Dry January. We’re halfway through it. Millions of people around the world have given up alcohol for 31 days as part of a New Year’s Resolution. The benefits are obvious - better health, better sleep, better finances are all within the realm of possibility by giving up booze for a month.
Recently, however, the alcohol-free trend has extended to beyond January. People are drinking less, regardless of the month. Frankly, it’s no longer cool to be drinking.
I first noticed this when I was living in San Francisco in 2010; social activities became less and less likely to revolve around alcohol consumption. At first, I thought that it was just because I was getting older, but I’ve only noticed this trend grow and even spread to younger people.
Research shows that millennials today are drinking less than their counterparts 10 or 15 years ago. According to the Pittsburgh Gazette, “the decline is most significant in teens, but also present among adults in their 20s.”
In fact, it has become in-vogue to not drink at all for people of all ages. As an investor, I’ve seen the non-alcoholic beverage category grow dramatically over the last several years, and the trends shows no signs of reversing. The global non-alcoholic beverage market is expected to grow to $1,189Bn by 2023, a 4.7% CAGR. At the same time, alcohol sales growth is slowing down. According to Nielsen, alcohol sales growth has slowed across all categories.
Instead of alcohol, people are choosing to drink coffee, tea, kombucha, pressed-juice, sparkling water, sports drinks, energy drinks, and bottled water. Recently, I’ve seen the rise of “functional beverages” i.e. products that convey a specific health benefit. Whether it’s energy, relaxation, or brain health, consumers are seeking out beverages that provide more than hydration.
What does all of this mean to me as a CPG investor?
- I’m looking for brands that are providing more non-alcoholic beverages in situations typically reserved for alcohol i.e. sports events, bars, restaurants. I’d love to see the non-alcoholic beverage section be much longer at almost every restaurant I visit
- I’m excited about beverage companies that are redefining drinking formats (i.e. with shots, packs, refillable bottles)
- Within alcoholic beverages, I’m most excited about beverages with a functional aspect or low-alcohol, easy-drinking brands