GETTING LIQUID TO LIPS IN NON-ALC

When covering “the state of modern alcohol,” we would be remiss not to include the non-alcoholic category. Between August 2021 and August 2022, total dollar sales of non-alcoholic drinks in the US stood at $395 million, showing a year-on-year growth of +20.6% NielsenIQ. This is no longer a category for small brands. Alcohol giant Diageo has been making major investments in this space, including the acquisition of Seedlip and the innovation of Guiness 0.0. In late 2022, Keurig Dr. Pepper invested $50 million in Athletic Brewing.

As the category grows, its supporting partners are growing, too. In this article, we get to know the stories and people behind Absence of Proof and Spirited Away — and how these unique stakeholders are viewing the brands behind their businesses.

THE NATION’S FIRST BOOZE-FREE BOTTLE SHOP

Douglas Watters has always enjoyed the ritual of gathering over drinks. As a craft beer and cocktail drinker, Watters has made it a ritual to punctuate his day and transition to the evening hour with a drink in hand. "During COVID" when Watters wasn’t going into an office, this ritual become even more important — a way to break up the day without a physical transition. But as he’s gotten older, he's re- alized that alcohol was becoming less and less aligned with his personal goals for health, longevity and mindfulness.

“I began looking for alternatives and discovered the emerging non-alcoholic movement,” Watters says. “In 2020, there were a couple of fledgling brands that I was able to buy online, but I couldn't find in stores. Part of the beauty of living in New York is being able to have everything at your fingertips, but this one category was unrepresented. I wanted to bring the experience of my neighborhood Wine and Spirits store to the non-alc space.”

So, Watters decided to create it — and Spirited Away, America’s first booze-free bottle shop, was born.

THE NON-ALCOHOLIC CUSTOMER

“There is no average consumer of nonalc,” Watters says. “Every day we'll get a student at NYU, and we'll get somebody who's in their 80s, and all parts of the city, all ethnicities, all reasons for drinking less — medical reasons, pregnancy — but it's mostly just people who want to keep their social rituals and be more mindful about what they're consuming.”

While customers of all demographics are shopping at Spirited Away, the data reflects that younger generations, in particular, are gravitating towards the category; 21% percent of Gen Zers and 18% of millennials purchased nonalcoholic beer in the past 12 months FoodDive.

DEMYSTIFYING NON-ALC

Because the category is still so new, non-alcoholic brands carry the burden of educating their prospective customers — beyond the bottle. “You can go to a very beautiful website, with very beautiful hero photography and a compelling view of the brand, but the customer still doesn’t understand how that product fits into their lives,” Watters believes. “Spirited Away is focused on contextualizing these brands that are built in a vacuum. It’s a new category, and a lot of people are looking for help demystifying it.”

Watters’s staff is well-equipped to guide customers’ purchase decisions. When shoppers come into the store, they typically ask what the staff recommends. “We always fire right back with ‘what do you like to drink? Do you like to make cocktails? Do you enjoy a glass of red wine? Are you celebrating something?’ And then we go from there,” Watters explains. The consumer is likely familiar with the layout and experience of a liquor store — and Spirited Away tries to emulate this experience with non-alc. The shelves are organized by type of non-alc and occasion, rather than by brand.

“I think there's a retailer-brand parallel,” says Watters. “In 2020, back when I launched Spirited Away’s first location, it was very unprofessional — the shelves were from Ikea. But it was a very forgiving business client climate during COVID. Similarly, in the very early stages of the evolution of non-alcoholic brands, you could launch without a lot of competition. It didn't really have to be a super polished, really super thoughtful product,” he recalls. “It’s just amazing how much more competitive everything has gotten over the last three years. If you're launching a new non-alc brand today, you have to be much more strategic, much more thoughtful. You have to look for opportunities to get liquid to lips.”

GETTING “LIQUID TO LIPS”

Retail is one way to help contextualize your brand. But more and more, new opportunities are arising for non-alcoholic brands to activate through events. One example is Absence of Proof, a “non-alcoholic nightlife option for anyone taking a night, week, or lifetime off of drinking.” Elizabeth Gascoigne founded Absence of Proof after seeking out lower-ABV alternatives in NYC nightlife — and finding little to offer.

