This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe click here.
From fruit fusions to RTDs, wine producers are luring ‘generation moderation’ to their wares with innovative no- & low-alcohol extensions.
Dry (or ‘Damp’, as it appears to have been rebranded) January may be firmly in the rear-view mirror, but ‘no & low’ drinks will continue on their upward trend throughout the rest of the year and beyond, with IWSR Drinks Market Analysis forecasting volume CAGR growth of 7% for 2022-26, compared with 5% for 2018–22.
The research firm expects no-alcohol to spearhead this growth, expected to account for over 90% of the forecast total category volume rise. Last year, no & low beer, cider, wine spirits, and ready-to-drink (RTD) products grew by more than 7% in volume across ten key global markets.
IWSR’s recently-released annual 'No/ Low Alcohol Strategic Study' forecasts that between 2022 and 2026, no-alcohol beer and cider will contribute nearly 70% of the overall category’s growth.
“Almost all of the no-alcohol RTD growth will come from the US and Japan, whereas no-alcohol wine growth is expected to be more fragmented, but positive, across markets,” according to IWSR. “No-alcohol spirits will see some of the more dynamic growth, as brand owners invest in innovation, and products are given more space by retailers and the on-trade.
"Low-alcohol is expected to grow at a 2% volume CAGR, 2022–26, with much growth driven by the low-alcohol beer and wine categories. The US is the dominant driver of low-alcohol wine, with early seeds of innovation and traction in others.”
Of all the categories, no & low wine has been left behind as producers have struggled to create products that satisfactorily replicate the flavour profiles and mouthfeel of their alcoholic counterparts. Overall, between 2021 and 2022, no & low wine across the ten markets in the IWSR study grew 9.9% in volume terms.
However, innovation over recent years has begun to turn the segment’s fortunes around, particularly when it comes to wine-based fruit fusions and RTDs.
Wine spritzers/cooler RTDs forecast to grow by 5%
IWSR chief strategy officer Brandy Rand explains: “We segment RTDs by alcohol base in ten markets (the US, the UK, China, Japan, South Africa, Brazil, Mexico, Germany, Canada and Australia) as part of our ongoing deep-dive work in RTDs. These markets cover 85% of global RTD consumption.
“Of the RTD brands we track in those markets, wine-based RTDs make up around 2.5% volume share of the total RTD category (this would include any RTD - seltzers, wine spritzers, cocktails, FABs, etc). Of those wine-based RTDs, about half are in the premium-plus segment. In general, we see RTDs overall premiumising. We do not forecast by alcohol base, we forecast by RTD subcategory only. As a majority of the wine-based RTD brands fall into the wine spritzers/cooler segment, we forecast this to grow at a five-year CAGR 2022–2026 of 4.9% by volume and 2.5% by value across the ten markets.
“There is some innovation in wine-based products, but at a slower rate than spirits and malt. Wine-based RTD launches between H2 2021 and H1 2022 only made up 7.1% of the overall RTD innovations that IWSR tracks at a SKU level.”
Fruit fusions and ‘on-the-go’ products offer growth potential
Amber Beverage Group’s no & low fruit fusion wine range, Cosmopolitan Diva, which has recently launched two single-serve options in 20cl bottles, had a good year, growing in volumes by 8% in 2022 versus 2021.
“This is an extremely good result as our expectation was that China would be the driver of the growth, whereas the ongoing Covid restrictions there have slowed our growth dramatically,” says global portfolio director Evija Sparāne. “Instead, growth was driven by outstanding performances in Israel and Finland, clearly showing that the brand’s appeal is cross-cultural.”
There are plans to extend Cosmopolitan Diva's reach. “We see further growth potential in the on-the-go category,” says Sparāne. “At the same time, one of the supporting factors for our brand growth is the fact that we introduce a new flavour variant almost every year and thus keep our consumers engaged. This year will not be any different; after the successful launch of Piña Colada Fusion last year, we will introduce a Cosmopolitan Diva take on another globally-recognised and much-loved cocktail.”
