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Tapping into the low and no alcohol market

An article in Retail World by  Sarah Connelly. 

The growth of the NA drink sector

Nielsen reported growth of 32.5 per cent growth in sales of no to low alcoholic beverages during lockdown in the UK. In Australia growth in low and no alcohol spirits is predicted to rise by 28.6 per cent over the next year, so while Australians are considered some of the heaviest drinkers in the world, it appears we’re also embracing the global trend towards more ‘mindful drinking’. 

Over the past 12 years I’ve seen many categories emerge relating to health and wellbeing in the form of a variety of analogues from gluten-free to plant- based alternatives. In October 2019, when I quit alcohol, I was also on the hunt for one: alcohol-free wine. I found a solitary independent online retailer and a few token gestures in Dan Murphy’s and Coles.Fast forward 12 months and the words ‘sold out’ appear daily on products offered by the three main online and exclusively alcohol-free retailers that have launched this year.

Coles has recently added McGuigan’s Zero range of non-alcoholic wines to its shelves, while Lyre’s Spirit Co, a brand that produces premium alcohol-free spirits, has just secured $16 million in growth capital to expand the category. 

Lyres just secured $16m in capital

Mark Livings CEO Lyres Spirit Co

“The penny dropped in 2015 when I realised there really was a market for an alternative,” Lyre’s co-founder and CEO Mark Living said.

“I wanted to cut back but also wanted a decent adult alternative to alcohol. This realisation backed up by research was the reason we developed the Lyre’s range.”And the goal? “

To shake up the drinks category and give consumers more choices in social situations.”During Covid, Lyre’s sales are claimed to have skyrocketed to 400 per cent monthly recurring revenue growth online since January.

The company now sees the opportunity to expand its range (currently 13 products) into ready to drink, and is soon to launch its first foray into non-alcoholic wines with a “quality” non-alcoholic Prosecco. 

Some of the world’s largest brewers and drinks manufacturers have also responded to consumer demand, with well-known brands such as Heineken and Carlton adding a range of zero- alcohol beers to their portfolios.

Brands selling out

 New non-alcoholic Australian craft- beer brands such as Sobah and Heaps Normal are said to be making waves and struggling to keep up with demand. 

Andy Miller, founder of Heaps Normal, tells me the brand’s first batch “sold out within 10 days of launching.

“We’ve since grown sales by more than 100 per cent month on month,” he said. 

In the past six months, well established brands such as Giesen and McGuigan’s Estate have launched alcohol-free versions of their popular wine varietals, using advanced techniques to remove alcohol content while maintaining the flavours and mouthfeel of the original wine. Australian Vintage Global Marketing Director Scott Burton says a marked shift towards moderate and responsible alcohol intake is a clear global consumer trend.

“McGuigan Zero gives those consumers who are abstaining or moderating, a known and trusted choice,” he said, adding that, as far as performance goes, “the range is enjoying strong growth across Coles’ grocery channel and key liquor retailers nationally”. 

New categories emerge

 While the mainstream brands gain momentum, sitting neatly in ‘non-alcoholic beer, spirits or wine’ categories, products from local brands in subcategories are finding it trickier to establish themselves.

Altina zero proof cocktails and Etch Sparkling have created alcohol-free alternatives that do not aim to replicate traditional alcoholic drinks, but are designed to offer a healthier, more sophisticated choice to consumers wanting to quit or cut back on alcohol.

‘‘Our drinks are complex, thoughtfully presented, enhance the experienceof the occasion and are different from traditional soft drinks,” Altina Drinks co-founder Alan Tse said.These fall into what he calls the “zero-proof cocktail” category, whichcan be a hard one to explain to retailers and venues alike.

Etch Sparkling co-founder Jason Quin says its product is “an option that satisfies mouthfeel, flavour and presence, utilising uniquely Australian plants”.“It’s an ideal solution for drivers, or the health bod rising early for their exercise,” he said. “Above all, it satisfies the taste buds in a healthy, positive way. ”The category they see themselves in is ‘lifestyle beverage’.

The challenges here lie in clarity of category as well as finding thebest mediums for meeting emerging consumer needs.“Segmentation by outlet type is the biggest challenge to date,” Mr Quin told me. “Is it grocery? If so, where does it sit in-store? Traditional liquor retail? Health food? Online? All are under consideration and answers differ depending on shopping environment.”

For Mr Tse, there is also a paradox between what consumers say they want and what retailers and venues are hearing (or not).“The main challenge is that on the one hand, consumers tell us they’d like more options, but they don’t want to request them in venues,” he said. “On theother hand, venues tell us there’s no demand. They’re yet to understand consumers’ willingness to pay for quality alcohol-free products.”

On-line is the place to be

 In terms of how this will play out in Australia, maybe we can look to the overseas experience, with a wide range of alternatives sitting both on- shelf in supermarkets and in venues, maximising every opportunity to meet the growing demand.

For now, it’s clear that online is the alcohol-free place to be.

In January this year, Craftzero (@craftzeroau) was launched to provide “a platform to unite all big and small producers, locally and internationally, in one place for mindful drinkers to enjoy”.

“The growth in the non-alcoholic adults’ drinks sector has increased immensely due to the quality of products compared with three or four years ago,” Craftzero Director and co-founder Sherif Goubran said. 

Hot on its heels, Sansdrinksau, one of the latest alcohol-free online retailers from entrepreneur Irene Falcone (founder of Nourished Life) launched earlier this year, with new virtual stores popping up almost daily.

Online sales growth in this space can be attributed to both changes in shopping habits due to Covid and the simple fact that there is still limited variety in stores. As a result, sales have lifted significantly and innovation in the fulfilment of fragile products has also been fast-tracked. So, if you’re a retailer or a producer considering dipping your toe in the alcohol-free pond, here are some statistics:•

The Stats

The non-alcoholic spirits category is expected to grow 23 per cent in value this year.• The non-alcoholic wine sector is predicted to achieve a compound annual growth rate of 7 per cent.•

Nielsen reports that the global non- alcoholic beer market is expected to reach $5.91 billion by 2023. 

 You may also like to explore the growing number of social media influencers and communities. Here, scores of ‘mindful’ and ‘non-drinkers’ are launching accounts daily, promoting the benefits of an alcohol-free life.

This is where they’re vocal about wanting more options and where they explore and promote every new alternative as soon as they can get their hands on it.

So, while many may be drowning their sorrows, there’s an unquestionable and uplifting opportunity for retailers, venues and producers alike that want to contribute to health and wellbeing by meeting this growing consumer demand. If you’re interested in alcohol-free recommendations follow @sober_sommelier.

Sarah Connelly

Sarah Connelly

Sarah is the Founder of Tapped In and has been writing and blogging about alcohol-free alternatives and lifestyle since October 2019. She's no pro, but she does her best.

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