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Are big brands a help or hindrance to no/low space?

The no/low sector has rocketed in recent years. But as big players become increasingly involved, creating low- and no-alcohol takes on favourite spirits, how can smaller brands break through?

Low-no-spirits
How can small brands shine against competition from established players?

*This feature was originally published in the October 2024 issue of The Spirits Business magazine. 

In less than a decade the non-alcoholic beverage market has gone from being a token gesture to a serious player in the mainstream drinks market. In the UK, total beverage alcohol volumes declined by 2% between 2022 and 2023, while the total no- and low-alcohol segment grew by 47% (2022-2023), according to IWSR. It forecasts a volume compound annual growth rate of 19% (2023-2028), and has confirmed volumes of no-alcohol ‘spirits’ now “comfortably surpass” Tequila in the UK.

Volumes of low- and no-alcohol in the world’s leading 10 no/low markets (which account for 70% of volumes), grew by 5% in 2023. The market is now worth US$13 billion. “Globally, 37% of consumers have reduced their alcohol intake, but people are going out just as much,” says Paul Mathew, founder of non-alcoholic apéritif Everleaf. “Humans are social; we want to go to bars and restaurants, we’re just realising that doesn’t need to feature quite as much alcohol.”

In 2022 Pernod Ricard announced its zero-ABV expansion, creating a division dedicated to the development and production of no- and low-alcohol drinks. This year, it unveiled a zero-ABV Beefeater ‘gin’, and in August acquired a minority stake in Lewis Hamilton’s alcohol-free agave ‘spirit’ brand, Almave.

Diageo has non-alcoholic versions of its Gordon’s, Gordon’s Pink, and Tanqueray gins, as well as Captain Morgan rum. In August, supermarket chain Aldi added two alcohol-free ‘gins’ to its Greyson’s range: 0% London Dry, and 0% Pink Berries.

With so many global alcohol brands and retailers flexing their muscles, offering zero-ABV extensions of core products and cheaper alternatives, how can newer, dedicated no/low brands cut through? Not by imitating an alcoholic spirit, says Ben Branson, founder of Seedlip, Seasn, and the new Sylva non-alcoholic distillery and maturation laboratory in Essex. “If you are creating products to replicate specific alcoholic categories be warned,” he says.

“The best thing smaller NA [non-alcoholic] brands can do is not try to be alcohol. Across beers, wines and spirits we now have big trademarks making 0.0% [ABV] versions, so the consumer doesn’t need new NA brands to do this. I don’t think small competing with big is the answer. The competition is the fact that the large majority of non-alcoholic brands are small, and haven’t scaled, so the competition is actually who is going to break through and find scale among the hundreds of small companies.”

Luxury dark ‘spirits’

Sylva’s aim is to create luxury dark ‘spirits’ with an ABV of less than 0.5%, extracting flavour from wood and cereals. Its first release, Padauk, (£40/US$52 per 500ml bottle) is made from the eponymous West African wood, red oak and rye, undergoing malted rye extraction, toasted-rye vacuum distillation, and gravity percolation.

Pollen Projects' Ben Branson with Seasn cocktail bitters
Ben Branson, founder of Seedlip and Pollen Projects

“Rather than compete with the scale, awareness, budgets and penetration of alcohol trademarks, the opportunity is to offer people products and experiences that trademarks can’t or don’t,” he adds. “The next 10 years for no-alcohol are about breaking free from the shackles of seeing alcohol as the parent category, and learning to stand on its own two feet.”

There is work to be done on branding too, with the non-alcoholic sector a blank canvas for memorable advertising campaigns. Imme Ermgassen, co-founder of non-alcoholic apéritif Botivo, says: “NA brands have to differentiate through authentic stories – it’s something often missing from non-alcoholic brands, as the category is so new and liquids are often made in fragrance houses. We have to work harder to tell stories about the makers, the provenance, the complex processes involved in liquid creation. Leaning into these stories will differentiate us.”

Every batch of Botivo is hand blended, and takes a year to make using citrus, bittersweet, aromatic botanicals, and apple cider vinegar on Lannock Farm in Hertfordshire. “It’s not about mimicking drinks or making 0% versions of existing alcohol,” Ermgassen adds. “The momentum is with brands that offer a totally unique taste profile, combined with a ritual around it that allows consumers to symbolise a ‘new stage’ to their day.”

Still, according to a report from analytics firm Commetric, a survey of 10,000 Reddit posts over the first six months of 2024 found that 62% of references to low-and-no products related to established alcohol brands over newer, dedicated low-and-no brands, further highlighting the gap in awareness among everyday consumers.

Stifled competition?

