NO AND LOW-ALCOHOL

From zero to hero

It’s one of the fastest growing categories at Dan Murphy’s and has inspired its first-ever foray into hospitality. We take a look at the liquor giant’s ZERO% strategy and the rise of non-alc across the categories.

ZERO% BY Dan Murphy’s is the alcohol retail giant’s first bar which, since opening in March, has been serving non-alcoholic drinks only to patrons 18 and over and will do so until the end of June.

Patrons can choose from a broad beverage menu including non-alc beer on tap or can from $2.99, eleven different wines by the glass from $5 per glass, and a range of cocktails and premix drinks.

The bar includes a bottle shop featuring a range of more than 200 nonalcoholic products and is open seven days a week in the heart of Melbourne’s bayside suburb Hampton.

According to the liquor giant, zero alcohol drinks have become one of its fastest growing categories, with sales more than doubling in the last two years.

In fact, non-alcoholic drinks are now competing with well-established categories such as aperitifs and international craft beers in terms of share of sale, the retailer says.

“Australians are embracing zero alcoholic beverages more than ever before, but for those who are still hesitant, ZERO% is the perfect place to discover what is undoubtedly the hottest drinks trend at the moment in a contemporary setting,” Dan Murphy’s MD Alex Freudmann said at ZERO% launch. “We think it’s great that more Australians than ever are drinking responsibly, which is why we want to lean into and support this great trend.”

Dan Murphy’s Melbourne bar ZERO% serves only non-alcoholic drinks.

The response to ZERO% had been great so far, Freudmann told Australian Hotelier. “This is a first for us; it’s the first time we’ve created a bar and a store in one, and even more excitingly, it’s the first time we’ve created a destination with zero alcohol products only.

“We’ve noted that more than half the sales at ZERO% are coming from the bar, so people appear to be really embracing the chance to try the new wave of zero alc drinks.

“This is very much an experiment for us, so we will watch and learn how ZERO% performs over the coming weeks.”

Freudmann says a rising number of requests from customers was the impetus behind ZERO%. “Customers are increasingly asking for zero alcohol options for those occasions, which is why we want to lead in this space.

“Although zero alcohol products is one of our fastest growing categories in stores, we have noticed hesitation among some customers when it comes to trying them. By launching ZERO%, we wanted to create an immersive destination where customers can discover and explore the wide range and pristine quality of zero alcoholic beverages.”

At ZERO%, the most popular items ordered at the bar are the cocktails and Urban Valley Brewery’s Urban Myth beer on tap, Freudmann says, which also reflects the sales in its stores.

“In our retail stores, zero alcohol beer makes up the majority of all sales in the non-alcoholic category, thanks to new technologies and brewing processes, which have made it possible for brewers to make beers that really replicate the flavour of their alcoholic counterparts,” he says.

“Non-alcoholic spirits is a fast growing category within zero alc, as customers look to explore making cocktails at home, minus the alcohol.”

As non-alc category growth continues, Dan Murphy’s has almost tripled the number of non-alc products in its range over the past year to more than 200.

This strong uptick is also being reported by non-alc companies in a range of categories in the retail channel and also in the on-premise space.

Getting into the spirit

Non-alcoholic spirits company Lyre’s says that due to increasing consumer awareness and trial of the category, it is riding an exciting wave of triple digit growth across the on-premise channel.

“Over the last few years at Lyre’s we have more than doubled distribution year-on-year with 2022 set to once again be our biggest year ever,” the company says.

Lyre’s points to changing consumer habits during lockdowns combined with pent up demand for on-premise experiences that have in turn led to an ever greater demand for the non-alcoholic category.

Moreover, hospitality remains a key driver of growth for the company. “Whilst we continue to expand rapidly into major retail and off premise during 2022, we are still seeing the best rate of sale coming from premium bars, restaurants and pubs,” Lyre’s says.

Lyre’s has added Highland Malt, a non-alc whisky, to its range.

“These venues and their expert staff are best able to showcase our products as mixed drinks in their best light. Our challenge in retail is consumer education and trial, something that is far more easily facilitated in your favourite local pub.

