This article appears in the November issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
Reduced-alcohol line extensions face stiff competition from an increasing number of new no- & low-alcohol brands. The battle has created an interesting dynamic between larger drinks groups and smaller specialists, writes Sandra Newman.
In 2021, according to IWSR Drinks Market Analysis, global volume sales of no- & low-alcohol beverages rose by 9.6%. Among the top ten markets last year, growth was fastest in Brazil, Japan, Russia, the US and the UK. Beer and cider dominate the no-&-low category, generating about 75% of volume sales combined, but new brands of spirits, wine and RTDs are widening the choice for consumers across the space.
Early UK beer and cider entrants find success
UK-based Adnams has achieved success with 0.5% versions of its Ghost Ship beer and Wild Wave cider brands, according to head brewer Dan Gooderham. “Ghost Ship 0.5% is now our second-best-selling beer and we're seeing strong demand across all [sales] channels,” he says. “Ghost Ship 0.5% launched in 2018 and we were one of the first to bring choice to the market. We're still incredibly proud that it continues to surprise and win over new customers. Wild Wave 0.5% continues to perform strongly too.” Gooderham reports that more brands have launched in the no-&-low beer segment. “Some have more firepower than others," he says, "but it's clear the market is growing.”
Elsewhere, fellow UK-based company Thatchers Cider’s alcohol-free variant, Thatchers Zero, has become the UK’s best-selling no-&-low apple cider by volume since its launch in early 2020, according to Thatchers off-trade sales director Chris Milton. He highlights the importance of the company’s early entry to the no-&-low cider sector. “Thatchers has had a strong commitment to no-&-low for some time, and invested in product development early, becoming the first cidermaker to introduce an alcohol-free fermented cider to the UK market.”
Milton also emphasises the brand’s focus on quality, which he identifies as a key factor in light of continued premiumisation in no-&-low cider. “It’s clear shoppers are no longer prepared to put up with mediocre quality in their no-&-low choices. In fact, across alcohol, in particular spirits and beers, we are seeing more investment by producers into higher quality as consumers demand no-&-low products that taste as good as their favourite alcoholic counterparts.”
Rise of ‘like-for-like’ replacements of full-strength spirits
One interesting trend in the off-premise is the rise of non-alcoholic versions of established spirits brands, says CleanCo GM James Shillcock. “Growth is being driven by brands that offer like-for-like replacements of full-strength spirits,” he explains. “This could be the likes of Tanqueray 0.0 or the likes of CleanCo with our portfolio that looks to offer replacements for popular spirits such as gin, rum and Tequila. The reason behind this is likely that they remove a barrier to shoppers around taste expectations and how to use, which helps drive conversion.”
With off-premise value sales growth of 59% for the year to date, CleanCo has overtaken Diageo-owned Seedlip to become the third-best-selling brand in the UK, according to Shillcock, behind Diageo's Gordon’s 0.0 and Tanqueray 0.0 in the UK.
Smaller brands leverage craft and artisan consumer trends
Although existing brands may have consumer recognition on their side, there are factors that may limit demand for alcohol-free versions of their lines. “Some consumers will be naturally drawn to the 0% offerings from big brands," explains Angus Lugsdin, co-founder of New London Light non-alcoholic spirits and aperitifs producer Salcombe Distilling. "But, as they then have something to directly compare the taste with - an expectation - this could lead to a negative response.
“There can also be a considerable difference between the processes used to create non-alcoholic spirits, with the smaller brands tending to focus on craft production techniques without over-reliance on chemicals, preservatives and additional sugar and salt, which are often used by the bigger brands to reduce production costs.”
Since debuting in 2020, the New London Light range has been “extremely successful”, Lugsdin says, with strong trade and direct-to-consumer sales, particularly in the UK and the US.
Chris Bax, the co-founder of alcohol-free spirits producer Bax Botanics, also feels craft products will become increasingly popular. “Many consumers are entering the market through big brands like Gordon’s 0.0, Tanqueray 0.0 and Seedlip," he says. "As happened with both gin and craft beer, I feel that consumers will soon be looking for more interesting and artisan products to bring quality and variety to their alcohol-free drinking.”
Existing brands offer heritage and ‘genuine provenance’
Brand heritage is also important, says Thatchers' Milton, whose company has been producing cider since 1904. “Across the cider category, consumers are responding to producers who can demonstrate genuine provenance,” he says. “As a result, we’ve seen more consumers move to Thatchers confident of our brand’s provenance and assured by the quality. We see this with the younger generation of adults, in particular, who are those caring most about sustainability and provenance.”
His views are echoed by Julka Villa, head of global marketing at Campari Group, whose Crodino brand was created in 1965 and is the leading non-alcoholic aperitif in Italy, based on IRI volume sales data. “Brands from leading drinks companies can help in expanding the category and creating awareness among consumers thanks to their already famous brands and positioning,” she says. “What really matters, however, is authenticity, meaning a brand whose story is able to appeal to demanding consumers eager to go beyond the surface.”
Campari is building the brand’s international footprint. “Crodino has a strong presence in Italy and is seeing positive growth in the UK, the Netherlands, Belgium, Austria, Switzerland and Germany,” says Villa. “With the increasing interest towards non-alcohol, we’ve seen the potential of Crodino grow significantly and we've been working to expand the brand geographically.”
RTDs and a ‘portfolio approach’ can help recruit new consumers
While Campari is one of several leading brand owners with a limited no-&-low offering, Shillcock says a wider range of products is important for CleanCo. “We see our portfolio approach being key to continued growth,” he explains. “We've moved away from over-reliance on [gin alternative] Clean G. Where a year ago it made up 70% of sales, it now makes up 45%. In particular, our flavoured gin alternatives have driven growth, which is a trend we've seen across the category.”
CleanCo forecasts “another strong year in 2023” as it increases its distribution footprint in the on- and off-premise. “We're also bringing out some NPD in form of Clean W — a whisky alternative — which should help recruit a new pool of consumers who currently aren’t being catered for,” adds Shillcock.
Bax Botanics, meanwhile, has also expanded its range with canned RTDs under its namesake brand name. According to co-founder Chris Bax, RTDs are an accessible way for consumers to try non-alcoholic spirits. “They were created in response to a demand for a grab-and-go-type product from the adult alcohol-free drinks consumer and they've been received very well,” he says. “In a new, crowded and sometimes confusing sector, RTDs give the consumer the opportunity to sample a product like our bottled alcohol-free spirits without the investment of a whole bottle. This is one of the main drivers behind the success of the cans.”
Innovation is a high priority in no-&-low
Innovation will remain key to the category's prospects, according to Bax. “The sector is full of new ideas," he says. "As it continues to grow, we'll see people pushing hard for truly innovative products. We need to keep it exciting as consumer expectations of what an alcohol-free drink rise.”
Whether it will be large or small companies that achieve the most success, Campari’s Villa admits: “Being a small company could open opportunities to create new relationships with consumers and not be anchored to an already-known brand.”
Salcombe’s Lugsdin, however, believes that the 'newness' of the category means “there is room for everyone".
"Little-known brands who specialise in no-&-low products are attracting a whole new fanbase. As long as the taste profile is exceptional, consumers will keep coming back.”
This article appears in the November issue of Global Drinks Intel magazine. For details on how to subscribe, click here.
