IWSR is striving to be an employer of choice, with the very highest standards of inclusion and supporting the broad, global diversity of our staff.  We recognise the significant contribution that diversity makes to our ability to provide the highest standards of data and insights to our clients.

We are continuously working to improve and embed best practices throughout our activities to promote and support inclusion, from recruitment through to our flexible working practices.

Our Actions

Our regular employee engagement surveys, and an annual EDI survey, enable us to collect feedback on a regular basis, empowering us all with the right data to take meaningful action.

We monitor our gender pay gap quarterly and whilst we are proud to have an almost even gender split within the company, and women in post in some of our most senior roles, our pay gap stood at 26% between males and females in the UK as of December 2023.  We are strongly committed to improving this gap.

As we grow during the year ahead, we are working hard to promote our career growth and development opportunities.   We are actively involved in a new mentorship programme for future female leaders.

In recruitment and selection, we share all of our opportunities internally.  We have implemented a gender balance policy in all our interview shortlisting.

We offer flexible working arrangements and offer a range of benefits to support health and wellbeing.

Through our focused attention on this area, we are continuously seeking a better understanding of what needs to be addressed and we are confident in our ability to make measurable improvements.

Last updated: March 2024

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The buoyant no-alcohol category in the US is poised for continued strong growth in the years ahead, fuelled by a combination of moderation trends, a well-established but expanding no-alcohol beer segment, recruitment of new consumers, and dynamic growth for zero-alcohol spirits, RTDs and alcohol adjacents. 

No-alcohol enjoyed a strong year in the US in 2023, with overall volumes rising by +29% versus 2022, according to IWSR Drinks Market Analysis data, well ahead of low-alcohol (+7%). 

This growth was driven by no-alcohol beer/cider, which accounts for 81% of servings and rose in volume terms by +30% in the year. Meanwhile, no-alcohol wine volumes increased by +18%, with the smaller spirits and RTD segments showing dynamic growth, up +32% and +36% respectively. The emerging alcohol adjacents sub-category was up +15% on the year. 

“An increasing consumer focus on moderation, health and wellness is having a positive impact on all no-alcohol sub-categories, with growth rates higher than their full-strength equivalents,” says Susie Goldspink, Head of No- and Low-Alcohol Insights, IWSR. 

No-alcohol beer remains notably larger than other sub-categories, thanks to the relative maturity of the segment, availability of good tasting quality products, and the ongoing introduction of new brands from large and small breweries. 

Meanwhile, alcohol-free RTDs have the smallest volumes, giving them the highest growth rates, primarily propelled by the demand for pre-mixed no-alcohol cocktails and the launch of new no-alcohol “hard” seltzers from some brands.  

“Leading spirits brands are becoming more involved in no-alcohol, suggesting the segment is reaching an increasing level of maturity. New brands have also entered the segment, providing more options for consumers,” comments Marten Lodewijks, Head of US Operations, IWSR. 

“Alcohol adjacent products have not yet become mainstream, but are gaining awareness slowly, especially among younger LDA age cohorts, through consumer education,” he notes.  

The buoyancy of the no-alcohol category in the US is reflected in IWSR forecasts showing double-digit volume CAGRs covering the 2023-27 period for every sub-category. Notably, no-alcohol growth in the US is largely driven by higher price bands: premium-plus products accounted for 75% of no-alcohol beer volumes in 2023, and an even larger share of no-alcohol wine (87%) and spirits (93%). 

Millennials, Gen Z key 

Demand for no-alcohol products in the US is particularly strong among younger legal age cohorts, with Millennials accounting for 45% of no-alcohol consumers in 2023; however, this figure is down on the 2022 figure of 51%, thanks to an increase in the share of LDA Gen Z consumers (17% in 2023, up from 11% in 2022). 

This in turn is driving an increase in the number of Substituters among no-alcohol consumers – those who replace full-strength with no-alcohol on a specific occasion.  

“Legal aged Gen Zs are more likely to fall into the Substituters group than Abstainers. This means that increasingly, the new younger LDA recruits to no/low are not “all or nothing” – they switch between alcohol and other products, rather than avoiding alcohol altogether,” comments Goldspink. 

“This presents different kinds of opportunities for brand extensions, and we will likely see more blurring between products, such as hard seltzer brands increasingly offering no-alcohol versions of their full-strength ABV products.

Consumers are becoming increasingly occasion focused – rather than category focused – and are looking for a drink that can fit into a traditional alcohol occasion.” 

Core categories: maturity beckons 

No-alcohol is a bright spot for the overall beer segment in the US as this increasingly well-established sub-category is supplemented by the launch of new brands from brewers of all sizes. An increased focus on draught in the on-trade will drive future volumes. 

