Improved product quality, greater social acceptance, health and wellness trends, and social responsibility have all helped drive a surge in sales and proliferation of brands.
What was once almost an exclusively beer-led sector is branching out into still and sparkling wine, RTDs and spirits.
It’s become more of a year-round category too, though dry January still remains a massive opportunity for the on-trade as consumers look to moderate their alcohol consumption after a big Christmas and new year.
A wider beer opportunity
The extension of low and no beer beyond lager, into ale, stout and speciality beer, has been a notable feature of the category recently.
No-alcohol beer specialist Days Brewing signed a listing deal with Stonegate in the autumn that effectively doubled its on-trade distribution with the addition of 1,500 outlets.
Co-founder Duncan Keith says its introduction of a 56.8cl bottle for its lager and pale ale brews gives it a USP – the ability to serve pints without a low/no draught line.
“It helps on-trade outlets to overcome the challenge of maintaining quality with a no-alcohol beer on draught and getting the throughput to justify a dedicated no-alcohol draught line,” he says. “Many pubs are simply not in a position to do that.”
Another thing in Days’ favour, says Keith, is the freedom to produce no-alcohol beers without the expectations associated with a full-strength alcohol brand.
“All we think about is how we can grow the no-alcohol beer category and our brand, which is very different to the big multinational brewers,” he says.
Another dedicated alcohol-free ale brand, Big Drop, has signed a deal with Keystone for its beers to be brewed under licence at Black Sheep in North Yorkshire.
Big Drop’s Paradiso Citra 0.5% ABV IPA is being trialled on draught in Fuller’s pubs over the Christmas and new year period.
Cornish brewer St Austell has just launched a 0.5% ABV version of its Proper Job IPA and will be offering its wholesale customers three cases for the price of two in a promotion through January.
“The low & no market is predominantly dominated by lager and stout, leaving room in the low-alcohol IPA category,” says chief operating officer Andrew Turner.
“We use a large proportion of Cascade, Willamette and Chinook, the signature hops for Proper Job, with a fermentation profile that helps develop the ester and flavour compounds of citrus and grapefruit, which are prominent in Proper Job.”
German brand Erdinger Alkoholfrei, distributed by Carlsberg Marston’s Brewing Company, sponsors mass participation events such as marathons, triathlons and cycling events to promote the brand’s low calories and isotonic properties, says Peter Gowans, UK country manager for the brand.
“Anyone pursuing an active lifestyle doesn’t suddenly abandon their healthier intentions when they visit the pub,” he says. “The choice of a brand they know and enjoy through their sporting interests is a natural one to make in the on-trade.”
Big guns lead the way
Among the multinationals, Heineken has the biggest back bar presence in low & no beer, with its eponymous Heineken 0.0 lager.
Serena Smith, head of category for the on-trade at Heineken UK, notes that beer and cider has been leading low & no growth, with a 47% annual spike in sales in a total low & no market now worth £191.5m (Source: CGA, year to August 10, 2024).
But she says there’s a compelling argument for pubs to provide a range of low & no beer types, rather than sticking to lager.
“When it comes to moderating their alcohol consumption, most drinkers will stay category-loyal,” Smith says, “so there’s real value in broadening the range to include different low & no alcohol beer styles, stouts and IPAs, to ensure all drinkers are being catered for.
“With many of the big brands now offering a low & no alcohol alternative, building out a compelling offer across beer categories should be straightforward.”
Diageo has made its mark in low & no, with a range of zero-alcohol spirits options and strong consumer enthusiasm for Guinness 0.0, aided by the surge in popularity of the parent brand. It’s now being trialled on tap.
Jennifer Runciman, head of category development for the on-trade, says Kantar Alcovision data for September shows 11% of 18 to 24-year-olds now regularly opt for low & no alcohol drinks – double five years ago.
She says pubs can take inspiration from the off-trade, where colour-coding of the category has been used to make low & no fixtures stand out in supermarkets.
“When it comes to standing out, blue has become a signifier for low & no alcohol beverages,” she says.
“It is important to use the correct naming conventions such as 0.0% and/or alcohol-free and consider mirroring the descriptors of alcohol drinks. Using alcohol-free cocktail instead of mocktail is a more premium approach.”
Zero-alcohol cider makes its mark
Gemma Pym, senior category and insight manager for Thatchers Cider, which markets Thatchers Zero, says pubs need to make sure low & no ranges properly mirror customer demand.
“Apple cider makes up 77% of draught sales in the on-trade,” Pym says. “Don’t get fooled into thinking your alcohol-free range, which often comes in bottles, needs to just reflect your usual fridge options. It needs to reflect your whole drinks range, including draught.
“A low & no fruit cider option is only going to satisfy a minority of cider drinkers.”
Barny Butterfield, chief cidermaker at Sandford Orchards, said it took inspiration from Guinness 0.0 when making its Red Zero cider.
“We weren’t prepared to make a dressed up soft drink,” he says, “which sadly many zero products are.
“We thought Guinness Zero was the most impressive of all the beer products, so adopted the same technology and used it on cider. It may be the most expensive way to make it, but for quality, it’s on another level.”
Marrying low & no drinks and food
Several brand owners believe that including low & no alcohol on food menus and in meal promotions is a big opportunity.
Molson Coors on-trade controller Stephen Groucott says: “Venues have an opportunity to elevate their zero-alcohol offering by integrating it with their food menus, much like they would with traditional beer or wine.”
The Molson Coors range now includes Cobra Zero, Doom Bar Zero and Rekorderlig Alcohol Free, offering options across beer and cider.
