Root beer market size to grow by 3.76% Y-O-Y in 2023, Technavio

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Apr 01, 2024, 05:36 ET

NEW YORK, April 1, 2024 /PRNewswire/ -- Root beer market is experiencing a resurgence in popularity, with the market set to expand significantly between 2023 and 2027. The market is projected to grow by USD 139.76 million during the forecast period, with a compound annual growth rate (CAGR) of 4.32%. The forecasted growth, driven by key factors such as the emergence of low-ABV cocktails and increasing demand from millennials, signals promising opportunities for market players. In 2017, the market was valued at USD 504.35 million.

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Market Dynamics: Factors such as the rising global beer market and the trend towards low-alcohol beverages are contributing to this growth trajectory. However, challenges such as low awareness and lack of standardized quality definitions pose hurdles to market expansion.

Key Drivers: The emergence of low-ABV cocktails is a significant driver fueling market growth. Consumers' increasing preference for healthier beverage options has led to a surge in demand for low-alcohol alternatives. Root beer, known for its rich flavor profile, is increasingly used by mixologists to craft innovative cocktails, driving market expansion.

Trending: Root beer floats are gaining prominence among consumers, both young and old, further propelling market growth. This nostalgic treat, often made by combining root beer with ice cream, has become a favorite indulgence. From classic combinations to modern twists, such as alcoholic floats, the trend is driving consumption and market expansion.

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Major Challenges: Despite its popularity, the root beer market faces challenges such as low awareness and the absence of standardized quality definitions. Building brand loyalty and educating consumers about the beverage require significant investment and time. Additionally, regulatory bodies are yet to establish uniform quality standards, hindering market growth.

Key Market Players: Market players are adopting various strategies, including alliances, mergers, and product launches, to strengthen their foothold. Companies like AleSmith Brewing Co. and Keurig Dr Pepper Inc. are at the forefront of innovation, offering diverse root beer products to cater to evolving consumer preferences.

Fastest-Growing Segment: The decaffeinated segment is poised for significant growth during the forecast period, driven by increasing health awareness. Consumers' preference for caffeine-free options is driving demand for decaffeinated root beer products, presenting opportunities for market expansion.

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Key Regions: North America, particularly the US and Canada, is expected to dominate the market, accounting for 40% of global growth. The region's thriving brewery scene and consumer preferences for craft beverages are driving market expansion.

Conclusion: The root beer market is primed for growth, buoyed by emerging trends and consumer demand for innovative, healthier beverage options. Despite challenges, market players are poised to capitalize on opportunities, driving expansion and diversification in the years to come. As the market evolves, catering to changing tastes and preferences will be crucial for sustained success.

Analyst Review

The Root Beer market has undergone notable shifts, propelled by evolving consumer preferences, changing market dynamics, and external factors such as the COVID-19 pandemic. ProWein Business Report sheds light on various facets of this industry, particularly noting trends in turnover and sales decline due to lockdowns and travel restrictions. However, amidst challenges, North American beverages like Root Beer have maintained their allure, drawing inspiration from the sassafras tree and infusing flavors like honey, sugar, molasses, vanilla extract, and more.

Root Beer, with its distinct blend of black cherry bark, wintergreen, sweet birch, cinnamon, acacia, anise, nutmeg, and licorice root, caters to diverse tastes. Notably, the market has witnessed a surge in low-alcoholic and non-alcoholic product segments, leveraging caramel notes and highlighting health benefits. This segment has gained traction, particularly among teenagers, recalling the days of the Prohibition period when root beer was a popular alternative.

In the alcoholic product segment, brands like "Not Your Father's Root Beer," "AB-InBev Best Damn Root Beer," "Abita Bayou Bootlegger," and "Jed's Hard Root Beer" dominate, catering to a conventional segment in North America. Concerns over sassafras content and FDA regulations have led to a shift towards artificial flavoring, while dietary considerations have propelled the rise of gluten-free variants.

Distribution channels play a pivotal role in reaching consumers. The off-trade segment, comprising supermarkets, hypermarkets, retail outlets, caterers, and beer/specialty stores, has witnessed a surge in online platforms, amplifying accessibility. Conversely, the on-trade channel, including bars, clubs, restaurants, hotels, and coffee shops, has faced disruptions but is poised for recovery as health and wellness awareness grows.

With a rising interest in vegan, sugar-free, and low-calorie options, players like Warped Wing Soda Co. have innovated, offering gluten-free, non-alcoholic root beer with caffeine-free alternatives. Millennials, discerning about ingredients and distribution channels, are driving demand, favoring e-commerce platforms and health-conscious choices.

Overall, the Root Beer market reflects a dynamic landscape, blending tradition with innovation, responding to changing consumer preferences, and adapting to market challenges. As distribution channels evolve and consumer tastes diversify, the industry continues to navigate through uncertainties, propelled by resilience and ingenuity.

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Market Overview

The Root Beer market has witnessed a significant shift amidst the challenges posed by the pandemic. Bars, restaurants, and hotels, vital sales channels for this North American drink, faced downturns due to lockdowns and travel restrictions. According to the ProWein Business Report, turnover saw a decline, impacting sales of this beloved beverage. However, the essence of Root Beer, derived from a blend of ingredients like sassafras tree, honey, sugar, molasses, vanilla extract, black cherry bark, wintergreen, sweet birch, and cinnamon, remains timeless. Despite setbacks, the market persists, with consumers craving its unique taste profile. As restrictions ease, there's optimism for resurgence, fueled by nostalgia and a desire for comforting flavors. Root Beer's enduring appeal lies in its rich history and diverse blend of natural ingredients, promising a sweet return to better times.

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Related Reports:

The dark beer market is estimated to grow at a CAGR of 10.67% between 2022 and 2027. The size of the market is forecast to increase by USD 25,898.47 million. The rising demand for dark beer among millennials is notably driving the market growth, although factors such as stringent regulations and heavy taxation may impede the market growth.
The craft spirits market is estimated to grow at a CAGR of 22.15% between 2022 and 2027. The size of the market is forecast to increase by USD 49,112.89 million. The growing demand for craft spirits is notably driving the market growth, although factors such as fluctuations in raw material price may impede the market growth.

Table of contents:

1 Executive Summary
2 Landscape
3 Sizing
4 Historic Size
5 Five Forces Analysis
6 Segmentations
7 Customer Landscape
8 Geographic Landscape
9 Drivers, Challenges, and Trends
10 Vendor Landscape
11 Vendor Analysis
12 Appendix

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