18 minute read

No and Low Alcohol - Flying NOLO

Flying NOLO

Seamus May investigates why the no and low alcohol trend shows no sign of slowing.

With drinkers arguably more informed and concerned about their health than ever before, the no and low alcohol (NOLO) market is growing in strength.

More than just a passing trend, NOLO’s continued development shows all the signs of being a genuine change in consumer drinking habits. Both established alcohol brands and dedicated NOLO producers are now looking to the sector for opportunities.

Data gathered by brands and analysts supports the notion that Australians are increasingly aware of their alcohol intake. For example, David Andrew, the Founder and CEO of Australian non-alcoholic cocktail brand, Naked Life, pointed to a rise of 400,000 in the number of Australians who do not wish to drink, growing from 1.5m in 2016 to 1.9m in 2019.

Back in October, DrinkWise CEO, Simon Strahan, said: “Almost six out of 10 alcohol drinkers aged 18 – 24 years old are looking to cut down their alcohol consumption.”

Likewise, a statement from Carlton & United Breweries (CUB) referred to ABS data that shows “Australians are increasingly moderating their alcohol intake and research released this year predicts demand for low and no alcohol beverages in 10 key countries, including Australia, will continue to grow in the next five years.”

COVID only seems to have focussed and accelerated consumer interest in NOLO products, with Iozzi noting: “The last 24 months have placed a spotlight on individual health and wellbeing, forcing many people to revaluate what habits they bring back post lockdown, including consuming alcohol.”

There’s an absolute tsunami of people coming in and using our category, not to replace alcohol, but to moderate alcohol.

Mark Livings CEO and Co-founder Lyre’s

Yet, this is not just a pandemic-induced fad, with figures from non-alcoholic spirits producer Banks Botanicals detailing that 71 percent of Australian consumers intend to either increase or maintain their NOLO consumption in the new year.

Mark Livings, CEO and Co-founder of Lyre’s, one of the foremost NOLO producers in the market, believes that the trend has expanded its traditional base of “the pregnant or the breastfeeding… the religiously abstinent… athletes and health and wellness-minded people.”

He said: “There’s an absolute tsunami of people coming in and using our category, not to replace alcohol, but moderate alcohol.”

Statistics also suggest that as consumer interest has risen, the NOLO market has grown. Andrew told National Liquor News: “IWSR forecasts that the no and low alcohol volume in Australia will grow by +16 percent in 2020 to 2024.”

According to an IWSR no and low-alcohol study, NOLO volume increased by 2.9 percent in 2020, and in fact outpaced the performance of regular alcohol, which recorded a volume decline of 1.4 percent in the same year.

The retail and import wing of the industry is also upbeat about the future of NOLO. Kirsten Chalmers, Director of alcohol-free store and distributor Point ZeroCellars, expects to see strong growth in all three categories (beer, wine, and spirits).

She said: “Mindful drinking is becoming increasingly trendy… PointZero is preparing for growth. We see this category only growing.”

Beer

Gone are the days when the only NOLO beer choices were light lagers – there is now a wealth of options for the conscientious consumer.

Big Drop Brewing Co. offers a wide range of no and low alcohol craft beers, including IPAs, pale ales, stouts, and lagers, alongside seasonal and limited-edition expressions. Like its alcoholic counterparts, Big Drop also collaborates on beers with craft breweries all over the world.

“When Big Drop launched five years ago in the UK, we were the first dedicated NOLO craft beer brewer,” said Darren West, Big Drop’s Australia and New Zealand Country Manager.

“In fact, at that point, there was only one award for NOLO in the World Beer Awards, now there are seven, which goes to show how much the choice for consumers has improved.”

Like other producers in the sector, Big Drop is expanding its range, with West saying: “Outside of our existing core four products in Australia [Galactic MilkStout, Paradiso IPA, Pine Trail Pale Ale and Uptown CraftLager], we also have the ability to both draw on many of our existing recipes or create new ones of the market.

“Our first example of this is the upcoming release ofour first limited seasonal, Poolside, a Double Dry Hopped IPA. It’s a real hop-fest of a beer.”

Australian craft breweries are also taking advantage of opportunities in the NOLO category. Brick Lane Brewing is one, launching its Sidewinder Hazy Pale Ale back in July.

Paul Bowker, Managing Director of Brick Lane Brewing, said that with Sidewinder, the brewery “wanted to show the market that you could pack a huge amount of flavour and body and depth and mouthfeel into a low alcohol beer.”

After Sidewinder’s success, Brick Lane is is planning to extend its offering even further with a lower ABV beer, indicating the brewery’s continued confidence in the NOLO category.

