When a new year rolls around, social circles split into two groups. The dividing line: alcohol. There are the people doing Dry January, swearing off booze for the month to regroup after the holiday season's indulgence. Then there are the people who have no plans to shift gears — if anything, they're excited that all the January teetotaling means smaller bar crowds. But increasingly, the sober/drinking split is stretching beyond the confines of January into other months and across American culture.

The conversation around sobriety and sober curiosity has become louder and more open in recent years. Whereas 20 years ago a decision to abstain from alcohol was often kept hush-hush (the implication being that the abstainer had a shameful problem), nowadays people are much more open about sitting drinking out. They're skipping happy hours, going on booze-free dates, and laying out their reasoning for sobriety online. The beverage industry has been happy to cater to them, too. IWSR, which covers the alcoholic-beverage industry, said volume in the nonalcohol segment in the US grew by 29% in 2023, driven by young people in particular.

Before everyone does a victory lap about how America's given up on alcohol, it's important to note that the nonalcohol segment is still pretty small — IWSR expects it to make up 4% of the overall alcoholic-beverages market by 2027. And while the modern temperance movement is growing, so too is the high-alcohol-content segment. Americans are increasingly opting for spirits over beer, and ready-to-drink cocktails and high-ABV beers are becoming more popular than middle-of-the-road options.

Polling from Gallup suggests men, white people, college graduates, and higher-income people are among those with a higher propensity to drink. And heavy drinkers consume the bulk of alcohol volume in the US. But many drinkers are incorporating nonalcoholic options into their routines without giving up on booze altogether. They're looking at occasional abstention as a form of moderation. After all, per the market-research firm NIQ, more than 93% of nonalcohol buyers also buy alcoholic drinks.

"The people who are drinking a lot of NA stuff, they just are interested in more flavors and more beverage profiles and things like that," said Dave Infante, a contributing editor and columnist at VinePair who writes a Substack about drinking called Fingers. "So they're just drinking more interesting shit out of everything."

To some extent, drinking culture is moving toward the extremes. Sure, more people are abstaining on a given night — but when people do order an alcoholic drink, they're really going for it. They're getting an old-fashioned, not dialing down to a light beer or two. Instead of forgoing the real thing altogether, Negroni lovers are mixing in a phony Negroni from time to time.

The surgeon general's recent warning that alcohol can cause cancer reiterated for a lot of people something they already (begrudgingly) knew: Drinking is not good for you. The proportion of Americans who say drinking is bad for health has risen quite steadily over the past two decades, per Gallup, even if the amount they drink hasn't changed much. The polling also suggests that the proportion of Americans who consume alcohol has for decades remained relatively stable, at about six in 10. Per-capita consumption of ethanol from alcoholic beverages has stayed at about 2 to 2.5 gallons.

"There's just a lot of evidence that suggests even though we have more alternatives than ever, people are still happy to consume and indulge in something, especially if they feel they can do it responsibly," said Bryan Roth, the director of insights at Sightlines, an analyst group that covers the alcohol industry.

For some people, drinking responsibly means strategically turning alcohol time on and off — sometimes throughout the year or week, sometimes just in a night — and moderating without giving up the bottle entirely. They think it's healthier, even if their doctor might not entirely agree. It's a way to slow down, to get a check on how much they're drinking. And sometimes they just can't afford to be too hungover ahead of a big workday.

"If all people who were buying Athletic beers and Bud Zeros were 100% sober, that would be one thing, but what we find is a good majority of people are sort of mixing and matching," said Nadine Sarwat, an analyst who covers the beverage and cannabis industries at Bernstein.

Some people set rules for themselves about when alcohol is allowed. They eschew alcohol on weekdays and leave it only for the weekends — so they'll drink alcoholic beer on a Friday but a nonalcoholic beer at lunch on a Wednesday. Or they'll replace that bottle of cabernet with a 0% option a few nights a week to take it easy. Some drinkers take part in Damp January and reduce their alcohol intake instead of going totally dry. Or there are those who attempt a harder and longer reset with the "75 Hard" challenge, which says no alcohol (or cheat meals, or, seemingly, fun) for 75 days. (There's a "75 Soft" for those who want some semblance of joy.)

