NOLO drinks outperform alcohol in the UK

The total beverage alcohol market in the UK is expected to see volume and value declines of -1% CAGR over the next five years, although it is still set to remain the world’s third most valuable beverage alcohol market for standard-and-above price bands. That’s according to the latest data and forecasts from IWSR, a global analyst on beverage alcohol data and intelligence.

Total beverage alcohol (TBA) volumes in the UK declined by 2% between 2022 and 2023, capping a period of recent decline for the industry (2018–2023 volumes falling at a CAGR of -1%). Growth rates of the no- and low-alcohol segment outperformed the overall UK TBA market, partly driven by the ongoing consumer trend for moderation as well as excise duty changes. The overall no-/low-alcohol segment showed volume growth of 47% from 2022 to 2023, with forecast volume CAGR of 19% from 2023 to 2028. The no-/low-alcohol segment is expected to add incremental value of £0.8bn by 2028.

Low-alcohol volume sales almost doubled in 2023 and IWSR expects considerable growth over the next few years, particularly driven by low-alcohol beer. Many beer and wine brands are lowering their alcohol content (ABV) to take advantage of the UK’s new excise duty regime, although this is poised to bring renewed challenges for wine in particular when more changes are introduced during 2025.

Patrick Fisher, IWSR Senior Market Analyst, said: “Rising prices and the cost-of-living crisis have reduced disposable incomes for discretionary spending and, coupled with the enduring trend of moderation, as well as closures and reduced opening hours in the on-trade, this is having lasting effects on consumer behaviour. The upper end of the market remains more insulated, while mainstream-and-below retail sales became more dependent on promotions.”

Longer term, both beer and wine are expected to revert to their established pattern of gradual volume decline, with growth in beer focused on premium world lager, stout and non-alcoholic beers, and higher-ABV red wines losing share within still wine.

Overall, IWSR expects spirits to register modest single-digit declines over the forecast period, but gin will continue to incur heavier losses. Of the bigger spirits categories, rum is expected to register long-term growth, albeit modest and focused in spiced and flavoured variants. Agave-based spirits will also grow off a smaller base.

Wine’s long-term volume decline worsened in 2023 when volumes fell by 4%, and the category is expected to shrink further, with an anticipated 2023–2028 CAGR of -3%. Consumption of sparkling wine — until now a reliable growth driver — was down 5% last year, thanks largely to declines of 11% and 6% for champagne and prosecco respectively. However, IWSR said English sparkling wine and Crémant experienced continued growth.

Beer saw a modest volume fall of 2% in 2023, with slow declines expected to continue in the years ahead, and most growth opportunities centred on premium-and-above lager and stout. Beer also remains the key driver of the ongoing growth in no-alcohol products in the UK.

RTDs buck the trend

The only major category expected to increase consumption between 2023 and 2028 is RTDs, which capped a strong period of growth with a 2% increase in volumes last year. Premium cocktails are gaining traction, and canned RTDs are now being joined in the marketplace by a wider range of bottled ready-to-serve cocktails and spirit-derived liqueurs.

No-alcohol innovation expands beyond gin alternatives

There is a proliferation of no-alcohol products on the market, especially in zero-proof variants of well-known parent brands. Whilst most earlier non-alcohol spirits were clear gin-style alternatives, there are now more dark spirits no-alcohol alternatives and also some no-alcohol tequila alternatives coming to market. The latest Bevtrac consumer data from IWSR shows year-on-year increases in the no-alcohol drinker population in the UK. The no-alcohol market grew 17% in 2023, and is expected to grow at a 4% volume CAGR from 2023–2028. Volumes of no-alcohol spirits now comfortably surpass those of tequila in the UK.

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