• This year, Dry January coincided with the US Surgeon General's call for cancer warnings on alcohol.
• The CEOs of Heineken USA and Athletic Brewing told BI that drinking trends are moving toward moderation.
• While the space is becoming more popular, widespread availability can pose friction in adoption.

Dry January participants were given extra incentive to stay sober this month as the US Surgeon General said alcohol is a leading cause of preventable cancer and called for a warning label on alcoholic products.

US Surgeon General Vivek Murthy's advisory, announced on January 3, comes as a number of non-alcoholic drinking brands and sobriety-related trends, like sober curiosity or intermittent sobriety, have gained traction in the US.

However, CEOs of companies selling non-alcoholic beverages say the evolving attitudes toward drinking don't mean alcohol is on its way out.

"It's not that there is, like, a big prohibitionist movement or a sober movement, necessarily," Bill Shufelt, the CEO of non-alcoholic beer brand Athletic Brewing said in an interview with Business Insider.

Today, there are more options on store shelves to moderate alcohol intake while providing a similar taste experience. "Even two years ago," Shufelt said that there was "very little availability and awareness." Now the category is on the cusp of a "big societal breakthrough," the CEO said.

The increasing availability of non-alcoholic beer and spirits comes as studies suggest drinking rates have decreased among young Americans. Gallup data published in August also indicates a shift in perception of alcohol. The report said 45% of Americans view alcohol as bad for health, which is a 6% increase from the year before and 17% increase since 2018.

Dozens of celebrities have spoken out about their sobriety in recent years, with some even establishing their own non-alcoholic drink brands, including Katy Perry's De Soi, Blake Lively's Betty Buzz, and Tom Holland's Bero.

Shufelt said the availability of quality alternatives has given consumers the ability to drink non-alcoholic beer without changing their lifestyles.

Leaning into moderation

Both Athletic Brewing's CEO and Heineken USA's chief executive, Maggie Timoney, told BI that as more options are sold in bars and stores, buying behavior is leaning toward moderation over strict sobriety.

Shufelt said 80% of Athletic Brewing customers still drink alcohol, suggesting that most of its customer base isn't traditionally sober.

Heineken's Timoney pointed to NielsenIQ data from 2023 that indicated over 93% of non-alcoholic consumers also purchased alcohol, a 13% jump from the year prior.

The shifting mindset toward drinking can be seen in trends like Dry January, which has evolved for some into the more flexible approach of "Damp January," in which participants cut down on their alcohol intake for the month without fully eliminating it. Some have credited the less drastic approach for helping them moderate their alcohol consumption after the monthlong challenge ends.

Timoney said evolving attitudes toward non-alcoholic beverages stems in part from a desire to participate in occasions where others are drinking.

"It's linked to the health and wellness macro trend," the Heineken executive said, as well as occasions, "because people still want to have a sense of belonging."

Both companies have been making non-alcoholic beer for more than half a decade. Athletic Brewing was launched in 2018. In 2019, Heineken, which has experimented with non-alcoholic beer in the past, launched the non-alcoholic Heineken 0.0 in the US.

Over the last few years, other non-alcoholic drink companies like Free Spirits and Spiritless joined the space. Now, there are a number of non-alcoholic brands making the option to enjoy a mocktail or beer-like drink more widespread.

Athletic Brewing's Shufelt said that the proliferation of non-alcoholic options has expanded "menus and occasions" and has created excitement in the adult beverage industry.

Milan Martin, the CEO of Free Spirits, told BI the rise of participants in Dry January and the decline in some alcoholic drink sales isn't a sign that the alcohol industry "is in trouble" or that it's "going away."

"It's just that people are now just drinking more mindfully and more with an eye to moderation because they have the data," Martin said.

'Bars and restaurants are leaving a lot of money on the table'

While the sale of non-alcoholic beer and spirits has grown in recent years, the segment is still a fraction of overall alcohol sales.