Day to day, at the bar or a party, some drinkers are doing what's been dubbed "zebra striping," where they alternate between alcoholic and nonalcoholic beverages — a Manhattan one round and a mocktail the next. It's a more festive — albeit expensive — tactic than chugging a glass of water between drinks. In other instances, they incorporate "bookending," where they begin and end the night with an NA option. Or they go NA for the "fourth quarter," finishing off the night with a few alcohol-free drinks, emulating what stadiums do toward the end of sporting events.

"It then becomes a method of pacing so you can just kind of maintain," said Joaquín Simó, the global brand ambassador and mixologist for On the Rocks Cocktails. "What I am hearing anecdotally a lot more too is just people who are like, 'Yeah, I know I have to tone it down, but I don't want to give it up entirely. So I'm doing this as a means of dipping my toes not necessarily into sobriety but more into temperance.'"

Kaleigh Theriault, an associate director of beverage-alcohol thought leadership at NIQ, said that while nonalcoholic options appeal to people of many ages in many locations, higher-income people tend to favor them. Even as young people drink less overall and look for more ways to have booze-free fun, many are still imbibing. That NA IPA is combined with an 8% IPA that will knock their socks off.

"What we see with Gen Z is they want non-alc, but they also want those high-ABV beers as well," she said.

But the strongest indicator that someone will be into an NA option is that they're also an alcohol drinker, or at least a buyer. (Some proportion of NA purchasers are probably buying for parties and gatherings for other people to drink.) That many NA drinkers would also be alcohol drinkers tracks. If you don't really have a taste for alcohol, you might spring for a fun mocktail from time to time, but you may also just go with a Diet Coke, which you like better, has fewer calories, and is cheaper. And if you've never been a beer drinker, you're probably not jazzed about downing an NA one.

"No one likes the taste of beer when they first drink it," Sarwat said. "I think that's a universal truth."

For people who have given up drinking, NA options can be appealing, especially as the offerings get better in stores and at restaurants and bars. But as Laura Silverman, the founder of Zero Proof Nation, which is dedicated to the NA-beverage industry, told me, some people who have experienced problem drinking may opt to steer clear of them as they work on their sobriety.

"For people who have had problems with alcohol, many doctors and psychiatrists and stuff, they recommend not going down the path of some of these nonalcoholic beverages because they can be triggering for some people," she said. "I think it's completely individualized."

There's also a divide in the types of nonalcoholic beverages people are consuming — some categories are doing better than others. Most of the analysts and people in the industry I talked to for this story said NA beer was pretty good and close enough to the real thing price-wise that it's compelling to swap in. Many were not so bullish about wine and cocktails — Simó said that besides the sparkling options, most NA wine was "not good," and he described NA distillates as "hot trash." Silverman was more optimistic about the taste and price points.

"Where we were before, everything was sort of premium because it was the only thing that was available," Silverman said. "Not everything has an exorbitant price point anymore, but there is a wide range, and some things are quite expensive."

On the whole, Americans aren't drinking markedly less than they were in the past, but they are drinking differently. Some of the divides and distinctions are complicated to parse.

Gallup has found that while young people report drinking less than previous generations did, older people report drinking more. Gen Z is, for now, straighter-edged than the generations before them in terms of alcohol, but that doesn't necessarily amount to "the kids will be saints forever." With marijuana legal in so many states, some may be opting for cannabis products instead. Drinking is a social activity, and as young people socialize less, they skip out on imbibing, too. Many Gen Zers are still under the legal drinking age, and their consumption habits might change once they're not breaking the law. Roth, from Sightlines, told me that so far, as Gen Zers hit 21, they appear to be drinking about the same amount millennials did when they got into their 20s.

"What we see younger people do in terms of their attitudes toward drinking is very in line with how adults are shifting their attitudes and thought processes toward it as well," Roth said. "It's just a greater understanding of how it impacts you."

Consumers have more options now for drinking than ever. A lot of those options are concentrated at the bottom and at the top, with a sort of hollowing out of the middle. Instead of a 4.2% ABV Bud Light, they're going for a 0% Athletic or a 9% Voodoo Ranger IPA. Or they're swapping a six-pack of Miller Lite for a martini that really packs a punch.

"Demand is gravitating either to the high end of the ABV spectrum or the zero-ABV spectrum," Infante said.

Meanwhile, younger and older generations alike are thinking about their habits and choices — maybe never drinking, or maybe opting in sometimes and out others.