Meanwhile, no-alcohol wine and spirits will continue to grow by double digits. “The spirits segment will gain increased awareness through new products, particularly from mainstream brands,” says Goldspink. “Wine will increase through its core consumer base, as it is a more mature segment.” 

The rise of alcohol adjacents 

The still small sub-category of alcohol adjacents – including cannabis (THC) beverages and cognitive enhancers – is rapidly growing in significance in the US: some 31% of no/low consumers have bought these products at some point, according to IWSR consumer data, ahead of every other no-alcohol sub-category, including beer. 

“These brands will resonate strongly with younger LDA consumers who are seeking mood-altering alternatives to alcoholic products,” says Goldspink. “The cannabis beverage space is brimming, with a huge number of brands and products that cater to a wide variety of consumer needs.”

Barriers: availability a persistent issue 

While product availability remains a significant barrier to increased no-alcohol consumption, perceptions of good taste and excitement around the category are improving in the US, according to IWSR consumer research. 

Availability is cited as the biggest barrier to increased consumption, with 47% of no/low buyers in 2023 mentioning it as a factor preventing more frequent consumption – up from 36% in 2021. 

“Although there are no major shifts in barriers to consumption since last year, concerns over availability have been a long-term trend and are being cited by more no/low consumers,” says Goldspink. 

Growth opportunities: key takeaways 

The US is poised for strong growth in no-alcohol consumption in the years ahead, with a relatively underdeveloped market and high levels of moderation intent among consumers. 

This cultural shift is being increasingly embraced by the rise of sober bars and mainstream on-trade venues adding non-alcoholic sections to cocktail lists, as well as specialist retailers offering innovative products – while brand owners are aiming to improve routes to market by investing in retail channels.

“For brand owners, the on-trade and direct-to-consumer channels present relatively untapped opportunities,” says Lodewijks. “Brands can focus on expanding their presence in these to reach a wider audience. 

“Opportunities for brands also exist in boosting awareness through strategic marketing and educational campaigns that increase participation to widen the rapidly expanding consumer base for no-alcohol products.” 

You may also be interested in reading:

No-alcohol share of overall alcohol market expected to grow to nearly 4% by 2027
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No-alcohol innovation trends

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Mexico’s RTD market is well-placed to benefit from the flavour boom that has swept through the country in recent years – and tequila-based RTDs are poised for a resurgence on the back of falling agave prices.

Despite pressure on consumer spending amid a worsening economic backdrop, RTD volume growth in Mexico continued – building on the strong gains recorded in 2022, when category volumes rose by +12%, according to IWSR data.

“Despite hefty price hikes due to the rising cost of raw materials, volume growth for RTDs in Mexico continues,” says Jose Luis Hermoso, Research Director for Central and South America, IWSR. “The category remains buoyant and is expected to continue to grow, driven by favourable demographics, expansion of the convenience retail channel, and strong investment from multinationals. These companies are now fully committed to developing the RTD category in a market that is increasingly mature.”

IWSR forecasts show that RTD volumes in Mexico will grow at a CAGR of +5% between 2022 and 2027; however, the category will still represent less than 2% of TBA (total beverage alcohol) sales at the end of the forecast period, leaving ample headroom for future growth.

Thanks to their accessibility, RTDs appeal particularly to the younger legal drinking population, with 64% of category consumers either Millennials (47%) or Gen Z (17%), according to IWSR consumer research.

The value equation

For brand owners, category margins are tight and the barriers to entry are high, with longstanding RTD brands benefiting from their large volumes and maintaining market share. Local production is essential to keep costs down.

Despite this, RTDs are relatively expensive in Mexico; on a per-serve basis, only wine costs more. “RTDs are generally double the price of beer per serve, and there is almost no innovation happening at the value end of the RTD market,” says Hermoso.

“In the current context of squeezed disposable income and downtrading, new propositions at lower price points could appeal to some drinkers, luring them away from full-strength spirits and other more expensive options.”

Agave trending

Tequila-based RTDs lead the category in Mexico, preferred by 67% of RTD consumers (versus 51% for vodka-based RTDs and 45% for whisky). But, despite tequila’s status as a national icon, brand owners have been deterred from launching RTDs using the spirit by soaring agave prices and huge demand for tequila in the US.

But this is changing now, in line with general market trends, says Hermoso: “High agave prices have discouraged innovation in tequila-based RTDs, while benefiting spirit bases that are cheaper to produce, such as vodka,” he explains.

“The cost of agave is now falling, bringing more innovation in tequila-based RTDs, which continue to be in demand. This may lead to more activity in the value price segment.”