Shufelt said the relative availability of non-alcoholic options is "probably the biggest friction" in people regularly buying the products. He said that Athletic Brewing products are on less than 10% of restaurant menus in the US and as he sees it, "bars and restaurants are leaving a lot of money on the table."

Martin said that for those looking to drink moderately, it can be challenging "if they have to go out of their way to try your product or keep drinking your product."

In an effort to reach more consumers, Heineken plans to expand its 0.0 brand across two major US convenience retailer chains and launch a 12-pack of the non-alcoholic beer bottles for the first time this year.

Timoney told BI that while stigmas around non-alcoholic beer are "easing, they still remain a hurdle."

A Heineken study released on January 2, conducted in collaboration with a professor at the University of Oxford, surveyed 2,413 Americans. The study found that 16% of those in the US said they felt the need to justify their choice of low- or no-alcohol drinks at social gatherings, and 13% said they concealed those choices due to social pressures over the past year.

"Often, the hesitation comes from outdated perceptions— people assume it won't taste like beer," the CEO said. "But the reality is, once they try it, they're amazed."

• Major alcohol companies have been bracing for a culture shift favoring nonalcoholic options.
• Younger consumers under the age of 30 buy less alcohol and drink less often.
• Brands like Heineken and AB InBev have rolled out their own alcohol-free offerings, bolstering sales.

Even before the Surgeon General on Friday warned that alcohol can cause cancer and should come with a warning label, big companies like Heineken and AB InBev — the parent of brands like Budweiser and Michelob Ultra — were preparing for a culture shift favoring nonalcoholic options.

Nationwide, spending on most kinds of alcohol has declined in recent years — especially among young adults, Business Insider previously reported.

Younger consumers under the age of 30 have become progressively less likely over the last two decades to drink alcohol at all, with 62% of adults under age 35 saying they drink, down from 72% two decades ago, according to data from Gallup published in 2023.

Big brands have launched non-alcoholic options to cater to a market that, while they don't want a boozy drink, may still want something new to indulge in on a special occasion.

Heineken first released its non-alcoholic beer, Heineken 0.0, in March 2017 in the Netherlands and Germany, expanding its release to the United States in January 2019.

Corona Sunbrew 0.0% debuted in 2022, a product from Constellation Brands — a beverage company that produces beer, wine, and spirits from brands like Modelo and Corona Extra. AB InBev, which produces drinks for 500 global brands including Budweiser and Michelob Ultra, launched Corona Cero the same year. Constellation Brands owns the US brand licenses for Corona beer in the US, while AB InBev owns the beer in the rest of the global market.

And their zero-proof bets are paying off, executives have said in recent earning calls.

Harold van den Broek, Heineken's Chief Financial Officer, said during an October 2024 earnings call that the company is seeing an acceleration in non-alcoholic sales across many markets, including the US, adding that the brand's non-alcoholic options have grown to over 4% of their total portfolio since launching.

"We do believe that this category, which has been growing about 6% on average since 2018, will continue this growth trajectory," van den Broek said. "We have high hopes for the non-alcohol portfolio."

Constellation Brands' president and CEO, William Newlands, shared a similar optimism. During an April 24, 2024 earnings call, he said Corona Non-Alcoholic was "the number one share gainer in the non-alcoholic segment."

"I think that does reflect some change in consumer behavior or people that are concerned about being the designated driver but still want to enjoy an outstanding-tasting beer," Newlands said. "We're going to continue to emphasize the betterment trends as we go forward with a number of our product offerings and certainly expect Corona Non-Alcoholic to continue to grow here in this coming fiscal year as well."

Michel Doukeris, AB InBev's CEO, likewise told investors during an October 21, 2024, earnings call that the company views the non-alcohol beer segment as "a key opportunity to develop new beer consumption occasions" and that development in this market will continue to be a focus of the company's strategy going forward.

