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Non-alcoholic beverage boom is 'here to stay'

As non-alcoholic beverages gain steam, Drizly's Head of Consumer Insights Liz Paquette joined Yahoo Finance Live to discuss the accelerating trend. She notes non-alcohol purchases on the platform are up 62% in 2023, cementing "a trend that is here to stay" after rapid growth.

Paquette believes ongoing post-pandemic socialization will continue driving demand. With drinking often tied to hosting and celebrations, consumers want options. She highlights non-alcoholic beer as the top performer in the broader non-alcohol category, while spirits alternatives are starting to find traction as well.

Paquette notes that consumers are seeking value, saying it's "critically important for purchase."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

[AUDIO LOGO]

JULIE HYMAN: As we inch closer to New Year's Eve, you may be checking your liquor cabinets to stock up for parties but a big trend in the refreshment sector this year has been the growth of non alcoholic beverages. Online ordering and delivery platform, Drizly, seeing the share of alcoholic beverages growing 62% since last year.

For more on this and much more about what's going on in the space, we turn to Liz Paquette, head of consumer insights at Drizly Liz, it's good to see you. I do want to dig into the non alcoholic but first I just want to ask you big picture, what has surprised you the most this year? I non alcoholic has seen a big change. What are the trends that have sort of stood out the most surprised you the most as you reflect on the year?

LIZ PAQUETTE: Sure, and thank you so much for having me. So in terms of what has surprised me most this year, non health has definitely been one of those that has moved from being an upcoming trend to a trend that is here to stay. This is something that consumers are going to continue to look to when they're hosting, celebrating, having everyday kind of occasions with friends and family.

So last year, non ALC sales were up about 34%, they're up about 62% this year. And what's driving that in large part, what's interesting is that non ALC beer is actually the number one subcategory within the non ALC category specifically. However, we're seeing spirits accelerate quite a bit this year with sales in that category up 162%. So finding that consumers are looking to make more mocktails at home, which is in large part a trend that is in line with overall consumption within the Bev ALC category as well. Consumers continue to mix cocktails at home, kind of post-pandemic as they created this new behavior.

JOSH LIPTON: And Liz, I'm interested for consumers on your platform, right now. How are they spending Liz? Are they-- are they spending up for the more expensive drinks or kind of downshifting to less expensive drinks?

LIZ PAQUETTE: Yeah, so absolutely value is a bigger indicator for consumers this year and something that's critically important for purchase. We're seeing delivery of the Bev ALC category continuing to be strong in this year. However, consumers are citing value for their money as one of the main indicators of something that's important to them when purchasing, and then we're seeing that reflected in average unit prices as well.

So in the spirits category specifically, while this is our number one top selling category on the platform and we actually saw some growth in this category year over year, we are seeing the average unit price decreasing actually year over year by about 3%, and we're finding two shifts within the price points that consumers are purchasing within that as well.

So while in years prior, it was last year specifically, it was 40 plus that we had more sales or a higher percentage of sales in this category. We're seeing consumers trade down a little bit more in the spirits category specifically this year. And interestingly though, in wine, we're seeing folks are actually continuing to trade up a little bit more in this category when compared to spirits, so average unit price is pretty flat year over year in wine specifically, and we're seeing consumers purchase at a higher price point overall.

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