Demand for seltzers waning

Hard seltzer launches had dominated the RTD innovation space in Mexico in recent years, but this is waning as the segment suffers from the non-rotation of items on-shelf. Too much supply – and too little demand – has resulted in unsold stock nearing its expiry date.

Despite high levels of investment from big companies and evidence of consumers being open to trialling the products, hard seltzers simply haven’t taken off in Mexico, with IWSR forecasts predicting a steady decline in consumption between now and 2027.

“Some hard seltzer brands have exited the market because of poor sales,” says Hermoso. “This RTD sub-category remains largely misunderstood by the vast majority of Mexican consumers.”

Flavour explosion, mojito opportunity

The Mexican market has seen a flavour boom in the recent past, not only in RTDs, but also in the full-strength spirits category, with rum, vodka and even brandy getting involved. This has spurred a wave of innovations, with 85% of new RTD product launches between mid-2002 and mid-2023 fruit-based.

“Among leading RTD brands, the grapefruit-based paloma cocktail remains the most popular, encouraging brand owners to include a grapefruit version in any new product development. Citrus-flavoured drinks like the margarita are also in demand.”

However, NPD activity is lagging well behind the stated demand for mojitos. Despite a strong preference for the cocktail among Mexican consumers, only 8% of RTD cocktail launches were mojitos between mid-2022 and mid-2023 – compared to a combined 50% share for palomas and margaritas.

A format that fits

Single-serve RTDs remain the single most preferred packaging format – mentioned by 33% of RTD consumers in Mexico – but there is growing interest in larger formats that offer greater value for money.

Multipacks and larger formats are preferred by a combined total of more than 50% of RTD consumers surveyed in IWSR research. “These larger formats help to reduce the price per litre of RTDs, and are doing better than single-serve formats in the currently challenging economic conditions, which have squeezed disposable incomes,” explains Hermoso. New Mix and Vina Real, for example, have well established 2L PET formats on sale in the convenience store chain Oxxo.

Multinational investment continues

The Mexican RTD market continues to see investment, from internationals as well as local players. In May 2023, Diageo and FIFCO partnered to launch Smirnoff Smash for the Mexican market. FIFCO is also investing in its Seagrams Escapes and Bamboo RTD lines. Meanwhile local players Kosako and newcomer +Kool are also investing in the category.

Continued brand owner investment – alongside flavour innovation, larger formats and favourable consumer demographics – is driving a positive outlook for Mexico’s RTD market.

You may also be interested in reading:

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As the wine industry battles long-term structural decline in a number of markets, alternative wines – encompassing natural, organic, sustainable and Fairtrade – offer opportunities for growth in some markets.

While climate concerns are not enough in themselves to justify the purchase of these products, alternative wines continue to buck broader industry trends thanks to a strong perceived association with higher quality and ‘better for you’ attributes, according to IWSR consumer tracking data.

“Alternative wines – in a pessimistic wine landscape and under growing economic pressure – continue to offer opportunities for growth. The typical consumer audience is younger legal-drinking aged wine drinkers who have positive associations with the segment and are willing to pay for products that align with their needs and values,” says Richard Halstead, COO Consumer Research, IWSR.

“While sustainability and climate concerns remain factors driving purchase for these categories, the alternative wine audience is now more focused on quality and suitability for their personal needs. Combining this factor with the growing trend for purchasing less but better, spending on alternative wines is easier for consumers to justify.”

Opportunities for organics

Organic wines enjoy the highest awareness levels among alternative wines, and the segment is continuing to grow around the world, although consumption is concentrated in Germany, France and the UK, which account for nearly 60% of total volumes across reported markets, according to IWSR data.

Germany and Sweden are the most mature organic wine markets, while Australia and South Korea have experienced the biggest growth in recent years, albeit off a small base.

“Looking ahead, Sweden and Germany remain the key markets in which organic wine has now entered the mainstream,” says Halstead. “Meanwhile, growth opportunities are evident in newer alternative wines markets such as Hong Kong, Brazil and New Zealand. This is driven by an increase in awareness and consideration of the category, and an increase in purchasing in New Zealand.”

Quality associations are vital

While sustainability remains a core value for most wine drinkers, climate concerns in themselves are insufficient to justify spending more on alternative wine products – especially at a time of economic pressure. In this context, quality is paramount.

In the US, 30% of both LDA Gen Z and Millennial regular wine drinkers associate organic wines with high quality, compared to 12% of Boomers, according to IWSR data; similar trends are exhibited in the UK and Australia, and also for natural wines.

“Younger age cohorts – the most engaged buyers of alternative wines – show stronger positive associations for organic and natural wine, especially in the UK, US and Australia,” explains Halstead.