"We do see this broader trend of moderation happening across the industry," Theriault said.

In the ideal, healthiest world, Americans would probably give up on drinking, perhaps except for the most special occasions (and even the surgeon general would likely say that's a no-no). We'd also have a perfectly balanced diet of fiber and proteins and get in those 10,000 steps a day plus strength training and eight hours of sleep. But we do not live in the ideal, healthiest world; we live in the real one, where drinking is not going to "poof!" disappear. Part-time sober — or mindful drinking or whatever you want to call it — might be the best some people can do, or are at least willing to do, right now. And in an alcohol market that's increasingly split between super sober and hella boozy, it's an understandable impulse. That lunchtime beer was never a good idea anyway — let alone the lunchtime martini. Swap it out for a Heineken 0.0 or a mocktail, and leave the good stuff for Friday night.

Emily Stewart is a senior correspondent at Business Insider, writing about business and the economy.

A typical weekend for 28-year-old Olivia looks something like this: On Friday night, she'll catch a game, either in the stands or from the comfort of her couch in her home city of Philadephia. Saturday is for the girls — her book club might go out to brunch or convene at one of their houses. Sunday is for bonus activities like shopping and chores to help get ready for the week. While there might be alcohol at some of those events, Olivia won't be partaking. She's one of a growing cohort of Gen Zers who are opting out of America's drinking culture.

It's a choice that's become increasingly popular in Olivia's peer group. A few years ago, some of her friends would look at her like she was "crazy" for abstaining at social events. Now, some don't even notice — and more are joining her in cutting out alcohol completely, even in a city with a heavy drinking culture.

"I've noticed a lot of my friends have also started to give up drinking, or they're just not interested in spending the money," Olivia, who works in finance, said. "They don't like the feeling of it. Part of that I think, is getting older; part of it is it's just not as cool."

This year, Dry January came with a new warning for Americans: The US surgeon general, Dr. Vivek Murthy, published an advisory that said alcohol should come with a cancer warning, as multiple studies pointed to a link between the two — even as many Americans did not recognize it as a potential danger. Alcohol stocks tumbled immediately. But if the fresh warning about alcohol shocked millennials and older Americans, many Gen Zers met it with a shrug.

"The younger generations are just a little more risk averse than we were," Mary Charlton, a professor of epidemiology and the director of the Iowa Cancer Registry at the University of Iowa, told me. "I think they're a little less fatalistic about things." If older generations embraced an ethos of "I'm going to die anyways, I might as well smoke," Gen Z is rejecting that, Charlton said — or, at least, they're more aware of who's making money off of getting them hooked on those substances.

Existential considerations aside, for many younger Americans, drinking has become incidental to a good time. If millennials killed off everything from golfing to casual dining, Gen Z might put the final nail in the coffin of social and economic life centered on alcohol. It's cheaper and more rewarding for them to opt for a different kind of connection. And, for a growing subset of businesses, that could translate into huge dollar signs.

Becca Borowski, a 25-year-old Wisconsinite, said that she drank "way too much" in college. When she was 22, she began getting terrible hangovers and decided she wanted to cut down on her consumption.

"I feel like everyone kind of realized after COVID that we don't really have to drink to have fun," she said, adding: "That's kind of when I started to realize, oh, I really don't enjoy drinking as much. I kind of just enjoyed more so that everyone was there."

That seems to be a common sentiment among her peer group. Gallup polling found that the share of 18- to 34-year-olds who drink alcoholic beverages has tumbled to a record low.

Meanwhile, the share of 18- to 34-year-olds who think even drinking in moderation is bad for health has doubled since the early 2000s. Chloe Richman, a 29-year-old in New York City who cohosts the podcast "Litty and Sh*tty," has been sober for nearly a year. Her decision to ditch drinking came after she started watching videos about popular online wellness trends such as 75 Hard and cold plunges.

"It really got to me, and I was thinking, oh, that's an easy fix for me," Richman said.

She says she only drank on weekends but would go hard when she did. That meant a lost day on Sundays recovering from the inevitable hangover. So cutting out drinking completely seemed like a logical next step. At first, the decision felt "extremely isolating" — going out for a drink was an easy option for socializing that no longer existed. But soon, she became "obsessed with the idea of just treating my body the best it can be," and decoupled fun from alcohol. These days, her evening activities include going to paint at an art café.