Are big brands pushing out smaller ones, stifling competition? Exclusive listing and distribution deals can make it harder for smaller brands to compete, but it’s a double-edged sword. While competition helps the category develop, and big money helps raise awareness, it shouldn’t reach a point where the market is “reduced to a few key players”, says Mathew. “Having a unique point of difference, strong brand identity, and, above all, a great-tasting product are key areas in which smaller brands can develop an edge over some of the bigger players.”

Growing competition has driven up quality. A decade ago, most consumers looking for a non-alcoholic drink would have likely defaulted to cola – now there is enough competition to ensure choice, and taste is crucial. “That’s where smaller and dedicated alcohol-free brands do well,” adds Laura Willoughby MBE, founder of the mindful drinking movement, Club Soda, and an expert in low- and no-alcohol drinks. “Their ingredients and volumes mean they can’t compete on price.

“But we do know people will pay for drinks they like, and in the alcohol-free context are making a purchase based on their health goals as well as social inclusion.”

No-alcohol-beefeater
Beefeater created a 0.0% version of its full-strength gin

Big alcohol’s presence in the NA market can be problematic for smaller brands trying to make a splash. But global alcohol brands need innovative dedicated no/low brands to ensure a cultural shift around drinking less, and to take risks, just as smaller brands need big players to do heavy lifting when it comes to consumer awareness and investment.

“On a policy level, global alcohol brands colonising this space make governments jumpy, and they feel this is a cynical move to really get people drinking alcohol,” says Willoughby. “In reality it does not work like that, but it is a threat to the sector. Global alcohol needs dedicated alcohol-free brands to help make the case that alcohol-free is a good thing that helps consumers change their drinking habits, and are good drinks. It’s an interdependency we have never seen before, and that global brands ignore at their peril.”


The pricing battle

Bank of England moneyHigher prices of non-alcoholic ‘spirits’ have often cropped up in conversation in the industry, and have been cited as a consumer barrier to growth for the category (according to IWSR research). During a panel discussion in London this year, Emma Wykes, CEO of alcohol-free cocktail bitters brand Seasn, said if the category was going to have longevity, there “needs to be a premium price point because the liquids are hard and expensive to make”. She cited examples such as Gordon’s Alcohol Free 0.0% and Tanqueray 0.0% as being “far too cheap for the consumer”.

Eugenio Muraro, founder and CEO of MeMento, believes new cheap brands have a “double positive-negative effect”. He explains: “On the one hand, the population of the market helps the communication and the adoption of the products in this category by the mass market, which is directed towards low-budget solutions. On the other hand, there is a de-qualification of the products due to the reduction of costs, and the risk is that consumers approaching low-cost products will have the wrong perception of the category.

“In my opinion, the crux of the discussion is about the culture and the information behind the marketing of products. As in all sectors, you have to be able to communicate and enhance the elements that distinguish a production [process] and the reasons why you have higher costs. I believe that there are still people in the world willing to spend a little more for quality if it is well recognisable and appreciable.”

Matteo Reato, export director of Dutch Cocktail Club, does not believe that cheaper brands devalue the category, adding that they “enhance its value by broadening consumer choice”.

He adds: “These products provide a suitable alternative for individuals who would otherwise opt for soft drinks, thereby expanding the market without cannibalising traditional alcohol sales.”


Industry insights

Where are you seeing an increase in demand for no-and-low products?

Godelief van Erve – global marketing director, De Kuyper Royal Distillers

“We see no-and-low growing. Penetration of 0% ABV ‘spirit’ products is growing in all top spirits markets (except France). The younger target group especially is drinking less alcohol, and we see in this group an increased demand for low- and no-alcohol beverages.”


Sanjay Cachemaille – international sales director, Perola

“The demand for no- and low-alcohol products is increasing mainly in the gastronomy sector, including hotels, restaurants, and bars. This growth is driven not only by consumers seeking options with little or no alcohol but also by the hospitality industry itself. Due to staff shortages, there’s a rising need for products that allow for simple preparation of drinks without compromising on quality or variety. This dual demand is pushing the adoption of these products in more venues across the sector.”


Eugenio Muraro ­– founder and CEO, MeMento

“What we are seeing is a greater opening up of once very ‘boozy’ markets, such as those in Eastern Europe. This is due to the growth of awareness towards these products in the various countries, but also the increase of Western tourists, due to the low cost of staying there, who demand no-and-low products as they already do in their countries of origin.”


Armina Demon – co-founder and CEO, 9 Meadows

“We observe an increased demand mainly among younger consumers and women; however, not only limited to these. Consumers are nowadays more health-conscious, and seek out mindful options, while not compromising on taste. There is a great potential in this market, and it is encouraging to see that many events and venues are becoming more socially inclusive from that perspective.”

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