“On the other hand, fewer Boomers – the age group engaged the least with alternative wines – associate them with high quality.”

Millennials drive growth

Millennials are the chief age cohort driving growth in alternative wines, accounting for 69% of consumers in China who claim to buy more than two alternative wine types, according to IWSR research, noting that Chinese consumer perceptions are often misaligned with the technical status of the products they buy. Broadly similar trends – but with slightly lower percentages – are present in Australia, Canada, the UK and the US.

“Millennials have the widest alternative wine repertoires,” says Halstead. “Older age cohorts show established habits, purchasing mainly organic wine across markets, as well as Fairtrade in the UK.

“A combination of climate concern and a stronger perception of higher quality make Millennials the most engaged with alternative wines.”

Sentiment shift in the US

Regular wine drinkers in the US have a strong connection to sustainability and alternative wines, but both of these measures have fallen significantly in the past 12 months, with a similar trend evident in terms of consumers being willing to purchase sustainable wine, and to pay more for it when they do.

As a result, the proportion of sustainable-minded consumers in the US has fallen back to 2021 levels, impacting their purchasing and spend priorities – although the market for organic and natural wines has remained stable, thanks to the support of the crucial Millennial demographic.

“The US remains the market in which the most wine drinkers purchase more types of alternative wines, despite the fact that fewer American wine drinkers were highly engaged with sustainability and alternative wines this year,” says Halstead.

“This decline in engagement could be attributed to increasing economic pressure, and to the fact that some brands positioned towards health and wellness have replaced those positioned as being sustainable.”

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An ever more diverse range of no-alcohol products and flavour innovations are coming to market – including extensions of established brands, agave alternatives, alcohol adjacents, and no-alcohol craft beer and sparkling wine.

The wave of new launches comes as consumption of no/low products combined rose by +5% in 2023 in the world’s top 10 markets. No/low volumes are expected to rise at a CAGR of +6% between 2023 and 2027, according to IWSR forecasts, with growth spearheaded by no-alcohol (CAGR of +7% over the same timescale).

“The growth in volume consumption of no-alcohol products may be moderating, but innovation remains vital to the category,” says Susie Goldspink, Head of No- and Low-Alcohol Insights, IWSR.

“Our data shows that LDA Gen Z and Millennial consumers in particular are more interested in trying new no-alcohol alternatives than older cohorts – and NPD is emerging in a range of segments and formats to suit different occasions and demographic groups.”

Established brands

The extension of established full-strength brands into no-alcohol can be an effective means of attracting consumers into the category, thanks to their pre-existing equity and familiarity.

In Spain, for example, zero-alcohol spin-offs of popular gin brands, such as Tanqueray 0.0 and Seagram’s 0.0, are transforming a no-alcohol market previously dominated by legacy products.

“No-alcohol spirits are in a state of transition in Spain, as the focus shifts from traditional liqueurs towards big brand propositions, principally in gin,” explains Dan Mettyear, Research Director EMEA, IWSR. “These products are marketed well, have a good distribution network and are increasingly accepted by consumers.”

A similar approach to NPD is seen in Japan, where Suntory has launched a number of no-alcohol canned products recently under the Nonaru sub-brand – including red, white and rosé wines, a ‘whisky’ highball and a no-alcohol gin-and-tonic.

Agave

The increasing popularity of no-alcohol agave spirit alternatives mirrors the wider tequila and agave spirits growth trend in North America and beyond, encompassing RTDs and celebrity associations.

“Interest in new no-alcohol agave alternatives has grown rapidly, and remains relatively high in markets like the US, driven by younger legal drinking age groups, particularly Millennials,” says Goldspink.

“European markets and Japan show the least interest, influenced by their higher proportion of Boomers, who tend to be less open to new beverages, and also by the full-strength agave category being under-developed.”

The recent spate of no-alcohol agave RTD launches reflects the huge popularity of the Margarita and Paloma cocktails. For example, Ole Cocktail Co in Canada has launched a range of tequila-based mocktails, including Paloma, Margarita and Chilli Mango variants.

As in the full-strength agave category, celebrities are also getting involved with no-alcohol agave: Formula 1 driver Lewis Hamilton launched Almave – a zero-alcohol drink made with blue agave – in October 2023, while actor Danny Trejo is involved with a no-alcohol ‘tequila’ named Trejo.

Alcohol adjacents

Alcohol adjacents or functional beverages contain active ingredients that hint at health benefits, stress reduction, mood alteration and pleasure, as well as effects such as a buzz or acting as a social lubricant.

Ingredients include CBD, adaptogens (natural substances believed to help reduce stress) and nootropics (natural, semi-synthetic and synthetic molecules claimed to aid cognitive function).