“We look at the trends internationally and we can see that low and no alcohol has very strong traction already through Europe and the states… What we’re seeing in Australia is a boom,” said Bowker.

“One of the key drivers is the quality, and I think that quality is being driven to a large extent, by some of the new, emerging brands in the market.”

NOLO beers are not exclusive to craft beer producers, with larger brewers also responding to demand for no and low alcohol beer. CUB recently launched a zero-alcohol rendition of its Great Northern beer to coincide with the tenth anniversary of the original expression.

Great Northern Zero has been marketed to appeal to those who “enjoy the Great Australian outdoor lifestyle.” Drinkers can enjoy the beer and continue to drive, hike, fish or boat.

Lauren Fildes, CUB’s Head of Contemporary Brands, said that Australia’s ‘thirst for moderation’ had guided its decision to create a nonalcoholic beer.

“Zero alcohol beer has grown by 87 per cent throughout 2020 and is continuing to grow, with that part of the market expected to be worth $135 million by 2025,” Fildes said.

As for what’s driving the interest in NOLO beer, Fildes agreed with the consensus that the pandemic has altered the public outlook on health, and said: “Consumers have become more conscious of what they consume, particularly during the COVID-19 pandemic. Men and women are both seeking non-alcoholic beer with the strongest demand coming from those aged 25 to 45.”

NOLO vs the rest?

Both Bowker and West agree that their brands are not in conflict with full strength beers, or even other NOLO offerings, with West saying: “From a Big Drop perspective, we don’t really define other no alc. alternatives as competition. Our mantra from day one has always been to brew the best beer we can, that just happens to be non-alcoholic.

“We actually view other no and low alc. alternatives as a good thing for the category.”

The general outlook is shared by Hugh Jellie, Marketing Manager for Great Northern Brewing, who said: “Low and no alcohol options like Great Northern Zero are not designed to compete with alcoholic alternatives, but simply to provide drinkers with more choices.”

Bowker concurs: “In our mind, it’s just a beer, and it’s a beer that may play different role, but we don’t see it being categorised as something outside anything other than a beer.

“It has a lower alcohol content, but it still has the same attributes in terms of flavour, refreshment, quality… We don’t look at low and no as a niche market, we just think it’s an extension of the overall beer market.”

Retailing NOLO beer

With so much growth and movement in the market, Australian retailerswill be keen to capitalise on the opportunities on offer in the NOLObeer category. Yet, there may be some uncertainty on how to positionproducts in a sector that remains dominated by alcoholic offerings.

For Big Drop’s Darren West, it’s all about consumerunderstanding and the right range: “We know that once consumerstry our beers, they love them, so driving trial is critical to us andthe wider category.

“Consumers will come into retailers with the sole purpose of buyingno-low products and you want to make their journey within your storeas easy and enjoyable as possible.”

Wine

No and low alcohol wine has traditionally struggled when compared with its beer and spirits counterparts, as Livings explained: “Beeris leading the way… it’s fair to say spirits is next,and wine is definitely the third cab off the rank.”

This situation is partly due to the difficulty of removing the wine’s alcohol whilst retaining its flavour. Nevertheless, recent technological improvements mean that no and low alcohol wines are better placed than ever to ride the NOLO wave.

Kiwi winery Giesen has invested over $1 million in spinning cone distillation technology, which will allow winemakers to remove alcohol whilst retaining flavour. Giesen stressed that technically, no-alcohol wine must be dealcoholised,as fermentation is a requirementfor product to be called wine.

Angela Flynn, Giesen’s Marketing Managertold National Liquor News: “Our low and no alcohol wines have been really well-receivedwith sell out launches of our Giesen 0% range over the last two years.

“We see huge opportunity in the no alcohol segment; we saw the consumer demand for high quality offerings in this space.”

Giesen have expanded this non-alcoholic range, adding a rosé and Pinot Gris to the Sauvignon Blanc expression released in 2020. Flynn said: “These have recently landed in Australia for the first time, and we’ll be following up with a ‘0%’ Merlot very shortly.”

This expansion was backed by comprehensive market research, as Giesen’s Group General Manager, Kyle Skene, said: “We did a lot of work during our launch in understanding potential consumer pain points and addressing them – this helped to underscore our premium positioning through consumer education.

“Wine Intelligence advises the key motivators for purchasing no or low alcohol options are ‘its better for my health’, ‘I like to stay in control’ and ‘I enjoy the taste’.”

Like Giesen, Australian Vintage Limited’s (AVL) McGuigan produces no alcohol wines using a spinning cone technology. Ben Turner, AVL Wines Global Marketing Director, said: “This technology uses a lower temperature than other techniques in the category and is therefore ‘gentler’ on the wine retaining more varietal fruit character, aromatics and flavour.”

