The more things seem to change, the more they stay the same. That’s the message alcohol sales data tells about January: Though Dry January participation continues to grow, existing alcohol trends played out last month as they’re likely to do the rest of the year. A Morning Consult poll showed 19% of U.S. adults said they are taking part this year, up from 13% last year.
Year-over-year non-alcoholic beer sales in chain retail stores tracked by IRI increased +18% in January 2022, adding $3.2 million versus the year prior. But year-over-year sales for spirits, ready-to-drink (RTD) cocktails, flavored malt beverages (FMBs) like hard seltzer, and already-hot beer brands including Modelo Especial, Michelob Ultra, and New Belgium Voodoo Ranger Imperial IPA also showed similar or stronger growth during that time. Beer sales overall in chain retail were down -5.7% this January compared to last January—but a dip was expected, too, as last year’s sales still represented a high mark from pandemic-related pantry-stocking. January 2022 reverted back to some traditional pre-pandemic norms, as the month is historically the slowest month of the year for alcohol sales across the board.
Both for beer and alcohol broadly, last month proved to be less of a sales anomaly than one might expect if a reported one in five U.S. adults participated in Dry January. Instead, already hot categories and brands continued their momentum, while stragglers such as domestic and light Lagers lagged further. Perhaps this is because Dry January isn’t an all-or-nothing commitment some may assume it to be: that same Morning Consult poll found half of Dry January participants this year planned to drink less alcohol, not abstain entirely. The drinkers driving trends during January are the same drinkers driving trends the other 11 months of the year.
And as more drinkers adopt moderation goals year-round, future Dry Januarys are likely to be just another month for alcohol sales.
Dry January was a boon to non-alcoholic beer sales, but not in a way that’s radically different from that category’s recent upward trajectory. In fact, January isn’t even non-alcoholic beer sales’ biggest month of the year.
“The highest-selling week for NA beer throughout the year is the same as for total beer—the week surrounding the 4th of July,” Brewers Association chief economist Bart Watson recently told NPR. Sales of NA beer in chian retail were nearly 30% higher in the first two weeks of July 2021 than they were in January. (Google searches for “non-alcoholic beer” also peak in the summer.)
While still a drop in the overall beer bucket, non-alcoholic beer continues to grow, gaining in its dollar share of the overall U.S. beer market to start the year:
It inched up from 0.57% of total IRI-tracked chain retail beer sales in January 2021 to 0.7% this January.
By volume, it increased from 0.51% to 0.63%.
Momentum within the category is mostly coming from new players:
The biggest sales gains this January among NA brands came from relative newcomers Samuel Adams Just The Haze Non-Alcoholic IPA, Athletic Brewing’s NA portfolio, Heineken 0.0, and Budweiser Zeo—all of which launched within the past four years.
Stalwart NA brands, on the other hand, saw declines in January 2022: O’Doul’s (-20%), Busch NA (-8.7%), and Coors NA (-11.7%).
This isn’t surprising to Mel Babitz, founder and owner of The Open Road in Pittsburgh, a store that exclusively sells non-alcoholic beverages, from NA wine to CBD drinks. The most frequent reaction she hears from shoppers is that they just didn’t realize how many NA options there were beyond the traditional brands like O’Douls. Consumers are eager to explore these newcomers.
“They’ll say ‘I had no idea there were multiple NA stouts, or that there are beer options that aren’t Heineken 0.0,’” Babitz says. “I have a customer who’s been coming for a couple of months now, and every weekend he gets a four-pack of different single beers and just tries new stuff every week.”
Just as new non-alcoholic beer brands derive sales based on consumer curiosity and exploration, so too are non-alcoholic drinks outside of beer. This has echoes of the craft beer movement a decade ago, when sales came from a U.S. drinking public eager to explore new flavors and styles.
At The Open Road, Babitz also stocks not just NA beer but NA wine, NA spirits, ready-to-drink NA cocktails, hop waters, and functional beverages like CBD teas, adaptogen-boosted coffees, or drinks made with kava root (an ingredient prized for its calming qualities).