In Canada, alcohol adjacent volumes increased by +75% in 2023, according to IWSR data, and are forecast to grow at a CAGR of +45% between 2023 and 2027, although off a small base. Alcohol adjacent volumes in France are also predicted to expand at a CAGR of +45% over the same timescale, after growing by +35% in 2023.

“Abstaining from alcohol does not have to mean ‘going without’ any more,” says Goldspink. “There is clear momentum for products offering an alternative to the effects of alcohol.

“NPD in mood-altering products is on the rise – although regulation needs clarification to enable further category growth.”

Examples of innovation in alcohol adjacents include Hiyo social tonic and Moment meditation drink. Meanwhile Peak cocktails claim to help you recover from workouts.

Craft beer

While big brands continue to dominate global no-alcohol beer volumes, established craft beer producers are expanding into the segment, extending their portfolios to meet wider consumer needs.

This dynamic is evident in markets such as Canada, where independent brewer Partake has a core range of no-alcohol beers, supplemented by special releases to pique consumer interest; and in South Africa, where craft brand Devil’s Peak has launched no-alcohol spin-off Devil’s Peak Hero, including a number of flavour variants.

“Artisanal producers in Brazil have begun launching no-alcohol beer products, broadening the number of options available and keeping consumers interested,” says Luciano Anavi, Senior Market Analyst for South America, IWSR. Launches in Brazil include those from Cervejaria Dádiva and Doktor Bräu’s Isotonic Fruitbeer, amongst others.

Sparkling wine

While the core full-strength wine category remains in long-term structural decline, no-alcohol wine brand owners are aiming to tap into the success of sparkling wine with a number of new product launches.

In Brazil, for example, launches include Aurora 0.0%, Gotas D’Or 0.0%, and Espuma de Prata 0.0%.“No-alcohol sparkling wines in Brazil are exhibiting a notable dynamism, with local brands increasingly establishing a significant presence,” says Anavi.

Elsewhere, no-alcohol sparkling wine producers are trying to tap into the huge popularity of Prosecco with launches like Nozeco in Canada and the UK, a French zero-alcohol sparkling wine.

Similarly, in Australia, Not Guilty spans wine and RTDs, including a ‘prosecco’ and ‘prosecco rosé’ in bottles and flavoured wine spritzes in cans.

Zero alcohol sparkling also has good growth potential in markets where alcohol sales are banned or restricted, such as in the Middle East. In Saudi Arabia, there is established demand for sparkling grape juice sold in packaging that resembles sparkling wine – and for ‘Saudi Champagne’, a mix of fruit juice and soda water.

“Consumers in dry or semi-dry markets who have never tasted alcohol will not have the same expectations of taste for their no-alcohol beverage needs,” explains Goldspink. “These recent innovations are catering to those diverse tastes.”

You may also be interested in reading:

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Of the world’s largest alcohol ecommerce markets, the only one in which ecommerce alcohol shopping frequency continues to reach new heights is China. The development of the D2C and on-demand channels have been key here, while the removal of Covid restrictions in late 2022 further boosted online sales.

Growth has also been driven by China’s online buyer market penetration: more than half (53%) of all alcohol buyers shop online – almost double the incidence seen in any other major market. Additionally, IWSR data shows that 83% of non-users of the channel surveyed in 2023 said they were somewhat or very likely to buy alcohol online in the future, up from 71% in 2022.

Compare this with the US, where the online buyer penetration is only 14%. Interestingly though, the US remains the second most valuable ecommerce market, and will continue to deliver some of the most growth globally, although at a lowered level due to a weak macro-economic environment and normalising consumer behaviours.

What, then, keeps China’s ecommerce channel growing at such a high rate?

Online alcohol sales in the country expanded at a value CAGR of +16% between 2018 and 2022, building a 39% share of global ecommerce sales; IWSR forecasts a 2022-27 CAGR of +6%, increasing the global share figure to 40%.

China’s forecast absolute value growth is well above that of any other market. This is partly due to consumers’ ongoing enthusiasm for the channel, which was not simply a Covid-induced anomaly as in some countries. In addition, ecommerce momentum is being sustained by considerable retailer innovation.

Consumer enthusiasm

Chinese consumers show high levels of commitment to and participation in alcohol ecommerce: IWSR data shows a consistent purchasing frequency, with most people saying they are buying more than they did previously.

Rising numbers are now buying alcohol online more than once a week – largely driven by the legal drinking aged Gen Z cohort. And almost half of online alcohol buyers surveyed in 2023 said they expected to increase their purchasing frequency in the next few months – a significant increase on previous years.

