Why do your alcohol-free drinks cost the same as alcoholic drinks?

On a Friday night in Ottawa’s Hintonburg neighbourhood, Sophia Marco scans the drink menu at her local bar.

Around her, friends laugh over cocktails and beer, but she has her eye on the mocktail section — where prices hover around $14 or $15 a glass.

Marco stopped drinking alcohol in 2020. She doesn’t like how it makes her feel, but she still enjoys a night out and a well-crafted drink.

Since she switched to non-alcohol options, what surprises her most is that mocktails “are around the same price as cocktails.”

Across Canada, the non-alcoholic beverage market is growing rapidly as more people look for ways to socialize without the noise. But alcohol-free doesn’t necessarily mean cheap.

“When I first started ordering mocktails or non-alcohol drinks, I was shocked at first,” says Luba Khalil. “I thought alcohol was the expensive part. But now I’m kind of like that – everything is expensive these days.”

All process, no evidence

Making non-alcoholic beverages is not necessarily simpler or cheaper than making traditional beverages.

Mathieu Gagnon, co-founder of Sober Carpenter, a Montreal-based brewery specializing in non-alcoholic beers, says the process is more technical than one might think.

“We actually use the same ingredients that are put into beer,” he says. “We stop the fermentation before it gets above 0.5 percent.”

The method, called arrested fermentation, cools the beer until it is almost frozen to stop fermentation – a process Gagnon says requires precision to preserve flavor and aroma. It’s the expensive part, he says, not the wine.

While Sober Carpenter’s beers are labeled non-alcohol, they contain less than 0.5 percent alcohol – a trace amount that meets Canadian labeling standards.

Crafting a good zero-proof or low-proof cocktail or spirit can be even more involved.

Rudy Aldana, co-founder of Parcha, a non-alcoholic, agave-based cocktail brand, says removing alcohol means producers have to build flavor complexity from the start.

“Alcohol is a very inexpensive ingredient,” he says. “It helps with preservation. It also imparts flavor. So when you remove it, you have to replace it with other ingredients that bring the same level of complexity.”

He says Parch uses botanicals and natural extracts to replicate the taste and texture of traditional cocktails – all of which add to production costs.

“Alcohol can account for 10 to 20 percent of the price of an alcoholic beverage,” he says. “So when we create something from scratch, it can easily double that.”

Scale also plays a role. Gagnon says small breweries like his run on limited production compared to major beer makers.

“When you’re making traditional beer, you might be running 250,000 cans in a batch,” he says. “We’re doing smaller runs because the demand isn’t there yet, and that increases the cost per unit.”

perception has a price

Production costs aside, perception also plays a powerful role in keeping prices up.

David Soberman, a marketing professor at the University of Toronto’s Rotman School of Management, says one reason why non-alcoholic beverages are priced on par with their alcoholic counterparts is psychological.

“If you want something to be seen as an alternative, you have to have the price be fairly similar,” he says. “If it had cost a third as much it would have been considered of lower quality and not very good.”

Jordan LeBel, who teaches marketing at Concordia University’s John Molson School of Business, says marketing and packaging also play a major role in shaping how consumers perceive value.

“The costs are still quite high,” he says. “You have to pay for the ingredients, the bottles, the shipping, the access to the shelves.”

He adds that as the category grows, brands also need to compete for attention.

“If you want to get consumers’ attention you have to invest in marketing, advertising, perhaps hiring a well-known spokesperson or others,” he says. “Which explains why you get market prices equal to, or sometimes slightly lower than, alcoholic options.”

future on tap

As the category grows, both experts say prices could eventually drop — but not dramatically.

“Typically, as the industry ages, you see more consolidation – players buying each other out, achieving economies of scale,” Lebel says. “You may see less choice on shelves, as we may discontinue some, cut back the portfolio or drop brands that are not selling well.”

Soberman says competition may eventually bring some relief to prices, but zero-proof beverages will likely remain premium products, with similar prices.

“I’m not sure it’s intended to compete with alcohol versions on price,” he says. “When you do that, it’s hard to stay profitable. So competing based on taste is probably a better strategy.”

While the prices may not be ideal, Khalil says choosing a mocktail is about more than just cost – it’s about the experience and being part of the moment in social settings.

“I don’t drink, but I have a lot of friends who like to drink, and I don’t want to deprive them of that,” she says. “Sometimes it’s nice to treat yourself. Sometimes you just want something nice and fancy.”