The boom of alcohol-free is a sticking trend

The free-from movement has rapidly worked its way through most parts of the pub.

In an extremely short space of time, though, the trend has swooped through drinks and firmly embedded itself in the consciousness of consumers, more of whom are now seeking alternatives to alcohol.

These alternatives, however, are not simple soft drinks. An orange and lemonade, a lime and soda or a cola are not quenching the thirst of punters forgoing booze.

And, as vast amounts of research is now showing, operators would be doing themselves a disservice by not making an effort with a decent low and no-alcohol offering.

The non-alcoholic sector continues to show big gains in both value and volume sales. CGA moving annual total data to 23 February 2019, for instance, shows alcohol-free beer volume sales were up 28% with values up over 29%.

The same can be seen in non-alcoholic spirits, a relatively new category, which has seen volume and value sales for the same period rise by 407% and 418% sales respectively.

While the sales percentage increases are up, it is important to stress both alcohol-free beer and the spirits equivalent make up only a fraction of total beer and spirits sales.

For instance, CGA data shows just 46,391 hectolitres of alcohol-free beer were sold and 266 nine-litre cases of spirits, compared to total beer sales of 18,987,580 hectolitres and 567,037 nine-litre cases of spirits for the 12 months to 23 February 2019.

Yes, the segment does make up just a small part of category sales, but this is changing.

“No and low continues to drive strong growth in out-of-home, tapping into the health trend that has seen two thirds of consumers trying to lead a healthier lifestyle,” says CGA commercial director Graeme Loudon.

Rising figures​

Nielsen, meanwhile, says alcohol-free beer is the fastest-growing drinks trend. Last summer, non-alcoholic beer sales were up 58% on the previous year, Kantar stats show.

Sales of lower strength beer (between 0.5% and 3.5% ABV) rose by 16% at the same time, research from The Times newspaper claims.

“The volume sold in pubs, bars, restaurants and shops across the UK in the same period was the equivalent of 12.2m pints, following two major lager launches from Heineken and Budweiser,” says Laura Willoughby, co-founder of Club Soda.

“The world’s biggest brewer, AB InBev, plans to grow low and no-alcohol beer from 8% of their total sales in 2017 to 20% by 2025. As these beers move from bottle to tap, we will see sales further rise.”

Lifestyle choice​

Like many who are close to the category, Loudon clarifies that the trend is not just about abstinence, rather a larger lifestyle choice. “It is in fact actually about moderation,” he continues.

“With 33% of consumers telling us that their alcohol consumption has decreased over the past six months, consumers still want to enjoy the on-trade.”

This is backed by promising figures; 6m consumers have tried non-alcoholic beer, with a further 5m expressing an interest in it.

A similar number have or are willing to sip from the alcohol-free spirit category too, Loudon claims, but points out that it is still early days.

“There is already a significant market for these products and an opportunity to double the category through trial and conversion,” he continues.

“A similar number are willing to try non-alcoholic spirits, but as this category is much earlier in its life cycle, fewer have tried it, showing there is headroom for growth.

“The consumer who finds this appealing is typically younger and more engaged with the on-trade, so valuable to capture, our research also suggests that just 7% of these consumers are teetotal.”

The category has seen so much growth that respondents to CGA’s 2019 Business Leaders survey cited it as a top trend to watch.

That’s not to forget the original alcohol-free drink though, which is the humble soft. Almost a third of consumers prefer to drink carbonated softs, rather than an alternative to alcohol when moderating, says Loudon.

Soft drinks are, in fact, the second most popular drink category behind water, he says, adding: “So clearly while no and low is a growth category, there is still some work to do to grow its popularity versus more traditional soft drinks.

“One of the areas where this work can be done is around price, with 47% of consumers on abstaining occasions citing value for money as a key consideration, and with many of the products priced at or around parity with their duty paying alcoholic counterparts, whether consumers can be convinced to keep paying this price remains to be seen.”

Differing viewpoint​

For many, price isn’t an issue as the trend is part of a larger societal movement that incorporates technology, entrepreneurial spirit and healthier living.

It also covers a wide section of society, and not just Millennials or Gen Z, Club Soda’s Willoughby claims. “You can see from the creation of new low and no-alcohol products that a lot of it has been driven by personal stories of cutting back on drinking.

“From alcohol-free, distilled spirits to craft beers and lower sugar sodas, new technology is also allowing people to create drinks with flavour and body, but without the alcohol.”

Willoughby does concede there is a way to go, but says significant progress has been made in a short space of time.

The low and no-alcohol movement’s supporter also goes as far as suggesting the category can help operators tap into much needed new business, saying that, at a time when pubs and restaurants are struggling, this market could be easy pickings.

The belief is backed by both increasing consumer demand as well as the new product development that is feeding it.

“Low and no-alcohol drinks designed for an adult palate have, until now, been a rare find in a pub,” Willougby continues.

She again hammers home the fact there is still significant room to grow within the sector, which is likely to come through experimentation. “It is basically introducing a whole new drink category and there are some hurdles to get over for both pubs and customers.

“But we really do see diversity of choice in the alcohol-free options as becoming the norm. And the idea you can go to the pub if you are driving, or want to get up early the next morning, are perfectly acceptable.”

Ultimately, Willoughby subscribes to the belief that the low and no-alcohol movement is beneficial to the on-trade.

“Do not underestimate the alcohol-free market,” she says. “As people have become more savvy with what they eat, they also look at what they are drinking.

"Not only can venues cater to changing habits, they can exploit long-neglected opportunities too.

"Why serve free tap water to groups having lunch when you can upsell them an adult cordial or a Seedlip and tonic?”

No duty to pay​

Margins on such drinks can be generous because there is no alcohol duty to be paid on them, while consumers will be willing to pay a higher price point for products that deliver both on story and experience.

“Remember, a consumer can generally only drink one cola in an evening before being sugared out – whereas you can easily drink five alcohol-free beers. Treating a customer well with drink choices inspires loyalty, and if they are drivers they will want to come back again with their friends or for a lunchtime meeting.”

Despite all the evidence pointing towards bigger focus on low and no-alcohol products, there will be some sceptics out there.

However, look at the evidence and trial some options, because if the trend is set to stay, it can be easy to find yourself left behind.