“At the same time, consumer behaviour is becoming more complex, so brands will need to have a deeper understanding of shoppers, and to meet their needs with the right products and propositions to win in the competitive online space,” says Guy Wolfe, Head of Alcohol Ecommerce Insights, IWSR.

All of the main beverage alcohol categories in China are poised for growth in ecommerce: IWSR forecasts show that online wine sales will increase at a value CAGR of +8% between 2022 and 2027, with spirits (+5%) and beer/cider/RTDs (+6%) also expanding.

Online wine sales significantly outperform the overall market, because wine’s core consumer base skews to younger LDA groups – Millennials especially – who are more likely to use ecommerce. According to IWSR data, wine has a 3% value share of total beverage alcohol (TBA) in China; in ecommerce, its share is 12%.

Ecommerce spirits didn’t see the same pandemic spike as in many other countries, but the recent D2C success of baijiu, and strong demand for key categories, has helped elevate online’s value share of total spirits sales from 2.5% in 2018 to 3.7% in 2022.

Ecommerce penetration in beer/cider/RTDs has picked up from a low base in recent years as consumers look for convenience via the omnichannel and on-demand channels. The category is dominated by beer – more than 90% of sales – but RTDs over-index online thanks to their relatively younger demographic.

“Online wine growth is predicted to pick up over the forecast period as the previously ailing category bottoms out and starts to recover,” says Shirley Zhu, Research Director for Greater China, IWSR. “In spirits, strong growth seen in 2022, due to the rise of D2C baijiu, will soften, but the category will continue to perform well. We expect baijiu companies to likely increase their investment in online channels, now that they’ve seen the results. Meanwhile, ecommerce share of beer is likely to rise as more consumers seek convenience.”

Channel innovation: the rise of on-demand and D2C

As momentum for traditional online marketplaces shows signs of slowing, there has been a rise of on-demand platforms, as well as the recent emergence of brand owner D2C [direct-to-consumer] apps such as iMoutai, which are helping to maintain consumer interest in the channel. Other baijiu players are now launching ventures of their own, at the same time boosting baijiu’s presence in ecommerce, where it is underrepresented.

This, along with the rise of ‘social commerce’ channels such as Douyin (TikTok) and Pinduoduo, show that there are new ways to sell within the relatively well-developed Chinese ecommerce space.

“Brand owners should not be shy about exploring new platforms in the search for growth, as they can rapidly become major drivers in a market where consumers are receptive to new concepts,” notes Wolfe.

IWSR forecasts suggest that on-demand and D2C will record the fastest growth in the years ahead, with 2022-27 value CAGRs of +13% and +9% respectively. Marketplaces are predicted to grow at a value CAGR of +4% over the same timescale, leading to a further erosion of their share of ecommerce to 69% by 2027 (versus 11% for D2C and 9% for on-demand).

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While no-alcohol is poised to spearhead overall no/low growth in the coming years, a number of innovations across wine, beer and spirits will help to boost future consumption of low-alcohol products as well.

Low-alcohol volumes across the world’s top 10 no/low markets are predicted to grow at a CAGR of +3% between 2023 and 2027. Much of the category’s growth is expected to come from some of the largest low-alcohol markets, including Germany, the US, France and the UK.

Wine remains the strongest performer in the low-alcohol marketplace, with IWSR forecasts showing a 2023-27 volume CAGR of +12% for the category, ahead of RTDs (+9%) and beer/cider (+2%), while spirits are expected to decline (-2%).

But all categories are the source of much innovation at the moment, from the exploration of ‘mid-strength’ wines to extensions of established brands and the launch of low-alcohol products that aim to leverage changes in the regulatory environment.

Continued education

For consumers who want to moderate their alcohol intake, low-alcohol propositions can sometimes be confusing. “Consumers don’t necessarily know that an alcoholic spirit brand normally sits at 30-40% ABV, so they don’t always know what a 20% ABV spirit means for a gin brand, or how a 20% ABV spirit might relate to a 5% ABV wine or a 1% ABV beer,” says Susie Goldspink, Head of No/Low-Alcohol Insights, IWSR. Furthermore, it is often unclear to consumers how many low-alcohol beverages they can consume and still be within the legal drink-drive limit.

As such, brands may need to continue educating consumers on the low-alcohol proposition. In an online advert for Nice Drinks in the UK, for example, an illustration shows how many glasses of their low-alcohol Sessions wine equal one glass of full-strength wine.

Established brands

As in no-alcohol, line extensions of established full-strength brands into the low-alcohol space are a way of recruiting consumers to try products with reduced levels of alcohol.

Established wine brands are increasingly exploring the potential of ‘mid-strength’ variants (see below), as are some marquee beer brands. For instance, Asahi launched Asahi Super Dry Dry Crystal in the Japanese market in 2023 – a product with a reduced alcohol level of 3.5% ABV, marking the first time the company has changed the Super Dry recipe since its creation.

