February 28, 2024

Saying No to Alcohol – Looking Back at the Economic Effects of Dry January

By Molly Duffy, Senior Manager, Assurance Services & Kristi Curry, Manager, Assurance Services

Saying No to Alcohol – Looking Back at the Economic Effects of Dry January Food & Beverage

January, traditionally a month of new beginnings and resolutions, has seen a substantial shift in consumer habits due to the growing popularity of Dry January. This annual movement encourages participants to abstain from alcohol for the month, leading to a ripple effect across the alcohol industry. This movement has gained significant traction in most recent years for several reasons: 1) Many consumers were known to increase their at-home drinking during the pandemic, which resulted in increased health awareness post-pandemic; 2) The continued rise in inflation has resulted in less frivolous consumer spending. In this article, we explore how alcohol distributors were impacted by the challenges and opportunities presented by Dry January in January 2024.

The most immediate and expected impact of Dry January on alcohol distributors is a dip in alcohol sales. With many consumers opting for a sober start to the year, certain distributors reported a slowdown in demand, particularly for beer and spirits. A key component of the brewery industry is the local crafted beer experience. Marcum spoke with a small beer distributor whose menu offerings include in-house brewed alcoholic lagers and IPAs, noting no non-alcoholic alternatives. The Company experienced an estimated 50% reduction in January sales, which the brewer attributed to the growing popularity of the sober tide coined Dry January. From an operational standpoint, the Company is closely monitoring its sales data in conjunction with current demands while researching whether it should expand into the non-alcoholic market. The concern is that the popular trend will continue past January, thus leading to further declines in sales.

On the other hand, some alcohol distributors have been able to take advantage of the opportunities that the current popular social trends have created. We spoke with Eric Ottaway, CEO of Brooklyn Brewery, who noted that his brewery has not been negatively impacted. Fortunately for Brooklyn Brewery, they began offering non-alcoholic brews in 2019 as a result of their research on the normality of non-alcoholic beverage consumption in Europe. This launch proved to be successful in Europe, and thus, the Company decided to introduce these products into the U.S. marketplace. Up until a few years ago, the non-alcoholic market practically did not exist. As a result of being ahead of the social trends, Brooklyn Brewery notes that its non-alcoholic sales have increased by approximately 20% compared to 2023. The market is expected to continue to grow, and the Company hopes to see continued success with its products.

The effects of Dry January on alcohol distributors in January 2024 were multifaceted, affecting sales, inventory, and marketing strategies. After internal evaluations, some companies have adapted and evolved to meet the opportunities these seemingly ever-growing social trends have offered, while others are still researching the benefits of developing non-alcoholic products.  It’s essential that these companies remain vigilant as consumers continue to explore their relationship with alcohol. Distributors need to stay at the forefront of this changing environment, ready to cater to the nuances of demand and preference that each new year brings.