The LCBO's hottest trend? Non-alcoholic drinks

Ontario's biggest purveyor of booze, the LCBO, is seeing a surge in sales from an unlikely source: non-alcoholic drinks.

According to recently released sales data, non-alcoholic beverages saw the highest per cent-based growth year-over-year, with revenue nearly doubling from $5.7 million in 2023 to $10 million this year. The LCBO's non-alcoholic products include beer, cider, wine, pre-mixed cocktails and spirits.

Beverages without alcohol saw a 73 per cent sales increase this year compared to 2023 and a 189 per cent increase compared to 2022, according to an LCBO news release outlining its 2024 sales highlights. 

For comparison, the fastest selling alcoholic product this year was ready-to-drink cocktails, which saw a 17 per cent sales increase over last year.  

The LCBO's senior director of spirits, Alanna Bailey, says customers are becoming more interested in moderating their alcohol consumption and now there are quality products for them to choose from.

"We are seeing great innovation in the [non-alcoholic] space," she said. "You're basically not sacrificing any of the taste and they're very similar to their other products."

'The perfect formula'

One expert on alcohol-free products based in Toronto says the number of people turning to zero-proof, or non-alcoholic, offerings has exploded over the last few years thanks to a focus on wellness, the pandemic and younger generations' drinking habits. 

Sarah Kate started Some Good Clean Fun –  a website and online newsletters dedicated to non-alcoholic drink recipes, reviews and where to buy the beverages in Canada –  in 2021 after noticing a lack of information and expertise on the subject in Canada.

"Three years later, the category has completely exploded to the point where you can now go to your local bodega and chances are they're going to have something," she said.

Kate says that change was driven by "the perfect formula": a focus on wellness, recent guidelines that recommend little or no alcohol and the COVID-pandemic, when many people increasingly turned to alcohol.

"People were making jokes about it. 'Oh, look at me, I've got wine in my teacup while I'm having a Zoom meeting. We've come out of the pandemic and people are saying, 'I actually don't want to drink this much anymore; I've got to cut back. I don't like how I'm feeling," Kate said. 

Gen Z making informed choices 

Kate says up until this year, she would have given Gen Z the credit for pushing the change to non-alcoholic choices, but says she's now seeing people of all ages, especially the 35 to 50 category wanting to cut back. 

Still, 19-year-old Peyton Verhoeven says she and her friends have always been mindful of the negative effects alcohol can have.

"It's honestly scary to hear as a generation," she said. "When there are these really similar non-alcoholic tasting products being sold at the LCBO, why not choose those instead of something that would be hurting your body and your mental health?" 

Verhoeven is the co-founder of Think Gen Z, a consulting firm that helps companies become better educated on how to appeal to Gen Z consumers. 

She says while many of her peers choose legal cannabis products over alcohol, some simply choose not be impaired at all and people aren't questioned if they're at a party and not drinking. 

"A lot of these conversations are happening on TikTok," she said. "There is a change in social norms and I feel like Gen Z are starting to realize that you don't need to be drinking in order to have fun or to be at a social event." 

LCBO offering more zero-proof products

Last year the LCBO's gross revenues totalled $7.41 billion. The vast bulk of that, $5.87 billion came through its own retail outlets, which includes its online direct-to-consumer sales.

This year's total revenue has not yet been released.

The spirits with the most increased growth in year-over-year sales were American whisky at seven per cent and tequila at six.

The LCBO says this year's data is from Nov. 4, 2023 to Nov. 8, 2024 and may be understated due to the strike in the summer that lasted just over two weeks.

Kate says she'd like to see the LCBO increase their non-alcoholic offerings and sell more high-quality products. 

"They have a responsibility to," she said.

Bailey, with the LCBO, says the retailer is always looking to grow its assortment of non-alcoholic options and has recently launched a variety of products the LCBO thinks are "very high quality."

"It's still an evolution for sure. As the category matures, we continue to review our assortment  on an ongoing basis and make sure we have great options that meet our customers' growing needs for this category," she said.

Bailey also says the LCBO has dedicated non-alcoholic sections, has trained employees on the products and includes mocktails in its food and drink magazine.

Kate says there have been questions about whether the change to non-alcoholic beverages might just be a trend, but says recent large acquisitions of non-alcoholic beverage companies and investments into the industry show otherwise. 

"There's things happening in the financial markets too that are showing that this isn't going away," she said.