New wine technology

No- and low-alcohol wine has traditionally suffered from poor consumer perceptions of quality and flavour, but new advances in winemaking technology are trying to address this issue.

The Advancement of Australian Lifestyle Wines project was launched in 2023 – an initiative uniting brand owners and research institutes and backed by a AU$3m research grant from the federal government. It aims to position Australia as the largest global producer of no/low wines.

“Governments and producers are recognising the untapped opportunity in reduced-ABV wine, and are investing in new no/low technology to mitigate the long-term decline in the full-strength wine category,” says Goldspink. “Gaining repeat purchase of low-alcohol wines remains a challenge, but investment in technology will improve quality.”

Mid-strength and ‘better for you’ wines

Established wine producers are increasingly prioritising lower-alcohol product launches, expanding their most popular brand franchises with a number of mid-strength expressions that typically have about half the ABV of their core ranges.

This is particularly apparent in Australia, where recent low-alcohol spin-offs of major brands include Elephant in the Room (6.5% ABV), Squealing Pig Mid Pig (5-6.5% ABV), Pepperjack Mid (7%) and McGuigan Black Mid – which sits outside IWSR low-alcohol wine definitions at 9.8% ABV, but targets the same consumers (it has also been launched in the UK at 7% ABV).

“Outside Moscato, low-alcohol wine has traditionally struggled to cut through, but a wealth of mid-strength NPD means it should attract more attention in future,” says Goldspink. “Mid-strength is a well-known concept in the Australian beer category and has been adopted by wine brands to help shoppers better understand and navigate low-alcohol wine.”

In Japan, there is a growing trend towards lower ABVs across many categories – in beer and RTDs, but also in still, sparkling and rice wines. Recent innovations include AFAP sparkling sake from Sakura Town at 7% ABV (instead of a typical 10-16% ABV); and Japan Soda’s Nihonsakari Japan Soda sake, also at 7%.

In the US, there is growing interest in the ‘better for you’ wine segment, as a result of consumer awareness of health and wellness, especially among the LDA Gen Z cohort.

“Consumers are increasingly drawn to brands with fewer calories, organic credentials, reduced carbs, lower alcohol content and, in many cases, zero residual sugar,” adds Goldspink.

Examples of products targeting this segment include Kim Crawford Illuminate, Kendall-Jackson Low Calorie Chardonnay, Sunny with a Chance of Flowers, Mind & Body, Matua Lighter, and [yellow tail] Pure Bright.

Regulatory shifts

In August 2023, alcohol duty changes were introduced in the UK, ushering in a lower tax rate on beer below 3.5% ABV and higher duty on most still wine – and this is already driving NPD and the reformulation of existing products.

Examples in beer include the new Rosa Blanca 3.4% ABV variant from Damm, and Carlsberg reducing the ABV of its flagship lager brand to 3.4%.

Wine launches include the McGuigan Mid-range of 7%, lower-calorie wines from Australian Vintage, with a Shiraz, Sauvignon Blanc and rosé; and the Sevenly wine range which arrived in the UK in October 2023 – a partnership between actor Sarah Jessica Parker and New Zealand’s Invivo Wines.

“Low-alcohol could be on the brink of better times in the UK, with ‘mid-strength’ beer and wine gaining in prominence, aided by 2023 duty changes that favour products with lower ABVs,” says Patrick Fisher, Senior Market Analyst, IWSR. “This is only likely to spur more NPD and product reformulation in this area.”

Spirits making inroads

Low-alcohol spirits are ceding market share to low-alcohol wine in particular, especially in the US, where IWSR forecasts predict that low-alcohol wine volumes will grow at a CAGR of +14% between 2023 and 2027, while low-alcohol spirits are expected to decline at a CAGR of -9% over the same timescale.

Nonetheless, brand owners are still targeting consumers who are looking for lower alcohol levels, through products such as Decem, which is distilled with fragrant botanicals for a full flavoured 10% gin alternative, and Quarter, which offers 12% gin and tequila alternatives as well as a ready-to-serve lighter Margarita and Negroni.

“Such an approach generates interest in lower-proof products, even though it is outside IWSR’s definition of a low-alcohol spirit,” says Goldspink. “Low-alcohol spirits are overshadowed by low-alcohol wine, but brands are making inroads with products reflecting changing consumer behaviour, especially a preference for lighter drinking experiences.”

You may also be interested in reading:

No-alcohol share of overall alcohol market expected to grow to nearly 4% by 2027
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Has premiumisation stalled?

