Refreshing overhaul propelled by novel trends initiated at Diageo
Booming Non-Alcoholic Drinks Market in the UK
The market for alcoholic drinks is undergoing a significant shift, with traditional aperitifs like gin and tonic being replaced by drinks like Hugo Spritz. Simultaneously, the non-alcoholic drinks sector is experiencing a surge in popularity, particularly in the no and low alcohol beer segment.
Sales of no and low alcohol drinks in the UK, especially no and low alcohol beers, are currently experiencing strong growth and are forecasted to continue growing significantly in the near future. The no and low alcohol beer segment has seen a 35% increase over two years and is now the largest growth area in the UK beer market. By mid-2024, sales during summer months alone were expected to hit a record 33 million pints, a 20% increase over 2023, continuing a trend from 20 million pints in 2022 to 23 million in 2023.
Key drivers for this growth include increased health consciousness, a wider range of product offerings, and brewers' efforts to meet demand for alternatives to traditional alcoholic beverages. The category has grown by about 750% since 2013, indicating a long-term shift. Independent pubs and community venues are important contributors to this growth, with London being a regional leader in sales volume.
Looking forward, industry stakeholders advocate for updating the UK definition of "alcohol-free" beer from a maximum of 0.05% ABV to a less restrictive 0.5% ABV, aligning with international standards. This regulatory change could stimulate further investment and innovation, supporting continued expansion.
The overall non-alcoholic beverages market in the UK is also growing, driven by health trends such as sugar reduction, clean labels, and functional ingredients. The UK non-alcoholic beverages market was valued at approximately $45.9 billion in 2024 and is projected to reach $60.2 billion by 2030, growing at a compound annual growth rate (CAGR) of about 4.6%. This encompasses low sugar drinks, which have also seen rapid growth recently, with sales jumping 65% in 2025 due to consumers favoring healthier options.
However, the drinks industry is facing challenges as well. Diageo, the Guinness-maker, is planning 'substantial' disposals in the next three years, possibly involving beers like Hop House, Kilkenny, and Tusker Lager. Diageo's shares have fallen by a quarter this year and halved since the pandemic. Analysts expect a fall in full-year sales to £20 billion and lower operating profits for Diageo.
The industry is also experiencing pressure from weight-loss drugs that suppress alcohol craving and the 'sober curious' movement among Generation Z. Sales of no or low alcohol drinks are increasing, with a 28% increase at Ocado and a 32% increase at Waitrose. Sarah Holland, Waitrose's low-and-no buyer, says there is a trend towards wellbeing-focused drinking that doesn't compromise on flavor or social connection.
Despite these challenges, Olivia Ferdi, founder of Trip, a large privately owned soft drinks firm, asserts that most alcohol-free options do not deliver on taste or relaxation. The industry must continue to innovate and meet consumer demands to maintain the growth trajectory of the non-alcoholic drinks market.
- Investing in the non-alcoholic drinks segment, particularly in the no and low alcohol beer segment, could be a lucrative venture considering the current growth trend and forecast in the UK market.
- The finance sector may find interesting opportunities in the evolving landscape of the lifestyle industry, as the demand for food-and-drink alternatives and healthier options, such as non-alcoholic beverages, continues to expand.
