Functional Adult Non-Alcoholic Beverage Market Opportunity | Alcohol Industry Implications

Is society really shifting away from the “original functional drink?” And if so, which alternative is best suited to emerge as the next beverage industry winner? About two months ago, there was a Bloomberg article that noted “alcohol consumption has gone into possibly permanent decline.” And let me tell you…within the world of beverage industry pundits, that excerpt caused quite the tizzy. Yet, I’d argue this story of gradual, long-term moderation isn’t (for the most part) what’s being passionately contested. Instead, the Bev-Alc community seems more argumentative regarding the key factors causing these declines and whether the pendulum of consumer behavior will eventually swing back. And to be completely honest…when analyzing this dynamic subject matter, you can easily get yourself more twisted than chugging a few of those tea-flavored FMB tallboys. So, I’m going to streamline this content piece by acknowledging that “generational transition” and “economic growth challenges” are relevant…but largely focusing on interconnected underlying drivers that strengthened a few relevant consumer behaviors during the “Great Shutdown” era. But maybe the most obvious impact from “consumers re-evaluating what’s good for them and growing more focused on living healthier” becomes apparent when you consider the strategic lens that “demand growth breeds commercialization activity.” And since we also live in the “Age of the Endless Aisle,” strengthened by the “Great Shutdown” era normalizing online grocery shopping, it resulted in expanded availability for more great-tasting options across every nonalcoholic beverage category compared to any other point in our history. As a result, this wider range of alcohol-free drinks, alongside broader access…made abstaining more viable. Though, let’s dig deeper into popular alcohol-free beverage options…and attempt to answer my introductory question of “which alternative is best suited to emerge as the next beverage industry winner.” And maybe it’s best if we initially align ourselves around my belief that beverages offering more than enjoyment aren’t just a passing fad…instead a reflection of a deeper secular trend towards health-conscious consumption. Moreover, consumers are moving closer everyday towards this four-way intersection of taste, convenience, nutrition, and functionality. And consequently…every multibillion-dollar beverage category is in the early innings of a remarkable transformation, as hundreds of brands are competing for consumer attention with wellness-focused marketing and functionality of ingredients. However, it’s important to understand that (1) shifting consumer behavior most often happens progressively, but (2) there are multiple levels “to this game.” So, let’s use that thought framework to examine the past, present, and potential future of functional beverages. So then…are functional alcohol alternatives the ultimate disruptor? If our prediction timeline is decades into the future…I might be inclined to answer favorably, but in the near-term it’s going to be an incremental success story.