The shifting attitudes toward drinking affect not only how Gen Zers spend their time, but it's also had a dramatic effect on how they spend their money. For some businesses, this has become a serious issue: Concert venues are struggling with lower alcohol sales, and some bars are having to pivot their offerings, bolstering their non-alcoholic options and crafting spaces for optimal socializing. At the same time, a Gen Z nonalcoholic economy is quietly booming — and creating an opening for new types of businesses. The global non- and low-alcoholic beverage business has ballooned to $13 billion and is projected to grow even more. An analysis from IWSR found that nonalcoholic drink volume rose by 29% from 2022 to 2023, and the industry is projected to grow by 7% from 2023 to 2027. Nonalcoholic beverages have also captured new fans: In 2023, for instance, 17% of the industry's consumers were new to the nonalcoholic market. It turns out that Gen Zers still want to see each other; it just doesn't have to be over a drink.

As with any social movement, some big corporations are trying to capitalize on the recent shift. The big alcohol companies have already been gearing up for the anti-booze revolution, with many launching alcohol-free versions of their products. Heineken's CFO Harold van den Beck said in an October earnings call that 4% of the company's portfolio is nonalcoholic beverages and that that could increase to 6% or 7% of the total portfolio in the foreseeable future. Even Gen Z icon Tom Holland — who has been sober since 2022 — has launched his own nonalcoholic beer, Bero, which touts itself as "the new gold standard in beer."

Beyond the big businesses trying to get in on the trend, local entrepreneurs are also trying to create a smaller-scale community that caters to Gen Z's booze-free proclivities. Alexandra Zauner, 34, quit drinking 10 years ago. She wanted to create a way for people to socialize without alcohol, something she felt was missing in her own sobriety journey. That led her to create Lucille's, a nonalcoholic bottle shop and tasting room in St. Paul, Minnesota.

"We're seeing more and more people that are craving opportunities to connect, and it's less about the alcohol and it's more about just creating spaces for people that feel exciting and fun and gets people out of the house," Zauner said. She thinks people still want to experience nightlife — they're just opting not to do that at bars. Whether she's at one of her own nonalcoholic events or someone else's, she feels she gets to connect with other people on a deeper level — and have "genuine fun."

That rings true for Borowski, the Gen Zer in Wisconsin, who wants to get out and meet people without feeling the need to down boozy drinks. For her, that's meant pursuing some of her more creative hobbies: She's a student at local pottery studio Cream City Clay, where she's been cultivating a few friendships out of class. Connecting with peers who share her hobbies — rather than just a drink — has led her to more like-minded, creative folks.

"It's really fun to be able to take our friendship out of the class," she said.

At Chaotic Good Cafe in Manhattan — a new board game and role-playing venue — Gen Zers are flocking to play weekly games of Dungeons and Dragons. After being laid off in January 2023, the café's owner, 39-year-old Andrew Panos, combined his love for board games and coffee to create a space that doesn't revolve around alcohol (although it's still available for patrons who want it).

"We get a lot of people in their 20s and 30s coming in just to sit down and do work. We have WiFi and lots of outlets and 45 seats," Panos said. "We encourage people to sit down. So we're getting a lot of people who just want a cozy, warm spot right now."

That's pretty much the definition of an ideal third space — a place to gather that isn't home or the office but open to those who want to hang out for longer unstructured stretches. If millennials found themselves constricted by a loss of third spaces that funneled primarily into bars, Gen Zers' appetite to hang out sans alcohol might bring third spaces back and then some. A quick glimpse at the type of activities Gen Z is resurrecting — like speed dating or book clubs — shows that there's a larger cultural shift undergirding the patrons keeping these businesses afloat.

Gen Z sobriety still has its own nuances — many Gen Zers are still drinking, even if just a little. Others might be more motivated by current wellness trends and an acute need for connection than a long-term dedication to sobriety.

In Ohio, the rock-climbing walls at RockQuest are hopping on a Friday night. The general manager, 34-year-old Tyler Carson, has noticed an influx in younger folks who aren't just serious outdoorsy types. That includes everyone from older high schoolers to college groups to first dates. Carson said that the pandemic was a catalyst, of sorts — people were stuck inside and getting antsy. Now, some are opting for the thrill of the climb instead of the high of an alcohol buzz.

