No and Low Alcohol: Into the light

Into the light

The no and low alcohol sector has done some considerable work to dismantle consumer misconceptions and has transformed itself into a competitive category for bottle shops.

The past couple of years have seen an absolute explosion of the no and low alcohol (NOLO) sector in Australia, taking it from small and niche to now be one of the fastest growing and most innovated areas of the market.

Producers in this space have all seen the value of the sector rise in the past year. For example, at Carlton & United Breweries (CUB), no, low and mid strength alcohol SKUs now make up nearly 30 per cent of beer sales, while at independent brewer Modus Operandi, the volume of its non-alcoholic beer label Nort has increased by up to 11 times.

“We expect with consumers increasingly choosing to moderate that this trajectory will continue to grow throughout the year,” said Verity Jackson, representative for Great Northern at Carlton & United Breweries.

According to IRI data, the strong growth of the NOLO sector continues to build with an almost constant stream of NPD.

Stuart Henshall, Brand Director at Brunswick Aces, said: “The selection available now compared to just five years ago is almost unimaginable, with new brands seemingly launching on a weekly basis.”

This is happening on a worldwide scale too, according to Bill Shufelt, Founder of US non-alcoholic beer, Athletic Brewing Co.

“Non-alcoholic beverages represent the biggest new consumer introduction potential in all of on- and off-premise drinking occasions. And until a few years ago, there were no products to service these populations, but now it’s one of the most exciting innovation categories in beverage,” he said.

Growth is being experienced by all kinds of producers, whether they’re adding NOLO options into what was a full-strength portfolio or solely playing in the NOLO space. It’s also happening across all different products, from core ranges to limited edition and seasonal releases.

And the ceiling of this growth has not yet been reached, according to a leader of the non-alcoholic spirits sector, Lyre’s.

“There are still plenty of distribution gains to be had and we are seeing volume growth driven by increased conversion of category awareness into trial and consumption,” said Paul Gloster, Lyre’s Chief Marketing Officer.

The fight against misconceptions

Despite such great growth in the past year, NOLO producers are still forced to fight against traditional misconceptions of the sector.

“Despite the growing market, the main barrier for consumers considering lower alcohol wines is the perception they are ‘not really wine’ – a belief held by around a third of the wine-drinking population [according to a Wine Intelligence report in 2021],” said Angela Flynn, Marketing Manager at Giesen Group.

This idea about NOLO wine is not true, as producers like Giesen have invested in spinning cone technology which gently removes the alcohol from the full strength wines, leaving behind the essence of what makes the wine so great.

Another misconception rife across the sector is regarding taste, as a spokesperson for Heineken noted.

“Majority of consumers state taste as the biggest barrier to entry of the no and low alcohol category, with most assuming removing the alcohol will impact the overall flavour – which is simply not true,” they said.

The taste problem stems from many angles, and for Jackson, it comes down to how “people still expect it to be watered down in taste.”

This misconception extends into a general idea that the experience of drinking NOLO products doesn’t match that of the higher strength versions.

Help the consumers understand the process behind how some of these products are made, and together we can change perceptions with a little more information.

-Angela Flynn Marketing Manager Giesen Group

Non-alcoholic brewer Heaps Normal has noticed this, with Marketing Director, Tim Snape, saying: “For a lot of people a non-alcoholic variation on a traditional drink may have been frowned upon as an inferior product in terms of taste and experience.”

Modus Operandi believes that the idea of NOLO products being of lesser quality is stopping people from becoming educated about what products actually do in the space – it’s definitely not just cheap, watery, high calorie drinks.

“The three misconceptions I still hear in the market are taste, price and lack of health benefits,” explained Co-founder, Jaz Wearin.

Another thing that consumers aren’t quite understanding is price, expecting a crafted nonalcoholic beverage the cost the same as a mass produced soft drink.

Henshall said: “Sadly, there is a large swathe of society that still equates the alcoholic content of a drink to its value, over the taste and quality.”

While these misconceptions still exist though, consumers are being pleasantly surprised when they do experience the opposite. A producer that has witnessed this firsthand with both core and limited edition products is Big Drop Brewing Co.

“We do find that the craft part of the category, where Big Drop is squarely positioned, is one that still takes consumers and retail by surprise with just how good some of the brands are within this segment,” said Darren West, Country Manager for Big Drop in Australia and New Zealand.

