Written by Claire Hibbit for the April/May edition of Convenience & Impulse Retailing magazine.

As the petrol and convenience (P&C) landscape continues to change, retailers are having to embrace new and emerging categories.

One such category is zero alcohol.

Non-alcohol drinks are growing steadily in Australia as the ‘sober curious’ movement continues to gather pace among Australian consumers.

In fact, the category grew +2.9 per cent in 2020/21, according to the 2021 IWSR Drinks Market Analysis’ No- and Low-Alcohol Strategic Study.

According to the study, the emergence of the ‘sober curious’ consumer will contribute to total volume sales of no/lo (no and low) alcohol products increasing globally by 31 per cent by 2024.

“In Australia, we’re seeing the no/low category continue to grow in terms of both value and number of products available,” explains Angela Flynn, Marketing Manager, Giesen Group.

“It’s good to see more brands recognising this is a category that’s here to stay and that consumers deserve to have premium options.”

Untapped potential

Globally, according to IWSR, low-alcohol wine accounted for 66 per cent of the no/low category in 2020 and had more than double the value growth of the non-alcohol segment.

However, for Australian wine (consumed globally), non-alcohol, accounted for 86 per cent of consumption and had more than three times the growth of low-alcohol wine.

According to Jeff Howlett, General Manager ANZ, Australian Vintage Limited (AVL), McGuigan Zero, which is ranged in more than 800 independent P&C outlets nationwide, is performing strongly in Australia.  

“In Australia, the non-alcoholic wine category continues to accelerate, with sales doubling over the past year as new consumers enter the category each month,” explains Howlett.

“One in two Australians are now looking to moderate alcohol consumption and one in four are turning to non-alcoholic wines to do so.”

AVL is forecasting the total non-alcoholic and the non-alcoholic wine category to continue its growth trajectory over the coming years as the moderation trend continues and more consumers enter the category.

“Currently, the brands in this space appeal to older consumers so there is massive opportunity for more vibrant and appealing brands to enter the market to meet the needs of younger consumers,” says Howlett.

For Naked Life, famous for its sugar-free sodas and iced teas, its non-alcoholic cocktails are just entering the market, but are gaining traction.

“The P&C channel poses substantial opportunity for the Naked Life brand, as our products are often consumed on the go,” explains David Andrew, Founder and CEO of Naked Life.

“Even with our non-alcoholic drinks, having a (non-alcoholic) cocktail can be just as well consumed in the car by consumers.”

According to Andrew, Naked Life’s drinks have been gaining “year-on-year distribution growth and outperforming the year before”.  

The Giesen Group is also investing heavily in the zero-alcohol space, recently investing more than one million dollars in specialised spinning cone technology.

Its Giesen 0% range now includes four varietals: Sauvignon Blanc, Pinot Gris, Rose and most recently, Merlot.

Flynn says the investment is in response to the growing demand for the category, with research showing that Australians have a higher intent to purchase* low and no alcohol products compared to the UK, USA, and Canada.

Younger consumers are also more likely to purchase a non-alcoholic wine with three out of 10 consumers aged between 18 to 34 basing their purchase on health and wellbeing**.

Building category awareness

While the zero-alcohol category remains in its infancy, supermarkets, and P&C operators both locally and globally, are also taking notice of this growing movement.

“There is still significant growth opportunity as people start dipping their toes into the non-alcoholic product offering,” explains Andrew.

“But we face a challenge of being an unknown alternative. The key challenge will remain to encourage consumers of that initial taste of the product as we know that is the barrier.”

Howlett says in the UK, AVL has seen success with key supermarkets and retailers implementing dedicated ‘zero zones’ as a tactic to help consumers better navigate and engage the category.

“Recent trials of off-location stands have shown a 150 per cent increase in sales,” notes Howlett.

The Dunn Group, which first launched zero beer and wine in its stores 18 months ago, has given the category significant shelf space. Its zero alcohol zones include Heineken Zero, Carlton Zero, and McGuigan Zero Alcohol wines.

However, while consumers have embraced the product, Dunn says more industry support is needed from major liquor brands.

“We are seeing smaller craft style brewers coming into the zero market; however, I don’t think they see us as a genuine retailer to sell their products even though our customer counts and foot traffic would far exceed most bottle shops.”

AVL’s Howlett says education is still needed for retailers and consumers that zero-alcohol wine is actually a wine with alcohol removed, and not a juice.

AVL uses the latest spinning cone technology to remove the alcohol from its zero alcohol products. The technology uses a lower temperature than other techniques in the category and is therefore ‘gentler’ on the wine retaining more varietal fruit character, aromatics, and flavour.

Flynn says with growth in the segment, consumer education around the different methods of creating low and no alcohol products is becoming more important.