"We gained market share of non-alcohol beer in over 60% of our key markets in the third quarter, with Corona Cero more than doubling both volumes and revenues," Doukeris said. "While no-alcohol beer is currently a small portion of our global volume, we believe there is a significant opportunity for incremental growth."

Industry representatives have long warned of a "war on alcohol," a warning which increased in fervor after the late 2023 World Health Organization (WHO) report which indicated even low levels of alcohol increase the risk of cancer and that "no safe amount of alcohol consumption for cancers and health can be established."

However, amid the concern that alcohol sales might dwindle, brands have begun to capitalize on shifting consumer behaviors and buoy their overall revenue. Boston Consulting Group values the global market share of no-or-low-alcoholic beers, wines, and spirits at more than $13 billion, with sales expected to grow at an annual growth rate of over 7% between 2023 and 2027, settling at about 4% of the overall alcohol market.

Eliott Edge, the bar manager at Hekate, New York City's only sober bar, told Business Insider there is "a whole ecosystem" of new non-alcoholic offerings that customers are clamoring for, having witnessed increasing demand for the alcohol-free options firsthand.

"I get the sober, the sober-curious, and folks who still drink but want to take a break for one reason or another," Edge said. "Locals, tourists — everyone wants to see what it's like. So the non-alcoholic options don't cater specifically to any particular group."

As a result, more and more bars and brands are going to offer non-alcoholic options going forward, Edge predicted, "because they're going to realize that it's like vegetarians or vegans or gluten-free or dairy-free. It's just another type of customer profile to cater to — and the ones that don't cater to that are going to go the way of the dinosaur."

• The US Surgeon General recommended disclosing the cancer risk of alcoholic beverages on Friday.
• While just a recommendation, the advisory sent shares of some big alcohol manufacturers lower.
• It also presents a fresh opportunity for makers of alternatives to alcohol.

The US Surgeon General's finding Friday that alcohol causes cancer led to stock declines for some of the beverage industry's biggest names — and an opportunity for some newer entrants.

Drinking is a major cause of preventable cancer, Dr. Vivek Murthy said in the advisory, which also recommended placing a notice about the cancer risk on beer, wine, and spirits — similar to how packs of cigarettes include warnings about their health risks.

On its own, the recommendation doesn't mean that labels on booze will change. That would require an act of Congress.

Murthy is also part of President Joe Biden's administration and will be replaced by President-elect Donald Trump's nominee for surgeon general after he takes office on January 20. That nominee, Janette Nesheiwat, could take a different view on the advisory if she's confirmed by the Senate.

However, the advisory prompted a response from some companies and the markets today. Here's what it might mean:

Shares of alcohol companies like Diageo and AB InBev lost out

Stocks of some of the biggest alcohol companies in the world were down Friday after the surgeon general released his advisory.

Shares of Budweiser-maker Anheuser-Busch InBev closed down 2.8% in Belgium. In London, shares of Diageo, the company behind Captain Morgan rum and Ketel One vodka, closed nearly 4% lower.

Still, there's reason to doubt that the surgeon general's advisory will lead to a lot less drinking and fewer sales for the big booze makers, Kate Bernot, lead analyst at Sightlines, which researches the alcohol space, told Business Insider.

Annual per-capita alcohol consumption in the US has hovered around 2 ½ gallons since 2012, Bernot said, citing data from the National Beer Wholesalers Association. Gallup polling shows that the percentage of Americans who say that they drink alcohol has mostly stayed between 60% and 65% since the early 1990s, she added.

That stability in habits comes despite previous research into the link between alcohol consumption and cancer as well as the growth of "Dry January," a commitment drinkers make to avoid drinking during this time of the year.

"Maybe some people change their behavior, but I don't think we're going to see population-level dramatic shifts in alcohol consumption," Bernot said.

Makers of non-alcoholic beer and spirits could get a boost

Even if there is a nationwide shift away from alcohol, many of the big producers already have alcohol-free options that they have been ramping up for years. In 2023, for instance, Constellation released a non-alcoholic version of Corona beer.

