For the alcohol industry one of the biggest threats to profits is the growing alcohol-free norm among Gen Z and Millennials. These two generations are far less interested in alcohol than older generations. Young people have very good reasons for staying or becoming alcohol-free, including better health and saving money.
But the alcohol industry has geared up to exploit the trend to promote their major alcohol brands.

As COVID-19 regulations are withdrawn the world over, also pubs, bars and restaurants are re-opening. Globally, alcohol sales by volume fell 6% last year during the pandemic, largely due to the closure of the the on-trade sector. But already before the pandemic alcohol use patterns around the world were converging to a reducing trend, especially in high income countries. The alcohol industry has responded in multiple ways to protect and promote profit maximization. One example is the marketing of “premium alcohol products” which was a key strategy during the COVID-19 pandemic sales downturn.

Selling their products at higher prices increases profit margins for the alcohol industry. In addition, with the premium product strategy Big Alcohol is buying room to deal with what they see as the biggest threat to their profits: the growing alcohol-free norm among Gen Z and Millennials. These two generations are far less interested in alcohol than older generations. In fact, Gen Z is the least alcohol consuming generation in history.

Awareness of alcohol’s harm is growing in the younger generations. And they are are adjusting their behavior to healthier norms.

A new Jefferies survey of 4000 consumers in eight big markets found that over half (56%) of 18- to 24-year-olds think consuming even one or two alcoholic beverages a day is harmful, compared with 31% of those aged 65 and over.

56%
18- to 24-year-olds think consuming one or two alcoholic beverages a day is harmful
A new Jefferies survey of 4000 consumers in eight big markets found that over half (56%) of 18- to 24-year-olds think consuming even one or two alcoholic beverages a day is harmful, compared with 31% of those aged 65 and over.

According to the survey, young people were the only age cohort where the idea that alcohol is harmful outweighed more positive attitudes to alcohol. The leading reasons why young people prefer to reduce alcohol use or stay alcohol free are:

  • Saving money,
  • Health conditions,
  • Mental health, and
  • Avoiding hangovers.
Young people’s reasons for reduced alcohol use, Jefferies survey as per Financial Times

As Movendi International has reported previously, the alcohol-free way of life – driven by younger generations – has been catching on across the western societies, where the alcohol norm has been pervasive. But this is changing now. Various movements, such as the sober curious, Dry January and other alcohol-free months in the United Kingdom, United States, Switzerland and France, mindful sobriety, and NoLo trends are building a worldwide community of people who want to live in alcohol-free environments and who enjoy the benefits of being alcohol-free.

With rising demand for more alcohol-free products and places, sober bars are growing across the world. So are new no and low alcohol products. For example in Germany, beer consumption continues to fall but the alcohol-free beer market is growing and in Australia alcohol-free wine and other alcohol-free products are seeing a sales growth.

Major Big Alcohol companies are also scrambling to adapt to the alcohol-free and NoLo trends. These companies have been putting research and advertising clout behind low- and no-alcohol products for several years. Many of their efforts are directed to adapting their major brands to no/low alcohol products. They are also buying out stakes in smaller alcohol-free product companies and brands. For example, alcohol industry giant Pernod Ricard bought a majority stake in Ceder’s alcohol free spirits in January this year, and Diageo did the same with Seedlip in 2019.

According to IWSR, global sales of no/low alcohol are forecast to grow by 34% between now and 2025, compared with about 6% for the total alcohol market.

For alcohol companies, no/low alcohol products are actually much more lucrative since they are taxed far less but the price points are kept similar to other alcohol products. That means the companies earn more profits for no/low alcohol products.

While major alcohol companies are adapting to the new no/low alcohol trends it does not mean they are planning to substitute their usual health harmful product portfolio. Instead they appear to use the no/low alcohol products to increase brand image and popularity for their usual alcohol brands. For example, Heineken switched their sponsorship of Europa League football to Heineken 0.0. Considering the 0.0 is barely visible and most of the promo material feature Heineken branding, this sponsorship promoted Heineken as a brand more than the no alcohol beer.


Source Website: Financial Times