“This is key to understanding the quality differences between products and can factor into consumer decision-making as people seek options that are holistically better for them,” says Flynn.  

“Brands that will ultimately dominate in the no/low space are those that are successful in navigating the barriers of taste, price, pack format, availability, and overall consumer education, which is our focus in 2022 across all of our alcohol-removed brands.”

Product development  

According to Andrew, 2022 is shaping up to be a big year for Naked Life, with innovation coming in the next few months that is “perfectly aligned with the P&C channel”. 

“We have very exciting new non-alcoholic cocktail flavours coming in, as well as expansions into new categories like sparkling nootropics, functional hot chocolates, boba tea, and premium mixers.”

For Naked Life, the opportunity for zero alcohol products lies in new consumption occasions.

“Where alcohol is normally not suitable, for example when driving, or still need to work, or a mid-week drink, as well as the role it can play together with alcoholic drinks.”

AVL Wines is also preparing to release new products. It will launch a new zero-alcohol range under the Tempus Two brand, aimed at millennials with varietals such as Moscato and Pinot Grigio.

The company also recently launched two new line extensions, McGuigan Zero Sparkling Rose and McGuigan Zero Red Blend.

Earlier this year Giesen launched Giesen 0% Merlot, which was available first to the convenience channel. The group is planning to launch a smaller format Giesen 0% Sauvignon Blanc.

Flynn says there’s potential for range extensions under Giesen Group’s Ara wine brand, which currently offers Ara Zero Sauvignon Blanc. The group is also looking to launch an alcohol-removed varietal under the Ara Zero label in Spring 2022.

Promotions key to generating trial

According to Andrew, zero alcohol consumers are looking for deals or packaged offerings and remain open to trying new things.

“We have noticed that consumers are looking more and more frequently for a ‘whole’, ‘one size fits all’ solution to everyday demands. They are looking to combine a meal on-the-go with a drink.”

For retailers looking to capitalise on non-alcoholic beverages, Brouwer advises to engage in promotions that generate trial.

Howlett says giving the category space and more visibility puts the customer first and ultimately helps to drive sales.

“Using messaging around these dedicated bays to speak to the relevant occasions such as Dry July, healthier lifestyle, mid-week drinks would also help, as well as in-store tasting programs to help support.”

For those trialling zero alcohol products, Dunn encourages retailers to place items in a prominent location.

“Like a lot of products across our stores, not everything sells everywhere. Some of our sites that are barely five kilometres apart have products that sell well, and in other stores we struggle to move them and that’s okay.

“With zero alcohol, if you think it may work you need to give it the space so your customers can see it. Your customers already know you sell Red Bull and Coke so place zero somewhere strong. Once it gets traction you can relocate it.”

Reigniting the alcohol debate

While the Australian Association of Convenience Stores supports the sale of non-alcoholic beverages through P&C, AACS CEO Theo Foukkare says the biggest opportunity lies in the deregulation of packaged alcohol.

Foukkare says AACS has been working through the differing state legislation, developing its stakeholder engagement plans, and liaising with various government representatives in recent months, adding the industry body “has made a lot of progress in this space”.

Dunn believes the industry needs to treat zero alcohol products as a window of opportunity in the face of declining tobacco sales.

“As cigarette and tobacco sales continue to decline in the coming years, our industry needs to replace this category with an alternative. Our business has developed our own food and coffee brands as many others have in an effort to continue to build sales while one of previously strongest categories declines.”

He believes the growing presence of zero alcohol beverages in the convenience channel can also help re-start the conversation around the sale of alcoholic drinks in P&C.  

“Some P&C businesses haven’t found an alternative [to tobacco] and many will find continued growth and profitability hard to achieve if our industry is not given the opportunity to sell packaged beer and wine in the next five to 10 years,” he explains.

“It is more important for us an industry to gain government approval and access to retail these alcohol products, instead of focusing on EVs and plant-based hamburger patties.

“We retail cigarette and lottery products across our industry, which is accepted by government and consumers as convenience, so the argument against P&C not having alcohol products in the modern retail environment simply does not make sense.

“We need the alcohol suppliers, the large private fuel retail groups, and major oil companies to a step up and demand that this issue is talked about.”

*https://www.wineintelligence.com/intent-to-purchase-a-wine-that-states-it-is-lower-in-alcohol-is-higher-in-australia-and-of-interest-to-around-a-quarter-of-drinkers-in-the-uk-us-and-canada/

**https://www.wineintelligence.com/key-motivations-for-purchasing-lower-alcohol-wine-are-the-perceived-health-control-and-taste-benefits/

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1 Comment

  1. Interesting article

    like to know who is distributor of zero alcohol drinks
    for convenience store and super markets

    need more information so we can source products

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