"There's enough fear even when doing it properly that's like, ooh, this is kind of a rush for people, especially new to the industry. And so they get that excitement, they get that thrill," Carson said.

Indeed, some of the Gen Z focus on sobriety might be tied to the overarching wellness culture and a focus on weight-loss and body transformations fueled by drugs like Ozempic. As Meir Statman, a professor of finance at Santa Clara University, said, "thin is in" in America right now, and younger people (many of whom are frequently on camera, whether it be a Zoom call or an Instagram story) are more concerned about how they look to potential mates. Emily Wilson, a 28-year-old in New York City who cohosts the "Litty and Sh*tty" podcast with Richman, said, much of the new wellness culture — including the sober-curious movement — is centered on selling new products to Gen Zers.

"Wellness is kind of a scam, but I think the fact that it's making people be healthier in some ways — like sobriety — is good, but there's definitely other ways where it's like the Ozempic culture is terrible," Wilson said.

While more members of Gen Z are sober-curious or cutting out alcohol, it doesn't mean all members of the younger generation are dialing back, and other substances might see more Gen Z support: 19% of 18- to 34-year-olds surveyed by Gallup in 2023 and 2024 said they smoke marijuana, the highest among age groups. Even weed companies are adapting to the younger generation's desire for a less intoxicating experience — Curaleaf recently launched a new seltzer with a 2.5-milligram dose of hemp THC, half the dosage of its 5-milligram seltzer launched over the summer. Curaleaf chairman and CEO Boris Jordan said their products are getting a boost as young people search for alcohol-free alternatives.

"As cannabis legalization expands and the hemp market grows, we are seeing adults shift from alcohol use to cannabis consumption, particularly in the 21-27 age group," Jordan told me in a statement.

These changes started taking hold even before the surgeon general's advisory, which may help to accelerate Gen Z's shift — and grow the market for alcohol-free fun. After completing her own research on the link between drinking and cancer, Charlton abandoned her habit of having a glass of wine at night as a reward for getting work done. Now, she only drinks socially. She thinks the longer-term effect of the prominent cancer warning might help people broaden their perspectives on how they want to spend their time.

Kam Kobeissi, 44, has witnessed the Gen Z transformation firsthand. Kobeissi, an elder millennial and a nonprofit worker in the Albany region, has never been much of a drinker; in the past year or so, he's been trying to find a community of people who don't rely on drinking-based socializing. But who he finds isn't exactly his cohort: "I'm definitely a minority in my age bracket." As a millennial, he's familiar with the generation's reputation for killing off certain activities and brands (rest in peace, diamonds). Now, he's getting to see the younger generation perform their own economic sleight of hand. When Kobeissi went to check out a board game café the other night, he was the oldest person there by 10 to 15 years.

"I really like this new generation and how it stands out in such different ways from what traditional business and marketing kind of is used to," he said. "I think it's challenging everything across the board."

Juliana Kaplan is a senior labor and inequality reporter on Business Insider's economy team.

• Hekate Café & Elixir Lounge offers a sober experience in New York City.
• BI visited Hekate following the US Surgeon General's report linking alcohol to cancer.
• Though alcohol use soared amid the pandemic, there is a blossoming sober-curious movement.

Tucked away in Manhattan's East Village, a sober bar offers an alternative to the rest of the boozy scenes in New York City.

On a Saturday night, Eliott Edge, the bar manager at Hekate Café and Elixir Lounge, welcomed patrons, telling newcomers that: "Everything — with a capital E — is alcohol-free."

Business Insider revisited Hekate after US Surgeon General Dr. Vivek Murthy said alcohol is a leading cause of cancer and should have warning labels like those on cigarette boxes.

Edge, a career bartender, said he was drunk for five years straight before seeking rehab. Now, after being sober for two years and rebranding himself as a mocktail bartender, he wasn't surprised by the surgeon general's announcement.

"The news is not news, yet at the same time, whenever an authority figure shows up and makes a declaration, it enables people to reconsider their behavior," Edge told BI. "People are now going to think about their choices differently."

Alcohol consumption surged during the COVID-19 pandemic and deaths from excessive alcohol use jumped nearly 30% from 2016 to 2020, according to the Centers for Disease Control and Prevention. Heightened levels of excessive drinking continued into 2022, well after the pandemic first hit, according to the Annals of Internal Medicine.

Even so, Gen Z drinks less than previous generations, fueling a growing interest in sober socializing.

