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Peer pressure is slowing down the production of alcohol-free products
And Gen Z is suffering the most
January 31st, 2025
In recent years, the market for low or non-alcoholic beverages has grown significantly, driven by an increasing awareness of the importance of maintaining a healthy lifestyle. Major brands like Heineken and AB InBev, whose portfolios include many beer brands, have heavily invested in launching new alcohol-free products to capitalize on this trend, which has partly offset the recent decline in interest in beer—the global market for which shrank by 1% in 2023. The demand for non-alcoholic beverages is instead supported by the desire to continue enjoying their taste without experiencing the effects of alcohol. Concerns about declining interest in alcohol among young people are particularly focused on beer and spirits, especially in Anglo-Saxon countries. In the United States, since 2010, the "sober curious" movement has emerged, promoting a reduction or rejection of alcohol consumption to improve mental and physical well-being. In Northern Europe, on the other hand, the issue is linked to different consumption traditions compared to Italy, France, or Spain, where drinking is more associated with tasting and socializing rather than quantity.
And, just like that, we were left with no choice but to abandon Dry January.
— Rodney Lacroix (@RodLacroix) January 20, 2025
As reported by the Financial Times, according to research conducted by Oxford University, more and more people are open to consuming low or non-alcoholic beverages in social settings. The study—based on a sample of over 11,000 adults of different ages from the United Kingdom, the United States, Spain, Japan, and Brazil—found that 68% of respondents had tried low- or no-alcohol beverages, while 80% believe that consuming them is more socially accepted than five years ago. However, as Charles Spence, professor of psychology at Oxford University and author of the report, points out, “despite greater social acceptance of those who do not drink alcohol, it is evident that these individuals are still subject to prejudice.” In essence, social pressure could contribute to slowing down the growth of the alcohol-free beverage market.
What Are the Limits of the Alcohol-Free Market?
According to Oxford University's study, Gen Z—among all the age groups considered—is the one that feels the most social pressure related to drinking non-alcoholic beverages: over a third of respondents born after 1997 stated that they felt obligated to drink alcohol in social settings. Compared to women, men seem to experience this dynamic more: 38% of them claim that they would only consume low-alcohol beverages if their friends did as well. Additionally, 21% said they had received at least one form of criticism for choosing to order a non-alcoholic drink. Besides social dynamics, one of the aspects that discourages young people from consuming alcohol-free drinks is the price, which is often higher than alcoholic alternatives. The high cost of these beverages, despite being mostly composed of water, has several causes. Firstly, the absence of alcohol significantly impacts the price. Alcohol is an excellent solvent for extracting flavors from the botanicals used in spirits, whereas water is much less effective. For instance, producing a non-alcoholic gin requires up to nine times the amount of aromatic substances compared to a traditional gin. Furthermore, alcohol is an excellent preservative, and its absence makes non-alcoholic spirits more sensitive to external temperatures: many require refrigeration and must be consumed within a few months after opening, which contributes to higher production and distribution costs. Another factor affecting the retail price is consumer perception: a product marketed as an alternative to a pleasure labeled as “rebellious”—such as alcohol consumption—could lose value if sold at too low a price, making it less appealing. On the contrary, a high price helps position the product as a premium alternative, maintaining its desirability and, paradoxically, encouraging a reduction in alcohol consumption, which in comparison appears less exclusive.
In the United States, the law sets the threshold for defining a beverage as non-alcoholic at 0.5% alcohol by volume. In Italy, it is 1.2%, and in other countries, it varies further. This difference not only affects the classification of products but also their shelf life and production process. Beverages with a higher alcohol content, as allowed in Italy, may have a longer shelf life and fewer refrigeration requirements but might not be considered "completely alcohol-free" in other countries, complicating their commercialization. Meanwhile, the low- or non-alcoholic beverage sector is expected to grow by 4% over the next four years in the 10 key markets of the industry. Sales of non-alcoholic products alone, however, are projected to increase by at least seven percentage points.