Business is booming for Per Se’s drinks.
Its nonalcoholic hibiscus margarita can be found on restaurant menus in the Minneapolis and St. Paul area. Eight distribution partners are putting its canned mock negronis and whiskey sours on the shelves of grocery stores and liquor retailers across the Midwest.
It’s not just thanks to Dry January. Consumers have been slowing their intake of chardonnay and pale ale for a while, and the tiny nonalcoholic beverage industry has been on a tear. After the surgeon general’s warning this month about the link between alcohol and certain forms of cancer, it is poised to attract even more customers.
But don’t expect mocktail and near-beer makers to start denouncing alcohol or citing frightening statistics from medical journals to make their case. Sounding preachy is not on brand. Moreover, the industry depends on the investments, marketing expertise and distribution systems of the beer, wine and spirits industry.
“Drinking alcohol is still the default in our culture when you go out, so telling someone to stop feels like a personal attack,” said Hally Turner, who founded Per Se in 2019 with her husband.
“This isn’t an opportunity for us to proclaim, ‘Death to alcohol,’ ” echoed David Fudge, a co-founder and CEO of the nonalcoholic beverage company Aplós. “Quite honestly, there’s quite a bit of distrust around the government and institutions broadly these days, so I’m not sure that kind of tactic would work with most customers.”
The surgeon general’s warning comes at a time when the alcohol industry is struggling. Beer sales have been in a decline since 2008, while wine sales peaked about five years ago and have fallen since, according to the global drinks research firm IWSR.
Analysts and industry observers attribute some of the slowdown to inflation.
On top of that, analysts say, fewer members of Gen Z drink alcohol compared with previous generations. Those who do drink are consuming less, sometimes adopting “zebra striping” — alternating between alcohol and nonalcoholic drinks — on nights out to moderate their alcohol consumption.
Then there is the increasing number of consumers of all ages who are embracing broader health and wellness trends, particularly after the COVID-19 pandemic, said Marten Lodewijks, president of the Americas division of IWSR.
“Between the first half of 2023 and the first half of 2024, the number of alcohol drinkers that consumed nonalcoholic beverages doubled from 6% to 13%,” Lodewijks said.
Revenues for nonalcoholic drinks remain tiny compared to alcohol sales. Last year, retail sales of nonalcoholic beer, wine and spirits totaled about $818 million, less than 1% of the $112 billion in sales of beer, wine and spirits, according to the research firm NielsenIQ. But they are growing fast: Sales of nonalcoholic drinks have risen 67% since 2022.
Still, the double-digit growth has grabbed the attention of alcohol giants, some of which have jumped into the game. The spirits company Diageo is selling nonalcoholic versions of its Tanqueray gin, Captain Morgan rum and Guinness beer. It also acquired Ritual, a nonalcoholic spirits brand, last fall. Molson Coors and Anheuser-Busch InBev offer nonalcoholic versions of their popular beers and beverages.