"It does seem that there is a slowing down of alcohol consumption enough for those of us in the industry who make it our job to notice," Edge said. "If there is a silver lining to the pandemic, it is that this whole new world of non-alcoholic options really exploded onto the scene."

Edge predicted that every bar will have to have non-alcoholic options to remain competitive "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."

Though Hekate is a totally sober experience, Edge said the bar is a "shining example" of how to do it right.

Drinks at Hekate are about $13 for those paying cash — slightly less than your average cocktail at an NYC bar.

But Edge says people come to bars for fun, and with his bar's music, lighting, and mood, Hekate delivers. The cozy bar, which shares its name with the Greek goddess of sorcery and witchcraft, is decorated accordingly.

"You don't need alcohol," Edge said. "Very little is required to have a good time. Really what we need is permission to have a good time, which is what booze does for us. But how often does that good time end in a shit show?"

Not only is he happier as a sober mocktail bartender, Edge said his customers seem happier too, even if they're only stopping by for a mocktail or two before going out for boozey drinks later on.

"My regulars look fantastic, you know? They don't look like they're slowly sliding down the hill," he said. "I'm not watching fights break out amongst best friends. I'm not watching dates dissolve into, you know, puddles of misery."

Perhaps the best part?

"My bathrooms are much cleaner."

• The US Surgeon General's advisory calls for a warning label on alcohol products.
• The CEO of Free Spirits told BI he thinks the statement will further push a change in drinking culture.
• Non-alcoholic brands like Free Spirits are expanding as mindful drinking gains popularity.

Milan Martin, the CEO of non-alcohol spirit brand Free Spirits, said American drinking culture has evolved over the last decade — and the US Surgeon General's statement on alcohol will further push that change.

In an advisory published Friday, US Surgeon General Vivek Murthy said alcohol consumption was the third leading preventable cause of cancer in the US, after tobacco and obesity. He also said he wants to see cancer warnings on wine, beer, and spirits.

In an interview with Business Insider, Martin said regardless of whether a change to the warning label would win political approval, he thinks the statement will impact consumers.

Do you plan to change your drinking habits in response to the Surgeon General's recommendation? Tell us why in this survey.

"What we've seen with the surgeon general is that there's enough research now that says alcohol does not play a positive role in your life and, specifically, it has ties to cancer," Martin said.

Martin said the advisory will be another "nugget" that reinforces similar messages about drinking based on data points, positive stories from friends who have stopped drinking, or guidelines from other governments. All of those insights sit in consumers' minds and lead them to make more informed decisions, Martin said.

"It's not that the alcohol industry is going away," Martin said. "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 the current non-alcoholic drinking landscape looks different than it did even a year ago.

"Even a year ago, when I would see a zero-proof cocktail menu on a restaurant's menu, I'd be like, 'great,'" Martin said, adding that, "the expectation is that most restaurants have them now."

Despite running a non-alcoholic spirits company, Martin said neither he nor his employees classify as "traditionally sober." Martin said he still enjoys cocktails, but he drinks a lot less than he used to. Similar to most non-alcoholic consumers, Martin said he enjoys both options.

Before founding Free Spirits, Martin said he spent 20 years in the advertising industry and embraced the "work hard, drink harder" mentality of the business. Oftentimes, he said he overindulged — but not because he necessarily wanted to.

"It was just that phenomenon of you're having a great time, you're out with friends in some great cocktail bar. The energy is high," Martin said. "Your glass is empty, you order another."

Brands like Free Spirits, which is now distributed across around 8,000 locations in the US, including at stores like Total Wine & More and Wegmans, offer consumers the "bite and burn" of alcohol in a non-alcoholic drink. The drinks also integrate Vitamins B12, B6, and B3. Other popular non-alcoholic options infuse THC or psychedelics.

Instead of drinking orange juice or soda in a social setting, consumers now have the opportunity to experience a margarita or martini without the effects of alcohol.

Martin said Free Spirits' prices have come down by about 15% to 20% since the company's start. As Free Spirits continues to scale and find efficiencies in its supply chain, the company plans to pass those savings onto its partners and to consumers to broaden the availability of the category and the brand, the company said.

• 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 US Surgeon General released a report directly linking alcohol to cancer.
• A BI analysis found that spending on most kinds of alcohol has declined — especially among young adults.
• It's reflective of Gen Z's shifting habits when it comes to alcohol consumption.

