising sales forecasts, it doesn’t appear to be giving up the spotlight any time soon!
Whilst it continues to flourish, we wanted to reflect on how far the industry has come and talk about what it is that makes NoLo so awesome. We’ll also delve into the reasons behind its impressive growth and why we should all care!
What is NoLo?
NoLo is an abbreviation of no and low alcohol. It’s used to refer to non-alcoholic drinks or drinks with a lower percentage than their alcoholic counterparts. For a full rundown on NoLo terminology, make sure you check out our blog on the meaning of alcohol-free.
What’s growing exactly?
So, the NoLo industry is booming…but when and where? And by how much?
The truth is that it’s growing all over the place and by quite a lot. But let’s start with the UK. According to the IWSR (International Wine and Spirits Record), sales of NoLo drinks increased by 17% in 2021. In fact, Tesco recorded an increase in the sales of no- and low-alcohol drinks by 106% year-on-year, whilst Sainsbury’s recorded 91%.
And it’s not just the UK experiencing growth, the NoLo industry is trending in other countries too, including Germany, Spain, Canada and the US.
Whilst the first category to really take off was NoLo beer, the alcohol-free wine, non-alcoholic spirits and 0% ready-to-drink categories have started to follow in their footsteps. Currently, beer represents 75% of all NoLo beverages and spirits only 0.6%. This compares to traditional alcohol in which spirits have a much larger 24.7% market share. Therefore, as the market matures and spirits "catch up" there could be a 41x upside in market share. This is represented by the much higher CAGRs (compound annual growth rates) being seen in spirits, which are currently forecast to grow by 14% annually in the next few years…but more about the future later.
For now, what’s important is that stylish and sophisticated drinks seem to be the new face of the NoLo industry, with consumers seeking something on par with their refined evening tipple.
Why is the NoLo industry growing?
Because it’s awesome!
Oh, you wanted more details? Ok then!
Whilst a drink-free January used to be all the rage, many consumers are beginning to see the benefits of no alcohol all year round and cutting back on the booze (or abstaining altogether) has evolved to become a global movement.
According to Emily Neill, COO of IWSR Drinks Market Analysis, “beverage alcohol companies have invested heavily” to meet that demand, leading to the introduction of “a number of innovative new products, and many established mainstream brands have recently crossed over to develop no/low alcohol versions of their popular beer, wines, and spirits.”
More investment means more growth, more growth means more options for consumers. Of course, more options do not always positively affect sales or increase demand but we believe that when consumers see how many incredible alcohol alternatives there are, they’ll be even more eager to partake in NoLo drinking.
And our hunches have often been right before ;) but do we have any evidence to prove this hunch?
You betcha! Keep reading to find out more.
Who is drinking NoLo?
It appears that the youth are leading the way with 46% of the LDA Gen Z consumers and 41% of the Millennials that took part in the IWSR research more likely to substitute alcohol for alcohol-free than 36% of the Boomers.
What’s more, according to the IWSR, “a distinction in how and when consumers choose no- versus low- products is becoming increasingly evident. Across key markets, the majority of no/low consumers can be identified as ‘Substituters’ – those who use no- and low-products in place of full strength for certain occasions.”
20% of the LDA Gen Zs and 23% of the Millennials defined themselves as ‘Blenders’, meaning they switch between no/low and alcoholic drinks on the same occasion. In other words, they choose to moderate their drinking.
Why should we care about the NoLo industry?
Up until recently, going out for a drink meant you would have to choose an alcoholic beverage or opt for juice or the designated driver’s lime and soda. The growth of the NoLo industry has changed all of that. Nowadays, adults can enjoy a sophisticated no or low alcohol drink whenever they please, no matter their motives.
Of course, there’s a lot further to go in terms of getting NoLo drinks available in all venues but there are now plenty of alcohol-free bars in London and alcohol-free restaurants across the UK and the NoLo industry is definitely motivating businesses to provide a wider variety of options.
The ISWR have reported that the increased demand for NoLo drinks has led to a diversification of the drinks industry, driving more innovation and creating further opportunities for an inclusive society. So whether you’re pregnant, abstaining for religious reasons, staying sober to hit your personal best at the gym tomorrow, or simply moderating your drinking, the growth of the NoLo industry will have a positive impact on a huge number of people...maybe even you?
What does the future hold for the NoLo industry?
The forecasts are pretty optimistic. The IWSR claims that the no- and low-alcohol volume will grow by over 8% CAGR between 2021 and 2025! If you compare it to the alcohol industry’s +0.7% CAGR during the same period, we’re confident that the NoLo industry will continue to flourish!
But most importantly, no- and low-alcohol drinks are developing in response to consumer demand.
So, we’d love to know, what do you think?