Australian Venue Co, Endeavour and Fun Lab are among the groups that stock Lyre’s products across their venues, and Lyre’s says its pubs that are known for a premium beverage offering that contribute the most volume.

“Consumers are expecting outlets where they purchase premium craft beer and local wines to have a complimentary non-alcoholic offering that suits their needs and matches their occasion,” the company says.

“From our research we can see that social acceptability and category awareness are key drivers of consumer demand for non-alcoholic products in venue.”

Lyre’s has a wide range of non-alcoholic spirits and has just created its first non-alcoholic whisky-style beverage, Highland Malt.

A new non-alc dram

Lyre’s has created a new non-alcoholic whisky-styleproduct, adding to its 18-strong line-up of innovativenon-acoholic spirits.

Highland Malt is Australia’s first non-alcoholicwhisky-style beverage, Lyre’s says, and has beencrafted to capture the essence of a blended maltwhisky, one of the world’s most revered spirits, withflavours that are distinct and contemporary.

“Whether you’re enjoying a highball, shaken ina sour or simply on the rocks, delight in the samedelicious experience of your favourite serve, withoutthe hangover,” its maker says.

Highland Malt was created by Lyre’s flavourarchitect, David Murphy, who says that while Lyre’sspirits are true to taste, they have their own distinctionas a premium non-alcoholic beverage.

“Whether served neat or in mixers, whisky isa firm favourite for many around the world andunderstanding this, we’ve worked tirelessly to studythe aromas and tastes that whisky fans most enjoy, todeliver the Highland Malt,” Murphy says.

“People who enjoy the taste of a great whisky canexperience our non-alcoholic version in occasionswhere it would otherwise be just featuring the alcoholicequivalents – it extends the occasion to more peoplemore often.”

Highland Malt will be available from mid-May.

A rosy future for wine

According to NZ wine maker Giesen,there’s been a huge amount of categorygrowth for the non-alcoholic wine segmentover the last year, and it’s been growingmuch faster at 15 per cent per year thanthe general wine market.

Late last year, the company introduced0% Rosé and Pinot Gris to its range inAustralia and more recently a Merlot, joiningits non-alcoholic 0% Sauvignon Blanc.

Giesen non-alcoholic 0% Sauvignon Blanc was the first product it launched in Australia.

Giesen Group’s Australian countrymanager Dan Chorley points to anoverwhelming increase in focus aroundhealth and wellness post COVID-19 as thedriver behind the growth.

“Our 0% Giesen Sauvignon Blanc hassold out numerous times since release, andthe new additions to the range, Rosé, PinotGris and now a Merlot, are also gaining inpopularity as consumers discover the tasteof these new beverage options.”

The on-premise market is particularlyimportant for Giesen, according toChorley, as it’s often the occasion wheremany consumers are seeking healthierbeverage options. He says that the numberof venues stocking its product is growing,although the numbers are somewhatskewed due to constrained supply.

“We have seen a mixture of venuetypes embrace our 0% alcohol wines,ranging from traditional country gastropubs to surf clubs to restaurants andcafes. There’s no typical profile ofcustomer and we’re thrilled to see somany pubs being so open minded to addthese products onto their bottle shopsand by the glass lists.”

According to Chorley, it’s great to seethe quality improvements in the category.“Since investing in our own spinning conetechnology at the winery, the winemakingteam are continually refining the profile ofour no alcohol wines, gently removing thealcohol to keep the flavour profile as closeto full strength wine as possible.

He believes smaller format wine bottleswill see an even bigger acceleration insales and availability of 0% wines onpremise. “This will enable venues toprovide a less expensive option comparedto 750ml.”

Lift-off for cocktails

Naked Life began its journey in anunconventional channel for the non-alccategory – supermarkets, and has wonstrong brand recognition by doing so,outstripping sales of more establishedbrands’ non-alc offerings (read moreon p20).

Now the company has the on-premisemarket in its sights, and to this endhas recently closed a partnership withdistributor Craft Rev, and is in alreadystocked at some iconic venues includingthose operated by Sand Hill Road.