By the time the US Surgeon General dropped its report linking alcohol to cancer on Friday, Americans had already been curbing their spending on booze over the last several decades — especially young people.

Surgeon General Vivek Murthy said in his latest advisory that alcohol consumption is the third leading preventable cause of cancer in the US, following tobacco usage and obesity. He recommended updating warnings on alcohol packages to raise awareness of the harmful effects of drinking. However, doing so requires an act of Congress.

"For individuals, be aware that cancer risk increases as you drink more alcohol," Murthy wrote in a post on X on Friday. "As you consider whether or how much to drink, keep in mind that less is better when it comes to cancer risk."

Do you plan to change your drinking habits in response to the Surgeon General's recommendation? Tell us why in this survey.

Many Americans have already been cutting back. Business Insider analyzed alcohol spending data from the Bureau of Economic Analysis and the Bureau of Labor Statistics to get a sense of how alcoholic beverage consumption has changed. It showed that spending has decreased over the past few decades, especially among Americans under 25.

With spirits and beer in particular, Bureau of Economic Analysis data shows that personal spending as a share of personal consumption expenditures has dropped since 1959. Spending on wine as a share of personal spending, meanwhile, has seen a small uptick.

Additionally, expenditure data adjusted to 2023 dollars using the consumer price index shows that younger adults under 25 years old spent less on average than this age group years prior. Bureau of Labor Statistics data shows that spending on alcoholic beverages by Americans under 25 is similar to people aged 75 and over.

The decrease in alcohol spending among young people is reflective of Gen Z and millennials' shifting habits and priorities compared to other generations. A Gallup survey from 2023 found that 62% of adults under 35 said they drink, compared to 72% two decades ago, with some of them citing health concerns as a key reason.

Gen Z is also favoring more active settings like fitness groups to socialize instead of drinking, marking a shift in younger Americans' behaviors.

It's unclear how the alcohol industry will respond to Murthy's latest report. However, warning labels on alcoholic drinks have not been updated since the '80s, and Murthy urged Congress to take action by updating labels and revising recommended consumption limits to prevent cancer among the US population.

• Dr. Vivek Murthy, the US Surgeon General, has released a report warning that alcohol causes cancer.
• It is the third leading cause of preventable cancer in the US, after smoking and obesity, he said.
• The report follows a growing number of studies showing the potential harms of drinking alcohol.

The US Surgeon General wants to see cancer warnings on wine, beer, and spirits.

Alcohol is a leading cause of cancer, but less than half of Americans recognize it as a risk factor, Dr. Vivek Murthy said in an advisory published Friday.

This is in contrast to the 89% of Americans who are aware of the links between smoking cigarettes and cancer, according to a 2019 survey of US adults aged 18 and older carried out by the American Institute for Cancer Research.

Alcohol consumption is the third leading preventable cause of cancer in the US, after tobacco and obesity.

Research has found that drinking alcohol leads to an increased risk of seven cancers, including breast, colorectal, esophageal, liver, mouth, and throat and larynx, the advisory said.

The risk increases the more a person drinks, and for certain cancers like breast, mouth, and throat, the risk can start to rise at one or fewer drinks a day, according to the advisory.

Warning labels on alcoholic drinks haven't changed since the '80s

Murthy recommended updating warnings on packaging to raise awareness of alcohol's link to cancer.

"Health warning labels are well-established and effective approaches to increasing awareness of health hazards and fostering behavior change," the advisory said.

Currently, health warning labels on alcoholic beverages mention general "health risks," as well as instructing pregnant women and those about to drive or operate machinery not to drink.

They have not been changed since 1988, The New York Times reported.

Ian Hamilton, an associate professor at the University of York's Department of Health Sciences, who researches drug use, policy, treatment, and prevalence, told Business Insider that there is a general lack of understanding of the role alcohol plays in several types of cancer.

"Many people aren't aware of this, so having this clearly laid out and explained is a welcome development," he said.

Richard de Visser, a professor of health psychology at Brighton and Sussex Medical School, UK, who researches alcohol use and behavior change, told BI that warning labels could be useful for raising awareness but should be part of a comprehensive approach to alcohol harm reduction.

"We also need to develop individuals' motivation and skills, and also provide opportunities for healthier behavior," he said.