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Non-alcoholic beers, wines, and spirits are flooding the market right now

(SOUNDBITE OF BEER CAN OPENING)

MARY LOUISE KELLY, HOST:

That is the sound of a can of craft IPA opening and - hang on - (swallowing) - yeah, it's actually not bad. Which I confess, I was not totally confident about going in because this craft IPA, made by Athletic Brewing Co., is a nonalcoholic beer. It's part of a growing trend of nonalcoholic alternatives flooding the market right now.

And since it is dry January, a time when a lot of us are trying to give up alcohol for the month, we have invited Planet Money's Greg Rosalsky to tell us more about why this industry is booming. Hi there, Greg.

GREG ROSALSKY, BYLINE: Hey, Mary Louise. Let's get this party started.

(SOUNDBITE OF BEER CAN OPENING)

ROSALSKY: There it is.

KELLY: (Laughter).

ROSALSKY: Cheers.

KELLY: Cheers. I hear you cracking one on your end. I'll let you...

ROSALSKY: (Laughter).

KELLY: ...Take a sip.

ROSALSKY: I got to say, it's such a treat to drink beers at work.

KELLY: And not get fired, absolutely.

ROSALSKY: (Laughter) Exactly.

KELLY: Well, while you sip, let me pose a first question, which is this - we had a hard time deciding which nonalcoholic beer to try. There are, like, a zillion options now. Tell us about the whole playing field of nonalcoholic drinks today.

ROSALSKY: First, I got to say, this does not taste like the nonalcoholic beer I remember from the past. So I don't know if you remember there was O'Doul's. It was basically the only buzz-free game in town. But now, if you like the taste of alcoholic drinks but don't like the effects of alcohol, you're basically living in a golden age. We're talking drinks like Kentucky 74 Spiritless bourbon, Luminara alcohol removed chardonnay, zero-proof margaritas. Over the last year alone, there have been more than 70 new nonalcoholic beers, wines and spirits that have hit the market. And to be clear, nonalcoholic usually means it has less than half a percent of alcohol by volume.

KELLY: OK. I'm just sipping and swallowing here. I will note that this stuff is pretty good. But like the hard stuff, the stuff I have tried, there's just a huge range in taste, in quality. Some of it is great. Some of it is pretty dreadful.

ROSALSKY: (Laughter).

KELLY: What is the demand like? Are people buying these drinks?

ROSALSKY: Yeah, apparently they are. I talked to an analytics company called NielsenIQ, which is tracking this market. Their data shows that the market for nonalcoholic beer, wine and spirits grew more than 20% last year and more than 120% over the last three years. They suggest this is part of a broader trend of people caring more about their health and wellness. And the market for nonalcoholic drinks now sees around $400 million in annual sales in the United States.

KELLY: Four hundred million - how does that compare to the market for real alcohol?

ROSALSKY: Well, it's super tiny. The traditional alcohol market is, like, a juggernaut. It's around 200 billion in annual sales. So these nonalcoholic alternatives are a teeny, tiny fraction of that, less than half of 1%. But alcohol companies and entrepreneurs clearly see much more room for growth.

KELLY: Do they see it as an either-or? I mean, should companies that are focused on selling the hard stuff, on selling alcohol, do they see these new drinks as a threat to their core business?

ROSALSKY: It's hard to say. At first blush, faux alcoholic beverages seem to be, to use econo-speak, a substitute for real-deal alcoholic drinks. In this view, consumers drink them instead of alcoholic drinks, and because of that, their demand goes down. But it's also possible that these fake alcoholic drinks are not a substitute. They could be what economists call a complement, which means consumer goods that are often purchased together, like peanut butter and jelly.

And what's interesting is that NielsenIQ's data suggests this may indeed be the case. It finds that 82% of people who buy nonalcoholic beers, wines and spirits also buy traditional alcoholic drinks. And as a group overall, they actually spend more money on beverages than the people who only drink the hard stuff. So the alcohol industry likely views this trend as pretty awesome for them.

KELLY: (Laughter) Pretty awesome, to use econo-speak.

ROSALSKY: To use econo-speak (laughter). Yeah, exactly.

KELLY: Well, thanks for this. And I guess, cheers - bottoms up.

ROSALSKY: Yeah, cheers. And happy dry January.

KELLY: And to you. That is Greg Rosalsky.

And for more intoxicating content - hear what I did there? - more intoxicating content from Greg, you can subscribe to the Planet Money newsletter. It's at npr.org/planetmoneynewsletter. Transcript provided by NPR, Copyright NPR.

Since 2018, Greg Rosalsky has been a writer and reporter at NPR's Planet Money.