Gascoigne began throwing parties with curated non-alcoholic menus for her sober-curious friends, shared them on social, and the word quickly got out. Now, she’s expanded to Seattle and LA. “Only 25-30% of our attendees are actually sober. They’re more on the sober-curious spectrum,” Gascoigne shares. “They’re looking to be more intentional with drinking. They want the complexity of a spicy marg and the alcohol flavor, without the effect.”

Echoing Watters’s sentiments, Gascoigne also sees Absence of Proof as a way to contextualize and elevate non-alc brands. “Non-alc brands need to be par- ticipating in the community to be successful,” she says. “How are you going to get this product into the hands of customers if they don’t understand it?”

At the same time, Gascoigne acknowledges that this upper funnel brand awareness is limited to her events’ geographic scope. People across the country were reaching out to Absence of Proof on social, asking when they would come to their city. Still wanting to service those customers, Gascoigne decided to dip into her resumé — four years working at Amazon — and added on an ecommerce component. “Providing accessibility to non-alc will always will remain part of our business.” Gascoigne also partners with spirit-free retailers, like Spirited Away, to drive event attendees to stores for purchase after the event concludes.

WHAT’S TRENDING IN THE SPACE

In addition to Spirted Away, Watters also runs a site called Dry Atlas, which lists about 850 different non-alcoholic liquids. “I'm adding to it constantly. It’s a site for discovery, exploration, rating and reviews— like the Yelp for non-alc.” He’s constantly in touch with what’s new and interesting in the space, and is eager to share it with others.

Bitterness

“People are becoming more open-minded to bitter as a flavor,” reports Watters. Because alcohol is usually the suspension for herbs with which bitters are made, this flavor is typically associated with alcoholic beverages. But there are now a couple of brands that do non-alc bitters, suspended in vegetable glycerin. “They’re very popular in the store. They easily add a lot of depth and complexity to straightforward cocktails.”

Watters also sees aperitivo alternatives with subtle, citrus flavors doing well in their store. “You can drink it on its own, put it in a ‘negroni’, put it on top of a glass of Prosecco. It's so versatile and just appeals to a wide variety of tastebuds.” He’s also excited by the brand Kally’s use of verjus as an ingredient in a wine alternative. “I think it's gonna take a little bit of time for consumers to figure out what verjus is and how it can be a great ingredient for non-alc drinks, but I'm excited about the future for verjus-based non-alc wine alternatives.”

Function

If a customer is looking at a bottle of alcoholic gin and non-alcoholic gin, they’ll see a lot of the same botanicals, juniper, coriander, and a lot of the same flavor notes. But, importantly, these two beverages are radically different in what they do to the body. “That is a pretty distant bridge for consumers to make in their minds,” says Watters. “Consumers are often looking to replace the feeling of inebriation with some sort of functional feeling. It is a compelling value prop for a brand to put forward.”

CBD and kava lie on one end of the functionality spectrum, offering a well-known, relatively instant effect to curious consumers. On the other end, brands are using adaptogens, which require extended use for purported effects. Brands like Little Saints, though, are getting more experimental with introducing functionality in the middle end of the spectrum. “Our St. Mezcal product is the first that I know of to include a functional dose of Lion’s Mane in a beverage,” says founder Megan Klein. “We’re used to having alcohol make us feel something, so we included 100 mg of Lion’s Mane per serving — a functional dose, advised by neuroscientists, that will make you feel something in the moment.”

Sober-curious messaging

For Gascoigne, who is constantly socializing with non-alc consumers, one of the most important traits of a non-alc brand is their messaging. “The brands that do really well are not trying to say that alcohol is bad. Successful brands are taking the sober-curious angle,: she says. “Historically, sobriety had the reputation of ‘otherness’ or ‘we don’t want to socialize with you.’ But brands that are successful are just providing another option for a ritual. They’re not saying to never drink alcohol again.” Again, the data agrees with her observation — 82% of nonalc buyers are still purchasing alcoholic products NielsenIQ.

By Jenna Movsowitz