Based in the Hunter Valley, McGuigan has over 100 years of winemaking history, and the launch of its Zero range of no alcohol wines last year was another sign that established brands are taking greater notice of the NOLO category. Turner explained that it was customer desire that led their decision-making.

“We responded to the global acceleration and market shift in consumer behaviour toward moderation and abstention of alcohol. People want healthier alcoholic beverages. At AVL we are focused on putting the consumer at the heart of our business,” he said.

Similarly to AVL and Giesen, non-alcoholic sparkling producer French Bloom was created to supply something high quality that fits into more lifestyles.

The brand was born after Maggie Frerejean-Taittinger, pregnant with twins, found that there were few high-quality alternatives for those who weren’t drinking alcohol. Supported by her husband, Rodolphe Frerejean-Taittinger (who has serious Champagne experience, as his surname suggests), Maggie developed French Bloom following two years of research and development.

Grégoire Bertraud, the CEO of French Bloom’s Australian distributor, Noble Spirits, said: “We are seeing a change in demand from the next generation of consumers, who are looking for non-alcoholic alternatives. It’s important to them to be able to maintain their healthy lifestyle whilst still enjoying the social benefits of having a glass of wine.”

Retailing NOLO wines

Brands had several useful tips for retailers looking to successfully market no and low alcohol wines.

Giesen believes thatretailing premium expressionscan aid the category’s growthwith consumers, with Flynnnoting: “We’ve found lowcalorie options and premiumquality offerings haveresonated with consumers:offering higher qualityproducts that consumers arewilling to spend extra for willhelp to grow the zero percent wine category.”

French Bloom believes that selling the wellness aspect of the wines will be key to connecting with consumers:“We would recommend highlighting the lifestyle more than the product.

“Sharing moments withloved ones is a key part ofwellness, and wellness is atthe heart of conviviality.”

Spirits

Perhaps more than any other categoryin the sector, no and low alcoholspirits have seen innovations that haveunlocked new markets and appealed toa greater number of drinkers.

Founders of non-alcoholic spiritsbrand Banks Botanicals, YolandaUys and Brian Cohen, believe theemergence of local craft products is akey evolution in the category, as it hasbeen in the NOLO beer segment.

“A movement towards drinks that are vegan friendly, gluten-free, sugar-free, and organic is also on the rise, with the health and diverse needs of consumers being a key requirement of brands,” they said.

Like its fellows in the NOLO beer and wine sectors, Banks Botanicals is finding that its audience is made up of people who consume alcohol, as well as non-drinkers, noting: “58 percent of consumers switch between full strength and NOLO beverages during the same occasion. Yet only 14 percent of adults are considered non-drinkers.”

“We are shifting as an industry. At Banks, we look at how people choose to drink alcoholic and non-alcoholic options as part of a repertoire.”

Livings, leader of arguably the most well-known non-alcoholic spirits brand in the world, has a similar outlook, telling National Liquor News: “Our drinkers are drinkers.”

The growing appeal of NOLO spirits to consumers of alcohol is a game-changer, as Livings explained: “For us, that’s fundamentally changed the scale of the opportunity. It’s also changing what we’re observing with the growth of the category as well.”

This change is so drastic, that Livings believes the NOLO sector will exceed current predictions. He said: “A lot of the data out there is undershooting exactly where the category is going.”

If Lyre’s own brand story is anything to go by, Livings could well be correct. Established just two years ago, the company is now present in 60 countries, including a recent expansion into eight Middle Eastern markets.

Accelerating demand for NOLO spirits has been recorded not only by producers but by retailers too, with Michael Timmons, Director of the online alcohol-free retailer, Clear Mind, saying: “We did not fully appreciate the demand for such high-quality products.

Retailing NOLO spirits and RTDs

As with no and low alcohol beer and wine, NOLOspirits present certain challenges for retailers looking to connect with would-be drinkers. Several of the brands that spoke to National Liquor News had vital advice in this regard.

Naked Life said it had seen success approaching consumers as if it were an alcoholic brand, allowing the company “to communicate a healthier alternative to a traditional consumer whilst simultaneously building credibility within the category.”

Furthermore, Andrew noted that as with marketing alcoholic beverages, it is important for retailers to consider the season and calendar when selling NOLO drinks. There are certain months when NOLO spirits and RTDs are more likely to connect with consumers, with campaigns like Dry July well established in the public consciousness.

Livings offered clear-cut guidance for shops and stores: “The one thing that has the greatest impact to retailer revenue and profitability is blocking the non-alcoholic alternatives together.”

