The increasingly profitable alcohol-free booze sector.

In September 2021, Blake Lively launched Betty Buzz–a line of alcohol-free cocktail mixers. The drinks did so well both in stores and online that the brand didn’t think it was necessary to begin traditional advertising until this week.

For those who are wondering what constitutes an alcohol-free cocktail mixer, you may better recognize these products by the names tonic water, ginger beer, or juice. And while a liter of any of these will cost you a few dollars at your local convenience store, a 12-pack of Betty Buzz tonic water will cost you $29.99 (plus shipping, if you’re ordering online).

The emergence of a successful celebrity brand is just the latest indication of the profitability of the alcohol-free sector. In 2020, the low-and-no alcoholic (also known as NOLO) wine, spirit, and beer market earned $291 million in sales. In 2021, it boomed to $3.1 billion, with alcohol-free products seeing more growth than their low-alcohol counterparts.

While NOLO products have been previously targeted at those who couldn’t drink–people in recovery, pregnant women, designated drivers–the increase in their popularity is actually being driven by a much broader audience who did and does drink alcohol.

That may seem surprising, given the numerous reports that came out about the rise of heavy drinking during COVID. However, alcohol consumption had actually been on a steady decline among Americans in the years leading up to the pandemic.

In 2019, 46% of drinking-age adults had purchased a non-alcoholic beer or cocktail, with drinkers making up the largest portion of that audience. Some of the motivations behind these purchases were a desire for a healthier lifestyle, wanting to save money, and weight loss. One would imagine that these factors became both more important and more popular during the global health crisis.

However, just because someone is abstaining from alcohol doesn’t mean they want to give up the experience of drinking–which created opportunities across the food and beverage industry.

Bars and restaurants have increased their non-alcoholic options, as well as the price-tags attached to these offerings. Gone are the days of “I’ll just take a seltzer with lime.” Instead, you can order a $16 glass of carbonated clarified comice pear and Mount Olympus tea. Sound enticing? How about a visit to an entirely booze free bar?

At the same time, vineyards in France, Spain, California, Australia, and more began bottling a variety of alcohol-removed wines for almost any palate. And the non-alcoholic beer industry has expanded far beyond O’Douls.

What I also find interesting is that the number of college-aged people that abstain from drinking alcohol is growing. This means that as the buying power of this demographic increases, so will the demand for–and staying power of–quality, non-alcoholic options.

To the early adopters in this space, I raise a glass and look forward to seeing what you come up with next.

Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.

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Investor in and lover of fine wine and restaurants.

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Danilo Diazgranados: On wine and food

Danilo Diazgranados: On wine and food

Investor in and lover of fine wine and restaurants.

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