"The diversification has been happening as a result of consumers' potential thoughts about alcohol's effect on their health," Bernot said.

Murthy's advisory came right as many drinkers are trying to cut back on their alcohol consumption in the new year or embarking on a Dry January.

That's a potential win for many other brands that make alcohol-free beer, wine, gin, and other drinks.

The CMO of non-alcoholic spirit brand Spiritless, Tom Santangelo, told BI he sees these comments as the "front end of a tipping point."

"My guess is that for a lot of America, this surgeon general statement is kind of the message they need to come to a realization that this is something serious," Santangelo said.

He said the industry has already grown significantly in the last few years as alcohol moderation and abstention have become increasingly normalized. Similar to cigarettes, change may not come quickly, but he said, "It's a message that's going to carry a lot of weight."

Milan Martin, the CEO of non-alcoholic spirit brand The Free Spirits Company, told BI that the US Surgeon General's comments are another "nugget" of insight that will contribute to cultural change around drinking.

"All of these teeny little nuggets sit in our minds and sit there at the point where we're ready to order our third drink and impact our choice," Martin said, adding that conversations among peers and in the media around drinking are contributing to changes in drinking culture.

Athletic Brewing, which sells non-alcoholic beer, similarly said that while it is "aware of the ongoing discussions about alcohol and health," it "has never been anti-alcohol."

"We believe the alcohol and non-alcoholic sectors are synergistic," the company told BI.

Innovative soft drinks, from seltzer to kava, could benefit

Besides alcohol-free beer and cocktails with all the ingredients other than the, well, alcohol, there are other beverages that have attracted attention from the sober-curious — and could benefit if people cut back on booze.

Celebrity seltzer and soda brands often pitch themselves as upscale, healthier soft drinks, BI reported last year.

Others have turned to kava, a beverage that's common to the Pacific and is supposed to help you relax and put you in a better mood. While the most authentic kava is served on its own, brands that have added juice, sugar, and coloring before canning it have popped up over the last few years. Some point to their kava as a healthier choice than a cold beer or cocktail.

Cannabis products could become more attractive

People looking to cut back on alcohol sometimes turn to cannabis as a replacement, especially as governments loosen restrictions. That could be good news for makers of everything from CBD-infused beverages to marijuana dispensaries. Cannabis company Canopy Growth, for example, rose more than 2% Friday.

In 2022, the number of daily or near-daily cannabis users outpaced the number of daily or near-daily drinkers, research from Carnegie Mellon University found.

Some states, such as Minnesota and Texas, already allow liquor stores to sell drinks that contain THC, the main psychoactive component in marijuana, right alongside liquor.

The AI-generated video scene has been hopping this year (or twirling wildly, as the case may be). This past week alone we've seen releases or announcements of OpenAI's Sora, Pika AI's Pika 2, Google's Veo 2, and Minimax's video-01-live. It's frankly hard to keep up, and even tougher to test them all. But recently, we put a new open-weights AI video synthesis model, Tencent's HunyuanVideo, to the test—and it's surprisingly capable for being a "free" model.

Unlike the aforementioned models, HunyuanVideo's neural network weights are openly distributed, which means they can be run locally under the right circumstances (people have already demonstrated it on a consumer 24 GB VRAM GPU) and it can be fine-tuned or used with LoRAs to teach it new concepts.

Notably, a few Chinese companies have been at the forefront of AI video for most of this year, and some experts speculate that the reason is less reticence to train on copyrighted materials, use images and names of famous celebrities, and incorporate some uncensored video sources. As we saw with Stable Diffusion 3's mangled release, including nudity or pornography in training data may allow these models achieve better results by providing more information about human bodies. HunyuanVideo notably allows uncensored outputs, so unlike the commercial video models out there, it can generate videos of anatomically realistic, nude humans.

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