David Andrew, founder and CEO Of Naked Life Non-Alcoholic Spirits, says the company has only just scratched the surface in the on premise. “Following an enormous increase in off-premise demand, we see the same potential reflected in the on premise.”

One of the brand’s strengths, Andrew says, is the size of the range, which means its products will appeal to a broad range of venues, whether that be an RTD G&T or Negroni Spritz at onsite dining and social venues, or its whisky-style spirits in 700ml bottles for cocktail bars.

“Non-alc is no longer specific to a type of venue. The consumer now cuts across demographics and venues,” he says.

“We’re super excited about the opportunities in the hospitality industry. With a few new SKUs such as our nonalcoholic Espresso Martini and our range of non-alcoholic range of spirits coming to market, we’re able to double-down harder in this channel and we will be investing strongly to create redefined moments and true cocktail experiences for patrons, without the alcohol or nasties.”

New brews hit the spot

Heaps Normal has been selling to the on-premise market since it launched just under two years ago, says co-founder and CEO Andy Miller.

“The initial traction in on premise was naturally slower than retail channels due to the impact of lockdowns and other trade restrictions at the time,” he says. Heaps Normal is now seeing a ten- fold rise in the number of pubs and bars buying its products compared with this time last year, according to Miller.

“Since opening up, we’ve seen a huge uplift in pubs, bars and restaurants adding Heaps Normal to their menus. In fact, many of these venues admit that while they wouldn’t have even considered ranging a non-alc beer prior to the lockdowns, they’re now seeing growing demand from consumers for more considered non-alc options.

“It’s mind-blowing to see how quickly Australian drinking culture is changing, without the need for us all to be sober.”

According to Miller, Heaps Normal is seeing 40 to 50 per cent monthly growth in venues, and it’s not limited to one corner of the industry. “We’re seeing Heaps Normal added to the drinks list everywhere from Australia’s best fine dining venues to our favourite old pubsand music venues,” he says.

Heaps Normal’s Another Lager is a classic lager but without the alcohol.

Pubs with a thoughtful food and drinkslist have recorded the strongest sales ofHeaps Normal, however, with MerivaleGroup, for example, putting a lot ofthought into non-alc options.

“They’ve been ranging Heaps Normalalmost since day one. Another exampleis The Forresters in Sydney’s SurryHills. It’s one of several pubs aroundthe country where Heaps Normal isconsistently the number one sellingpackaged beer in their venue, includingalcoholic beers,” Miller says.

“Thanks to the huge consumer demand,there are now a wide variety of non-alcoptions on the market. In the last 18months the non-alc sector in Australiahas grown from a few early movers to athriving, high-growth category.”

No and low by numbers

Here’s what’s happening in the no and low alcohol alternatives segment in Australia’s on-premise market right now, according to research group CGA.

Around 13 per cent of Australianconsumers drink alcohol-free alternativesin the on premise, according to the datadrawn from CGA’s 2022 Australia OPUS(On Premise User Study).

Six per cent of consumers drinkalcohol-free serves in drinking pubs andfive per cent in food-led pubs, accordingto the researcher.

The majority of these consumers areoccasional drinkers, with only 11 percent drinking the category every timethey’re out.

Out of all primary occasions, alcoholfreedrinks are most likely to be consumedduring after work drinks, and whenit comes to channels, higher temponightclubs and bars/late night bars seethe largest proportion of patrons drinkingalcohol-free options.

The most important factor whenchoosing an alcohol-free brand isgood value for money, followed byrecommendations from friends and specialoffers or discounts, according to CGA.

Consumers drink alcohol-freealternatives across both eating and drinkingoccasions, according to the researcher.

Of those who say they drink alcohol-freealternatives, 57 per cent drink mocktails(with no non-alc spirits), 33 per cent drinkvirgin cocktails (including non-alc spirits),30 per cent drink non-alc beer, 25 percent drink non-alc cider, 24 per cent drinknon-alc wine, and 21 per cent drink nonalcspirits.