As Canadians increasingly seek to drink less or not at all, soft drink makers are working hard to meet rising demand and sometimes struggling to keep up.
Interest has grown in recent years, with a surge in Dry January sales as the concept gains popularity, says Bob Huitema, who founded non-alcoholic spirits company Sobrii in 2019.
In the last few years alone, the industry has “exploded” as more and more companies are producing non-alcoholic beverages.
Mitch Cobb, co-founder and CEO of Libra Non-Alcoholic Craft Beer, launched a single non-alcoholic beer at Upstreet Craft Brewing in Charlottetown in October 2020. Since then, increased demand has seen it expand its non-alcoholic offering and recently spun off Libra into a separate company.
“It’s absolutely started to take off,” he said.
Cobb also noted that it’s becoming easier to sell to restaurants and grocers who used to be skeptical that customers would buy the drinks.
“As soon as we had the shelf space, sales started.”
But this increased demand has caused some hiccups along the way.
On some occasions, Cobb said, demand was much higher than expected, resulting in short-term gaps where he couldn’t fill all orders.
While he has learned from those experiences and is better able to predict demand, he said his company was still struggling to keep up with demand in January.
In addition to the increase in manufacturers, there are also companies that import and distribute soft drinks to retailers, restaurants and bars.
Clearsips launched last summer as a distributor of Canadian and international non-alcoholic beverages, including wines, beers and spirits. Co-founder David Thompson has run a wine agency for more than 20 years. Not a drinker himself, he decided to use his industry knowledge to connect producers with retailers and restaurants.
Sansorium, another distributor, was established in September 2021 and imports soft drinks into Canada from other countries where the soft drinks industry is more developed.
Fiona Hepher, the company’s creative director and co-founder, said demand is growing steadily as more people try soft drinks and their assumptions about it are shattered.
Like Cobb, she had some of her own wrong assumptions about demand when she saw some of her best-selling wines had sold out – and since they’re imported, they take longer to restock.
It can be frustrating, but it bodes well for the industry, Hepher said.
Although the growth may seem rapid, Sobrii’s Huitema believes Canada’s soft drinks industry is not developing as rapidly as other countries.
“I would say the UK is years ahead of where we are now in terms of retail adoption, in terms of retail penetration and in terms of retail consumer adoption and consumer demand.”
He noted that smaller, independent and specialty stores are far more likely to stock a wide range of soft drinks, particularly the newer, more innovative brands. Over the next few years, retail options need to expand toward the mainstream, he said.
There’s definitely a lot of room to grow, and many people barely know what’s out there, Huitema said.
Dry January, with attendees abstaining from alcohol for the first month of the year, has helped introduce some Canadian consumers to soft drinks every year, but industry officials say this time felt different.
According to payments company Square, sales of mocktails hit an all-time high in the first half of January 2023, with year-on-year growth of 123 percent.
Huitema believes new low-risk drinking guidelines released in January, which recommended drinking significantly less than you used to, have prompted many retailers and restaurants to jump on board.
Cobb said his January sales were up 40 percent year-over-year, and February sales are also up so far.
Thompson said in January Clearsips added more than 20 new restaurant customers, a significant increase from single-digit numbers in previous months.
Thompson compares soft drinks to vegan alternatives — years ago, most restaurants didn’t offer them, but with growing consumer demand and more products available, companies are beginning to realize they may have no choice but to offer them.
Hepher sees a two-fold business push: a surge in new soft drink companies, but also a rebound in traditional alcohol brands bringing non-alcoholic options to market.
While Thompson expects to see a spike in January sales for the foreseeable future, he believes consumer demand for soft drinks will continue to grow each month of the year. And he believes the next two years in particular will be pivotal for the industry as more products come to market, some likely to be more successful than others.
“It’s going to be very interesting over the next few years,” he said.
This report from The Canadian Press was first published on February 19, 2023.
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