The adult non-alc (ANA) category is on its way to hitting $1 billion in off-premise sales as new entries shake up the top brand families and begin to drive prices down, according to market research firm NIQ.
The new data was presented by NIQ director of bev-alc thought leadership Kaleigh Theriault and NIQ bev-alc consultant Jon Berg in a webinar for the Adult Non-Alc Beverage Association last week.
ANA off-premise product sales hit $925 million in the 52-week period ending August 2, up 21.9% versus a year ago. Note NIQ numbers don’t include unique opportunities, such as NA bottle shops or other retailers outside the three-tier system, and on-premise sales. E-commerce sales are up +208% versus a year ago.
Of the nearly $1 billion pie, NA beer still makes up the largest slice at 83.1% of dollar share (+19.4% vs YA), followed by NA wine at 11.2% (+23%) and NA spirits at 5.7% (+70.5%).
ANA makes up 0.8% of total alcohol off-premise dollar sales but the category’s segments are outpacing bev-alc growth. Comparing the dollar sales changes versus a year ago:
- NA beer is up 19.4% versus the overall beer category (-1.9%);
- NA wine is up 23% versus wine category (-3.8%);
- NA spirits are up 70.5% versus spirits (flat).
However, ANA shoppers continue to buy bev-alc: 92% of the buyers of ANA are also purchasing alcohol-containing products. On-premise, 47% of visitors are “zebra striping,” or drinking both alcohol and NA alternatives during a single visit.
New Entries Shake Up Leaders, Pricing
As portfolios expand and new-to-world entries pop up, sales of ANA products have begun fragmenting over the last three years.
The top 10 NA beers have shifted with Athletic Brewing jumping to the top spot and brands such as Corona and Michelob Ultra extending their portfolios into zero-ABV. The top 10 brands made up 83% of total NA beer sales in 2022, in the latest 52 weeks they make up 73% of total NA beer sales.
“The fragmentation that’s happening speaks to a lot of the new brands and brand families that are coming into the space, and this is very typical. We also see this in RTDs,” Berg said.
The trends are similar with NA wine, and even more dramatic for NA spirits – the top five brands three years ago (Seedlip, Ritual, Hella Cocktail Co, Mingle Mocktails and Lyre’s) have gone from making up 75% of dollars in 2022 to 55%. Some of that is due to new ready-to-drink (RTD) entrants gaining share in the off-premise, while NA spirit bottle alternatives are finding more success in cocktail programs on-premise. Hiyo, Recess and De Soi now join Ritual and Mingle Mocktails to make up the highest-selling brands off-premise.
While the top-five brands are driving growth, there’s also “a long tail of other brands that are finding success in capturing a piece of the growth,” said Theriault.
The top five growing brands in NA beer (Michelob Ultra Zero, Athletic Brewing, Corona NA, Blue Moon NA, Sierra Nevada) account for 66% of growth. The top growing NA wine brands (Fre, Seaglass NA, Mionetto, Giesen, Wolffer) account for 70% of growth. The top growing NA spirits account for 63%.
As brands make their pitches to retailers, they should have “some empathy” for buyers who are swamped with new products to review, added Berg. There are 203 new ANA UPCs since last year with NA beer and NA spirits driving those numbers.
“Tell them why the particular product that you’re focused on at the moment is going to be unique, and not just going to be taking away sales from something else that they already have in inventory,” Berg said.
The analysts added that we’re beginning to see an attempt to create some volume in ANA, with total price reductions going “a little bit deeper,” and less expensive products driving prices down.
“If you have to go in and tell a story about price going up, just know that you’re going to get a lot of pushback and you’re going to need some new justifications for where you are taking price,” Berg added.
This article also appeared on our sister site Brewbound.