He pointed to an example found in the UK and Ireland with major supermarket Tesco, which has a zero zone’ of non-alcoholic beverages.

“It anchors the category,” Livings continued. “The zero zone should be next to alcoholic products.

“When [non-alc spirits] are placed together, near the alcohol section or adjacent to it, that’s when they perform their best. What’s really great is that people come in typically looking for non-alcoholic beer… and if things are blocked together, that’s the moment of discovery for a consumer.”

Consumer education is also key for Uys and Cohen at Banks Botanicals, who said: “A key tip for retailers is to make sure the team on the floor or behind the bar have the knowledge and can explain how a drink is made, what it tastes like and how to drink it.”

Meanwhile, Chalmers has a valuable perspective to offer retailers of the NOLO category, given her background in retail. She sees passion as the key to connecting with customers, and said: “For me… it’s about being passionate about your product and believing that you are adding value to society.”

We are also importing a high-quality bourbon alternative called Kentucky 74 by Spiritless Inc of Louisville, Kentucky, which will retail for about $65 per bottle.

We are seeing a change in demand from the next generationof consumers, who are looking for non-alcoholic alternatives.

Grégoire Bertraud CEO Noble Spirits

“The anticipation for this and other products in our range encourages us to maintain the highest quality for our offering.”

Ready to drink, ready to rise

A key category that falls under the umbrella of NOLO spirits is RTDs. Australia has traditionally been one of the strongest markets for RTDs in the world, and alcoholic RTDs have been in resurgence, with dollar sales up 40.2 per cent in the year to March 2021, compared to the preceding 12 months.

And it is not a category that is neglected by NOLO producers, as Andrew notes: “The major trend we are seeing is the increased variety of options across Australia, spanning beyond the traditional RTD beer or cider options.

“Naked Life has capitalised on this by providing the largest range of non-alcoholic RTD spirit-inspired cocktails available within Australia.”

Naked Life has been responsible for its own innovations in the sector, releasing an industry record 11 SKUs. The range includes non-alcoholic margaritas, yuzu sake and Scottish sour – a whisky sour-inspired RTD cocktail.

Lyre’s too has seen great success in the RTD space, as Livings outlined: “The performance globally is extraordinary. With our RTD products – it’s rapidly approaching almost 50 per cent of our overall revenue.”

So what does Livings think is driving this incredible return for RTDs in Australia?

“There’s a couple of reasons for that. There’s a drive for convenience and a lot of people don’t have mixology skills in the home, but they still want an elevated or sophisticated beverage. So the convenience of an RTD, and de-risking the ability to make the product, that’s really, really appealing to consumers.

“Australia is a big RTD market. We are an outdoor country, so we do spend a lot of time in the backyard with our eskies, at beaches with our eskies, and our category is certainly hijacking the existing occasionality where alcohol used to live.”

But is there a risk of RTDs cannibalising the sales of larger format NOLO spirits, which Lyre’s also offer? For David Murphy, Lyre’s Flavour Architect, it’s all about identifying different settings, for different drinks.

“The RTDs are in a very casual scenario, and the spirits are 700ml – leaning more towards the bar, and the more formal style of drinking, whereas the RTDs is at the beach, at the park,” Murphy said.

The future of NOLO

Brands across the three main categories all agree: the future of NOLO looks bright.

The sheer quantity of NOLO beer being produced excited Bowker,who said: “I just look at the volume going through our brewery atthe moment and a very large chunk of it is going through this space[NOLO beer], it’s definitely an exciting segment of the market.”

Meanwhile, Livings suggests a future where non-alcoholic offerings are fully enmeshed with their alcoholic counterparts. He said: “We might approach a point of maturity where they do live alongside their alcoholic brothers and sisters.”

Iozzi predicts a trend of diversification in the non-alcoholic spirits market.

“Naked Life believes that Australians will seek more variety across the non-alcoholic category, echoing our developments in lesser-known spirits categories such as sake, whiskies, and rum,” he said.

And Iozzi was bullish in his message to retailers, saying: “It is time to diversify your offering and incorporate Aussie made non alcoholic spirits and RTDs into your retail space. The demand from Australians is real and needs to be met by retailers.”

This message is shared by Lyre’s, with Livings noting: “There’s definitely a pot of gold there for retailers if they pursue it and support the category – because the consumer is already there, theconsumer wants it.”

For retailers, the perspective is also a sunny one, with Chalmersespousing a utopian vision of the NOLO future.

She said: “I want the percentage of alcohol contained in the glass you are holding to be as insignificant as the car you are driving the outfit you are wearing when it comes to socialising. Sure, some may care, but it’s a fleeting conversation at best.”