Producers upholding the utmost quality in NOLO products and communicating this to consumers are doing some of the heaviest lifting when it comes to fighting misconceptions for the sector.

A spokesperson for non-alcoholic wine and RTD producer, Edenvale, said: “There remain people who think that NOLO products will not taste as good as their alcoholic counterparts. Thankfully, this misconception is slowly disappearing as the technology, and therefore the quality of the drinks themselves, continues to improve, and consumers are exposed to these products.”

Gloster said as more consumers become aware of this premium side, a full circle moment will be fuelled, dismantling one of the misconceptions of the retail sector.

“I think the value proposition is still a concern for many retailers in comparison to traditional full-strength products,” said Gloster.

“The rapid uptake of premium NOLO pairing options in a restaurant setting implies that the consumer value is in the sense of occasion and social freedom that premium NOLO options facilitate. Simply put, consumers are more than prepared to pay for a premium beverage experience, alcohol or NOLO.”

The road to mainstream

Just a few short years ago, someone drinking a non-alcoholic beer, wine, mixed drink or RTD would be seen as a bit of a novelty. But we’re getting over that stage now, as NOLO moves more towards a mainstream existence in the drinks industry. The availability of these drinks options is now much more widespread across both retail and hospitality.

Increased availability is often driven by increased demand from consumers, as NOLO products penetrate the key occasions where full strength alcohol products are usually consumed.

Heineken’s spokesperson said: “The category is definitely going to be an interesting space to watch as it becomes more normalised with core beer occasions to offer choice to consumers.”

The ability to penetrate these core occasions is due to the changing attitudes of people when their friends and family choose not to drink full strength products.

Wearin said: “Gone are the days of being ridiculed for drinking a non-alc beer. Instead, it often opens up a great convo about what they have tried, what they love and how it has made a difference to their lives.”

And according to Flynn, such discussions grow awareness further, which sparks more trial, awareness and discussions – it’s quite the positive growth cycle.

“It’s important to consider the consumers who are buying these products and the occasions in which they are consumed. The highly involved wine consumer may not be the target but there’s lots of consumers who are buying into health and wellness trends that these products will appeal to,” Flynn said.

Along with the more obvious alcohol occasions, the NOLO sector also introduces some new occasions, according to Shufelt.

“I think consumers are starting to realise that great beverages no longer have to be reserved for special occasions or Friday/ Saturday nights, but can be had anytime and anywhere,” he said.

Latest and greatest

With so many products out there and more entering every day, the state of the NOLO sector is continuing to develop. Producers from this story have shared their latest and greatest retailer tips for staying ahead of it all.

The biggest and most consistent message is to keep an open mind about NOLO.

“Occasionally we come across retailers who don’t stock non-alc options because they don’t personally drink them. Our advice would be to listen to what your customers want and then seek out one of the many great options available,” said Snape.

Edenvale’s spokesperson said it would also be a good idea to speak directly to the community of people who solely drink NOLO, as these people are often keen to trial a range of products and are advocates for quality in the sector.

West, Wearin and Flynn advised to discuss options direct with suppliers as they will have a lot of knowledge about the sector to share and can help you become educated about what’s on offer, and pass this education on to your customers.

“Our advice is to help the consumers understand the process behind how some of these products are made, and together we can change perceptions with a little more information,” Flynn said.

Wearin emphasised: “Make sure the NOLO product invests in marketing and education because this is still an emerging category and requires the brand to do some heavy lifting and drive to the shelf.”

In terms of in-store placement, Heineken’s spokesperson said: “Globally, retailers have seen great success from having ‘NOLO zones’ in-store to help guide and educate consumers on the path to purchase.”

This is something that is often discussed in the industry,but Gloster also advised this doesn’t mean you should “squirrelaway” the NOLO section at the back of the store, as proximityto full strength favourites is critical on the path to purchase.Clear and prominent signage and information can help withthis in-store awareness.

If you’re not sure where to even start with curating at the bestNOLO selection for your specific store, West has some solid advice– apply the same strategy you would for any section of your store.

“If you’re a smaller store, lead with a couple of the mainstream market leaders, but also offer a couple of premium offerings to help with trade up. If you’re a bigger retailer or beer-focused retailer, look at what styles of beers sell in your store and make sure you have tailored your no-low offerings to mirror these styles,” West said.

“Use your own experience to make sure you’ve got the best possible range to offer your shoppers.”

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