As booze alternatives take off, more nonalcoholic drink makers promote health benefits as the next buzz

Nonalcoholic Functional Beverages Gain Popularity as Interest in Alcohol Alternatives Rises #

A growing number of health-conscious younger consumers and an aging older demographic are driving the demand for nonalcoholic drinks, particularly a subset called ‘functional beverages.’ These beverages go beyond basic hydration or the taste factor of non-alcoholic beer and mocktails. They are marketed as having specific health and cognitive benefits, with some even containing substances like THC. The legality of these drinks remains undefined, but the interest in them is increasing. More Americans are seeking alcohol alternatives, and beverage makers are capitalizing on this trend. In 2024, over 40% of Americans plan to drink less alcohol, with the number rising to 61% for Generation Z. The global functional beverages market is expected to reach $249.5 billion by 2026. Functional beverages retail sales in the US reached $9 billion in the 52 weeks ending March 30. However, functional beverages have not replaced alcohol consumption entirely, as 80% of nonalcoholic beverage buyers also purchase alcoholic drinks. Younger consumers are primarily driving the trend, but interest from older generations should not be overlooked. During the pandemic, consumer health and wellness concerns increased, leading to an interest in functional beverages that promote energy, digestive health, brain health, and mood enhancement. Claims made by beverage makers about the health benefits of functional drinks are not subject to FDA review. Cannabis-infused beverages are gaining popularity, providing a true alcohol alternative without the negative health effects. The growth of functional beverages will depend on the buy-in from major beverage manufacturers and the extent of cannabis legalization. Safety concerns surrounding functional alternatives are also important for the industry to address moving forward.