The no-alcohol drinks sector is projected to expand by more than $4 billion globally, with no-alcohol beer at the forefront of this growth in Australia. Driven by younger consumers and evolving trends in moderation, this category presents new opportunities for the Australian beer industry.
The no-alcohol category is expected to grow at a rate of seven per cent per year by volume through 2028, according to the latest data from the IWSR No- and Low-Alcohol Strategic Study 2024.
While the low-alcohol segment remains steady, no-alcohol beverages are taking the lead, particularly in key markets like the US and Brazil, where demand is surging due to both new consumers and increased consumption frequency.
In Australia, the no-alcohol market is growing at an anticipated rate of 7.5 per cent, and beer is set to be the dominant driver of this increase. Local breweries now have a significant opportunity to tap into this fast-expanding market, as consumers increasingly seek alternatives to alcoholic beverages, particularly younger generations looking for healthier drinking options.
Key drivers behind the no-alcohol surge
The growth of no-alcohol beer can be attributed to several factors, including changing attitudes towards alcohol moderation, an emphasis on taste and quality, and the rising popularity of beer alternatives. Younger consumers, particularly Gen Z and Millennials, are leading the charge, gravitating towards no-alcohol beer as part of their lifestyle choices.
Sarah Campbell, Research Director for APAC at IWSR, notes that moderation trends are gaining momentum across all generations.
She says: “Moderation will continue to gain momentum and is relevant across all generations of consumers, but for varying reasons. Boomers are motivated by lifestyle and health factors, whilst the youngest legal drinking age cohort appears to be giving up or cutting back for financial reasons. As monetary pressures ease, the big question is how the behaviour of economic moderators will evolve.”
IWSR also reports that the no-alcohol category grew by two per cent in 2024 versus 2023, with no-alcohol beer being the primary driver of this expansion.
No-alcohol beer is gaining traction, not only among moderate drinkers but also among new consumers who are becoming more engaged with the category. IWSR reports that between 2022 and 2024, the no-alcohol category gained 61 million new consumers, with a large portion of them choosing no-alcohol beer over other alternatives. These new drinkers are increasingly loyal to their chosen brands and are purchasing more frequently.
For Australian breweries, this growth represents an opportunity to expand their portfolios and cater to the demand for high-quality, non-alcoholic beer options. As consumer preferences evolve, Australian beer makers can innovate to meet the rising demand for these products, particularly within the growing no-alcohol beer segment.
The US and Brazil are expected to see the most rapid growth in the no-alcohol market. In the US, no-alcohol drinks will grow by 18 per cent annually through 2028, driven by a broader selection of no-alcohol categories such as spirits and RTDs. In Brazil, beer will remain the dominant category in the no-alcohol space, but the market is poised for steady growth.
The importance of product innovation
As the no-alcohol market matures, consumers are seeking more than just a lack of alcohol. Brands are innovating to meet consumer demand for drinks that offer complexity, taste, and sensory satisfaction. Products with added benefits, like functional ingredients or botanicals, are gaining popularity.
Australian breweries can take advantage of this trend by offering a variety of no-alcohol beer products that meet the growing demand for both taste and quality. Innovation in this space will be crucial as the market continues to evolve and attract new consumers.
Younger consumers drive the future of no-alcohol
Globally, younger consumers are the primary drivers of the no-alcohol beer category. In Australia, Gen Z and Millennials are leading the way, with many opting for no-alcohol beer as part of their health-conscious lifestyle. These consumers are more likely to be brand-loyal and choose no-alcohol beer options based on taste, quality, and familiarity.
This represents an important opportunity for Australian beer brands to build strong relationships with this demographic, offering them high-quality no-alcohol options that cater to both social and health-conscious motivations.
Looking ahead
The no-alcohol market is forecast to generate more than $4 billion in incremental growth globally by 2028, and Australian breweries are well-positioned to capture a share of this expanding segment. With no-alcohol beer driving the growth, local brewers have a unique opportunity to innovate, expand their product offerings, and cater to the increasing demand for non-alcoholic alternatives.
By tapping into these trends, Australian beer producers can establish themselves at the forefront of an evolving market, offering high-quality no-alcohol beer options that meet the changing preferences of health-conscious and younger consumers.