The rise in CBD-infused beverages and reported decline in alcohol consumption amongst younger consumers has changed the face of the alcohol sector in recent years.
One way companies have been meeting these changes is by introducing low-ABV versions of alcoholic beverages, or by releasing products such as botanical drinks and ‘adult’ soft drinks. This is in response to a wider need for health and wellness options for consumers.
With this trend continuing to grow, FoodBev spoke with Nielsen’s commercial business partner, Gemma Cooper, and William Borrell, founder of Willow, a low-alcohol spirit, to understand the process of creating and marketing low-ABV beverages in a competitive sector.
Knowing who purchases low-ABV beverages is key in knowing how to market them. Borrell notes the range of reasons as to why different consumers are reaching for these options: “The much misunderstood Millennial and Gen Z generations want to drink less [alcohol] for health reasons and are afraid of embarrassing photos surfacing online. Older generations are coming round to the idea that a break in their normal drinking habits can be beneficial – and can lead to more productive work output.”
Cooper explains that it is this more mature age bracket that may have more of a tendency to opt for low-ABV beverages compared to their younger counterparts, due to a difference in income.
“The majority of households who consume no/low alcohol beverages tend to be more affluent, and come from smaller, more mature households (45 years and above). It is interesting to see that millennial households are the least engaged demographic when it comes to purchasing no- or low-alcohol drinks in the off-trade.”
Larger companies may pose challenges to the low-ABV sector, Borrell says, as they have the power to determine how transparent the low-ABV space becomes.
“The key challenge is that larger companies don’t ruin this young category with outrageous pseudo-scientific claims and ridiculously high price points,” Borrell contends. “That sort of behaviour could kill it off.
“Also, there needs to be transparency – as there mostly is in the world of spirits. Questions such as: ‘What goes in your drink?’ and, ‘How is it made, exactly?’ need answering – but I don’t see many big firms prepared to do that, which is unsettling for consumers.
“Finally, the education between 0%-0.5% and low-ABV products is also a challenge as there can be big differences in flavour and shelf life – especially the more alcohol that is used in a product.”
Low-ABV products must differentiate themselves, Cooper contends, through innovative flavour combinations.
Despite this, Cooper mentions how companies can use flavour challenges as an opportunity to differentiate themselves. This can either be through reranding, reformulating alcoholic beverages, or by creating new flavour profiles to complement this new beverage space: “Companies are exploring many different ways to enter into the no- and low-alcohol market, whether that be with well-known brands, new brands or creating sub-brands, so not exactly the same brand but using the brand equity to drive familiarity with consumers.
“Some companies are reformulating to ensure the same taste profile is present for their consumers, whilst others are looking at new ways to ensure a no- or low-alcohol offering which can mean a new taste altogether.”
Challenges within the sector could also be brought about for manufacturers, Cooper notes, in terms of justifying pricing points: “As the no/low alcohol trend continues to gain traction across both the on-trade and the off-trade, alcohol manufacturers need to think about how, or even if, they want to play in this sector.
“Non- or low-alcohol products can command a higher price point, with the average price of a litre of no/low alcohol being higher than the average price for an alcoholic offering, which presents a great opportunity for manufacturer growth.
“However, the shelf space in store allocated to these products is on the main alcohol aisle, therefore, as this category surely continues to grow it is worth bearing in mind that there will be alcoholic products which will lose space in order to accommodate for the influx of new no/low alcohol products.
“So, even if manufacturers are not intending to innovate into this sector, they still need to be aware of the growth in this sector and ensure their alcoholic products have a strong story as to why they should remain on the shelf.”
Borrell presents a good example of this in practice with Willow, which is a low-alcohol spirit. He says that he opted for creating this product from scratch as opposed to removing the alcohol from already existing products: “I started by diluting existing spirits to test the effect and then thought that the real joy – which is why I do this job – would come from creating a product from scratch.”
This has also created new flavour opportunities for Borrell to explore: “There are little-to-no rules surrounding this category. It’s why I settled on a base of Calvados and infused it with a unique and complementary combination of pineapple, cherry tomatoes and kaffir lime.”
Willow: an example of a new low-ABV product
Labelling and wording is also a new issue brought about by low-ABV spirits. Borrell’s opinion is that spirits without alcohol are not truly spirits. He explains: “There are now lots of these products aimed at adults. But there’s just too much obfuscation out there concerning production and ingredients. I also just don’t believe in the notion of de-alcoholised ‘spirits’ – because that’s what they’re definitely not.”
Instead, non-alcoholic beverages should be marketed as alternatives to alcohol, Borrell says: “My own passion has been to produce low-ABV spirits that can be enjoyed neat as an alternative to a spirit on the rocks – or, with tonic where the low-ABV % dilutes to create a genuine alternative to a G&T or Aperol Spritz.
“I believe that a small amount of alcohol really helps carry flavour – and taste delivery is crucial in this market. People should be able to enjoy low-ABV drinks, not ‘tolerate’ them or feel that they’re cheating themselves – which can be the case with those over-priced 0% ABV drinks.”
Cooper’s standpoint, however, is that alcohol-free beverages such as beer can be named in the same way as their alcoholic counterparts. It depends solely on their percentages: “Even low-alcohol wine can still be called wine and alcohol-free beer can still be called beer. Within the off-trade, the definition of what a low alcohol beverage is differs between categories, for instance no/low alcohol wine is 0-5% ABV, whereas within beer this is 0-1.2% ABV.”
Fears over low- and non- alcoholic beverages completely taking over the alcoholic beverage sector can be quelled, though, as Cooper explains how low-ABV beverages will become part of a wider range of options for consumers: “Alcohol will not disappear. It will continue to command space on the supermarket shelf as consumers increasingly demand greater choice.
“The growth of no- or low-alcohol allows for more choice for shoppers and consumers who may, for many different reasons, be looking to reduce alcohol consumption.
“Our Homescan Panel data shows that over a quarter of shoppers say that they are looking to reduce their alcohol consumption. And while most are doing this by simply drinking less, some are turning to low- or no-alcohol products.
“It’s not only health-conscious shoppers who are seeking to cut down their drinking – this category is gaining appeal across the board. By offering no- or low-alcohol offerings and widening the choice for shoppers this can only help the alcohol categories success in the long run.”
Gemma Cooper and William Borrell were speaking with FoodBev Media’s Harriet Jachec.
© FoodBev Media Ltd 2023