“Whenever someone comes into the store for the first time, they’re like, ‘Wow, there are so many options,’ whether that’s beer or not beer.”
Just as beer has faced stiff competition from spirits and wine in the broader alcohol market, the non-alcoholic space is beginning to reflect that competition, too.
A survey of approximately 500 people who planned to participate in Dry January, conducted by Numerator in December, found non-alcoholic beer was the least popular alcoholic beverage substitution among respondents. Just 6% of participants said they planned to swap in non-alcoholic beer for their typical alcoholic beverage of choice, compared to 74% who said they planned to drink more water, 9% who planned to drink NA cocktails, and 7% who planned to drink NA wines as part of Dry January. Again, January dynamics mimic broader trends in beverage alcohol: Beer once held the dominant market share, but increasingly has to compete with spirits, wine, and a host of other options like hard seltzer, tea, kombucha, and more.
NielsenIQ data presented at the Distilled Spirits Council of the United States conference in October showed NA wine’s growth (+39.4%) over the past 52-week period outpaced that of NA beer (+31.7%) during the same period. Babitz says NA wine has been the “most dynamic” category of NA products over the past year, with many new companies and products entering the space. Her customers have been asking for an expanded selection, so Babitz is eager to bring in as many of those new brands as she can.
Part of introducing those new brands is explaining how they’re made: Many, including Fre Wines and Surely, fully ferment grapes to make traditional wine, but then remove the alcohol using spinning cone column technology, which occurs at a low temperature. Fre’s website makes clear in the frequently asked questions section that this is not grape juice, but dealcoholized wine.
Non-alcoholic spirits are also on the rise, growing +113.4% in NielsenIQ-tracked sales over the 52-week period ending in October—a rate roughly triple that of NA beer and NA wine growth. That kind of competition parallels spirits’ run in the regular alcohol space in which it grew +3% in January 2022 vs. 2021, more than wine (-2.5%) or core beer, excluding hard seltzer or FMBs (-3.1%)
NA beer has historically had an advantage in terms of its ability to be sold in single cans, which is a relatively inexpensive package for a curious drinker to take a chance on. (Recall Babitz’s customer who buys new beers in single cans every week.) RTD non-alcoholic cocktails offer a similar value, and are a much easier investment than a $30 or $40 full bottle of non-alcoholic spirits. For example, a can of Fauxmosa Orange and Turmeric Alcohol-Free Mimosa sells for $4.75 per can at The Open Road and a GinISH & Tonic can sells for $6. That relatively inexpensive trial is, at least in some cases, converting fans to non-alcoholic spirits.
“Anecdotal info from our members shows that customers were challenged to pay $30-$40 or more per bottle if they want to mix cocktails with [a non-alcoholic spirit], versus picking up an RTD, which is leading to lots and lots of sales for the actual NA spirit,” says Marcos Salazar, president of the Adult Non-Alcoholic Beverage Association (ANBA), a trade group of more than 40 NA beverage producers that launched in December. He also sees that NA RTD cocktails also show strong promise as a ready-made option for bars and restaurants who may not have their own in-house mocktails.
Salazar says right now, ANBA members aren’t fiercely competing against each other in terms of categories—there’s not quite the rivalry between NA spirits and NA beer as there is in the alcoholic space. But depending on how lucrative the NA space gets as it matures—and how many new entrants chip away at beer’s early lead—it’s unlikely competition won’t follow.
In chain retail stores tracked by market research company IRI, NA beer earned $275.2 million in 2021, growing +26.4% from the year prior. Still a nascent category, NA still wine sold just $29.9 million in the same stores, but grew +39.4 last year.
“Our members really want to learn from each other. They understand they are competing for shelf space and customers but they understand if they work together they can grow the category,” Salazar says.
It’s not clear when the NA beverage category will reach its full potential in the U.S.—and which products and brands will be its big winners. But because NA drinkers are also regular alcohol drinkers, it’s smart to bet that the trends governing the alcohol market will extend to its booze-free counterpart.
Words by Kate Bernot