“To drive engagement, venues could introduce dining deals,” adds Groucott, “pairing a zero-alcohol drink with a meal, dessert or appetiser at a special price.”
Smith at Heineken says “putting low & no alcohol beers with suggested food pairings on menus is a powerful prompt, particularly around key abstinence occasions such as lunchtime or family meals”.
Keith at Days also gets behind the food angle. “Pubs can make extra margin on no-alcohol beer compared to water or a soft drink by taking it to new occasions, such as Sunday lunch,” he says.
“It’s better margin for the pub but also a much better experience for the consumer.
“Staff advocacy is also really big. The decision not to drink is often pre-determined before they come into the pub, and it’s not always clear what availability there is, so they will ask a member of the team what the options are.
“It’s really important staff are trained properly and can talk about brands to be clear what options they have.”
Low & no wine playing catch-up
The natural affinity between food and wine suggests low & no wine should shine, but product quality and expensive dealcoholisation techniques have historically held the sub-category back, compared to low & no beer.
Even in the past dynamic year, low & no wine’s value growth of 25% lags behind that of beer’s 47% and a 42% surge by spirits (Source: CGA, year to August 10, 2024).
Alcohol-free brand Eisberg has been in the market a long time and Dan Harwood, managing director of SW Wines Europe, says product quality and sourcing fruit makes all the difference to success in the segment.
“You can get Chardonnay from almost any wine country in the world,” he says, “but we want to make sure that we get something that is going to deliver a lot of fruit character and not too much acidity, because the acidity is going to be amplified during the dealcoholisation process.”
As in beer, Harwood says there’s the opportunity to segment a range to tastes, budgets and occasions.
“Our Signature range is tailored towards having fun,” he says. “It’s grabbing an impulsive bottle of rosé, putting it on ice and catching up with friends.
“Our Selection range is much more considered, a bottle you’d pick for a special occasion. Everything about it from the grapes used to the design on the label reflects this.”
Spirits gain acceptance
The story for low & no spirits is much the opposite of that for wine: relatively recent entry to the market but more rapid growth and acceptance.
Mangrove Global is among the specialist spirits suppliers that have embraced the category. Its portfolio includes the Giffard range of alcohol-free liqueurs, gin brand Portobello Road’s Temperance spirit, and Almave, a brand created by Mexican spirit guru Ivan Saldana and the F1 driver Lewis Hamilton, and made from blue agave grown in Jalisco.
Mangrove managing director Nick Gillett admits low & no spirits can be “a mixed bag” in terms of product quality.
“So many consumers have been stung,” he says, “paying high prices for a non-alcoholic liquid that just doesn’t taste great.”
He says the Mangrove range aims to offer low & no products that are high-quality spirits in their own right, rather than replicating parent alcohol brands.
“Price positioning for the on-trade is only a little less than full-strength equivalents, meaning similar margins,” he says.
Gillett says dry January will see brand-specific campaigns on its brands, but the competitive Christmas run-up be more about “raising awareness across the on-trade of the importance of a stellar booze-free range”.
He adds: “We’re doing this through partnership working and education with the venues we partner with, all while raising awareness.”
As part of that, he advises venues: “As well as low & no alcohol versions of beer, stout and wine, be creative with cocktails and mixed drinks that have the same sense of ceremony as their alcoholic equivalents.”
Lyre’s has a portfolio of 18 no-alcohol spirits, five RTD cocktails and a sparkling wine, and has on-trade listings with RedCat, Young’s and Heartwood Inns. It is the official spirit and sparkling wine partner of Alcohol Change UK’s Dry January challenge.
UK sales and marketing manager Anita Osborne advises pubs not to lose sight of the fact that low & no spirits are primarily ways for adults to substitute full-strength alcohol.
“Soft drinks and juice often mean compromise, whether that be high sugar or calories, or the experience of being served as glass akin to a guest under the age of 18,” she says.
“Remember your audience in menu and drink creation. Rather than focusing on what’s missing, have cocktail development sessions that focus more on what is going into the final serve.”
The operator’s experience
One pub that’s seen the value of excitement in low & no is the William IV in Islington, north London.
It has Lucky Saint beer on draught and Big Drop in cans, with Odd Bird sparkling wine by the glass and its red and white still wines in bottles.
The spirits line-up includes Lyre’s, Tanqueray 0.0, Hayman’s Small gin and the Gaba Red variant from Sentia.
William IV co-founder Lee Godwin says the pub team creates no-alcohol spirtz and Negroni cocktails.
Godwin adds: “Training is a cornerstone of our operation, and that extends to our low & no alcohol offerings.
“Our staff are well-equipped to guide customers through the options, ensuring they have a great experience.
“Offering premium low & no alcohol options not only makes our venue more inclusive but also helps convert a sale that might otherwise be a glass of tap water or a basic soft drink into something more elevated – and, importantly, with a higher spend per head.”
But Godwin’s enthusiasm for low & no comes with a caveat.
“Unfortunately for us, there’s not much profit to be made at the publican’s end of the supply chain,” he states.
“Yes, there are higher production costs due to quality ingredients and the dealcoholisation process, but low & no alcohol products are still wildly expensive and the margins just aren’t there.
“Our non-alcoholic draught, for example, offers around 66% GP, compared to 70% and above for other lines.
“So, while we’re adapting and embracing the growth of the category, it’s a cautionary tale.
“But low & no is here to stay. We must adapt and employ new strategies to ensure we stay relevant and able to pay the bills.”
- To read more on The Low & No Project, click here.