Bosca also clocked up a successful 2022, with export manager Antonio Romeo saying sales of its 5%-ABV Sparkletini and non-alcoholic Toselli ranges have been “phenomenal and currently selling around 15m bottles per year”. He adds: “We registered a 10% increase in sales in 2022 thanks to the recovery following the pandemic and have opened up 15 new markets from Europe to Asia over the last couple of years.
Health & wellness and moderation trends driving category
Henkell Freixenet's global export senior VP, Sandra Janetzki, believes the main reasons for growth in no & low wine are health-related as consumers aim for more moderated alcohol consumption. “Consumers are much more looking for a healthy lifestyle but still want to enjoy moments of celebration with no & low wines,” she says.
This is a sentiment echoed by both Sparāne and Romeo. Sparāne predicts: “Health & wellness will remain one of the key trends in upcoming years.”
Sandro Bottega, whose namesake company's portfolio includes Bottega Zero white and rosé sparkling drinks, notes that religious leanings also have an impact on consumption. He also makes an interesting observation about how consumption occasions open up when it comes to no & low: “Bottega Zero is both a perfect toast or aperitif and a great alternative to fruit juice - even for breakfast.”
Looking forward, Sparāne observes: “The competition in no & low is getting tougher, and more novelties are appearing on the market. It seems we haven't reached saturation point just yet. However, there are very few innovations that could disrupt the category. The next major breakthrough can be expected once cannabis and CBD-infused products are more widely legalised.
“The perception that the no & low trend is driven mostly by younger consumers is changing as we see older generations (Millennials, Gen X) shift their lifestyles and become more health conscious, especially after the turbulence caused by the pandemic over the last couple of years.”
Romeo sees “the meteoric rise of no & low” as “nothing short of a phenomenon”, noting that a recent study by The Portman Group in the UK found that almost one in three (32%) drinkers now ‘semi-regularly’ consume no & low products, compared to one in four (25%) in 2020.
“There are various reasons for the long-term decline of alcohol consumption, from nutritional and wanting fewer calories, to practical reasons including driving,” says Romeo. “The most popular reason for consumers who have tried no & low is ‘being able to drive home from social events’.
“In a generation of social media," he adds, "young adults, nicknamed ‘generation moderation’, are also much more conscious about their digital presence and personal brand, and therefore don’t want the risk of being visibly drunk for fear of it being published online.”
Market differences: zero wine dominates some, low alcohol others
In terms of the segments where the most potential lies, Henkell Freixenet’s Janetzki sees strong growth development in still and sparkling wine. “The volumes in the category are still on a low level, but with great potential for the future,” she says.
“With regards to no & low trends, markets such as the US, the UK, Nordics, France and Eastern Europe are driving the growth. The markets are developing slightly differently: while in some markets, the growth is driven more by low-alcohol wine, other markets are more dominated by no-alcohol wine. That means, in the majority of markets it is an either/or decision between no & low-alcohol wines, with a slightly stronger inclination towards no-alcohol.”
The company offers no & low extensions of all its main brands. “Products such as Freixenet 0.0% sparkling wines, Henkell Alcohol-Free and Mionetto 0,0% are internationally successful. In France, Festillant, which is a brand of our French subsidiary Freixenet Gratien, has been the market leader in the alcohol-free category for many years.”
At Bosca, whose main markets are the US, the Caribbean, Mexico, Denmark and Israel, Romeo says that other promising countries include China and ASEAN markets, such as the Philippines, Indonesia and Myanmar, as well as India.
“The UK is also an exciting market where we’re working through our distributor, LWC Drinks, and has one of the first dedicated no & low trade events in 'Low2NoBev',” adds Romeo.
Given their versatility when it comes to consumption occasions, the innovation that's underway, improving production methods and the increasing trend towards mindful drinking, the future is looking good for no & low wine.
This article was initially published in the March issue of Global Drinks Intel magazine. For details on how to subscribe click here.
