New data from IRI suggests the low and no alcohol category now accounts for 1% of total beer, wine and spirits sales in the UK off-trade.

Sales of zero and low alcohol products in the UK saw 3.7% growth in volume sales to 5 million litres in 2022, versus a year prior. This is a 15% decline in units as shoppers bought larger, more expensive packs. Value sales in 2022 grew 5.3% to £16 million.

The numbers were released today as part of a wider look at consumption trends across Europe. Overall figures show a EUR2.7 billion drop for BWS sales across the off-trade in Europe for the full year, with total category sales value at EUR66 billion.

Sales of champagne and prosecco remained resilient to the overall decline in alcohol sales, IRI said, as people “resist giving up on the sparkle of their special and celebratory occasions with family and friends after two years of restrictions and with the cost of out of home drinking stubbornly high”.

This has also been good news for RTDs. Consumers are opting to stay in on weekends to drink with friends, IRI said, pushing up sales of ready-to-drink spirits (in lieu of cocktails at bars) as well as multi-pack servings of well-known beer brands.

“It is increasingly evident that underlying demand has changed in response to post-pandemic trends with new consumption patterns and choices impacting how the category grows over the next few years,” said Ananda Roy, global SVP, strategic growth insights, IRI. “Alcohol brands are caught in a perfect storm with no end in sight. Alcohol sales tend to peak during a recession as consumers eat in instead of out. However, this recession is fuelled by a perfect storm of exceptionally high food and energy prices, record interest rate rises and anaemic wage growth. Households are having to make trade-offs to moderate its impact on their available income, prioritising food staples and small indulgent treats over discretionary items like alcohol. Alcohol sales are now lower than pre-pandemic levels.”

As the price of all groceries are predicted to remain high during 2023, IRI said that alcohol sales – both at home and at out-of-home venues – are unlikely to grow without investment in new products tailored to new consumer needs and consumption moments that make the category relevant again.

Retailers’ own labels accounted for 16.4%, or £11bn, of value sales for the category, IRI said. Although growth of Private Labels has not been as significant as in other categories, IRI noted that retailers may focus on the zero and no alcohol trend to increase private label penetration.

“Retailers are likely to raise prices in 2023, which may soften demand, particularly in the UK and Germany, where shoppers have been hardest hit by the cost of living crisis,” Roy continued. “When it comes to alcohol, strong brand equity usually keeps shoppers buying their favourite beer, wine and spirit brands. However, as prices rise we could also expect to see more people switching to private label brands as they do in other categories where they are perceived as good as national brands.”

IRI’s analysis was taken from its bi-annual FMCG Demand Signals report.