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As agave prices plummet and premium-and-above tequila demand moderates in the US market, brand owners have an opportunity to improve product quality at lower price points, make additional marketing investments – and divert extra supply to international markets with strong growth potential.

While a dramatic reduction in the cost of agave will also enable producers to fund discounts in order to build market share, IWSR believes that brand owners will be wary of sacrificing their recently acquired brand equity by slashing prices.

Agave price crash sparks panic sale

Agave prices in Mexico hit a record MXP32/kg only 18 months ago, but by February 2024 they had plunged to MXP5/kg. Price falls are set to continue thanks to the huge numbers of new plants that have gone into the ground in the past few years (up by more than 10% between 2021 and 2022 alone), and the fact that agave takes several years to reach maturity. According to industry reports, the number of registered agave growers has more than quadrupled since 2018 as well.

“The very large inventory of agave plants, coupled with slowing demand of premium tequila segments in the US after years of rapid growth, has sparked a panic sale among amateur agave growers who have recently joined the industry in a bid to cash in on the agave spirits boom,” explains Jose Luis Hermoso, IWSR Research Director for Central and South America.

“With such huge numbers of new plants going into the ground in 2021 and 2022, it’s entirely possible that pricing will not hit the bottom until 2026.”

The peak/trough cycle

Agave is similar to many long lead-time commodities in having an unbalanced production cycle: growers tend to overplant at times of high prices – as has been the case until very recently – which drives prices down as new plants come on stream. Lower prices then cause growers to underplant, diminishing supply and driving prices up again.

The cycle from peak to peak, or trough to trough, happens roughly every 10-15 years, or twice the agave maturity period. The last pricing trough occurred in 2007-10, when prices dropped as low as MXP2/kg.

At the same time, after several years of robust double-digit increases, overall tequila consumption volumes grew by only +4% in the US during the first half of 2023, according to IWSR data.

“Logically, we would expect to see an influx of cheaper 100% agave tequila into the market in the near future – so, potentially, a higher-quality product at a lower price, which might attract new consumers and/or encourage trade-down,” says Richard Halstead, IWSR COO for Consumer Research.

“The last time we saw a supply glut similar to this was around 2009/10, when numerous new brands came to the market using the 100% agave description, but at prices significantly lower than the majority of incumbent 100% agave brands.”

These launches increased the downward trajectory of mixto (51% agave) brands, which has continued since then – and could be exacerbated by the entry of new 100% agave brands offering a better price-to-quality ratio.

This need not signal the end of premiumisation for tequila. Longitudinal IWSR data covering the last agave pricing trough shows that, while global agave spirits volumes grew at a CAGR of +3% between 2006 and 2010, premium-plus volumes expanded at a CAGR of +7% over the same timescale – outstripping standard-and-below CAGR growth of +2%.

“Declining agave prices give leading brand owners the opportunity to improve their margins and/or increase promotional activity in order to build category share,” says Adam Rogers, Research Director for North America, IWSR. “But these experienced, marketing-led organisations will be wary of damaging their brand equity by widespread discounting.

“We do not foresee any race to the bottom in pricing terms, with premium-and-above products remaining dominant as the market leaders will be determined to preserve margin.”

Reinvesting into the category

Lower prices and increased supply will also allow brand owners to lay down more product for extended ageing – something that was previously difficult because of low supply levels and high input costs.

“Brand owners may also look to reinvest some of the margin windfall they have gained from lower agave prices into more aggressive awareness-building campaigns around the category, particularly in emerging growth markets across Asia Pacific, Eastern Europe, the Middle East, Africa and Latin America outside Mexico,” says Rogers.

While the US and Mexico continue to dominate global category volumes, agave spirits grew in 15 out of the world’s top 20 beverage alcohol markets in the first half of 2023, according to IWSR data, recording double-digit volume increases in 11 of them.

This category expansion is being driven by a number of factors, including the popularity of cocktails in Canada (where volumes rose by +14% in H1 2023); the reopening of the on-premise in China (+15%); and tequila’s improving quality image in Spain (+20%).

Meanwhile, tequila brand owners – many of them large multinationals – are working to create a more integrated production model from farm to bottle. Companies are expanding their own plantings and securing supply via long-term grower contracts – which should, in time, prevent or at least reduce supply and pricing volatility.

“While newer entrants are still falling into the approach of ‘buying at the peak/selling at the trough’, established players are trying to tame the cycle by underplanting during pricing peaks and overplanting during pricing troughs,” says Hermoso. “This can only be good for the agave spirits category in the longer term.”

You may also be interested in reading:

Is the US premium tequila boom over?
Does tequila’s growth mirror that of the gin boom?
The 8 drivers of change for beverage alcohol in 2023 and beyond

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