The emergence and growth of the zero alcohol category over the past few years, spurred on by campaigns promoting temporary abstinence from alcohol such as Febfast and Dry July, is providing P&C retailers with the opportunity to capitalise.
According to IWSR Drinks Market Analysis, 31 per cent of Australian consumers now buy no-alcohol products, with volumes of non-alcoholic beer, cider, wine, spirits, and RTDs increasing by around 60 per cent in 2022.
David Andrew, Founder of Naked Life, said it is still very early for non-alcoholic beverages in P&C, so it’s a matter of discovery for most people in both category entry and purchase habit.
“We’ve seen that RTDs and beer are leading the way. Trusted brands like us as a market leader in RTDs and Heaps Normal in craft beer, along with brand extensions from popular mainstreams such as Great Northern, that represent quality and known flavour delivery, are leading the market. People are already trying something relatively new, so security in the brand is important.”
Jeff Howlett, General Manager of Asia Pacific at Australian Vintage Limited (AVL), said they are seeing younger consumers embracing non-alcoholic wines as they are looking for more choice in this space to form part of their healthier lifestyles.
“As the consumer trends younger, we are seeing varietals such as Sparkling Rose, Moscato and Pinot Grigio increase in sales too.”
Howlett believes there is an opportunity for a new brand appealing to this younger demographic to enter the market.
“There is an opportunity for a disruptive, vibrant, and more appealing wine brand to enter the market to meet the needs of younger consumers. We have a new brand, Not Guilty, launching later this year, which aims to do exactly that.”
While the broader popularity of non-alcoholic beverages is evident, making consumers aware of the category’s availability in the P&C channel is incredibly important.
Andrew sees P&C as a key step for Naked Life Spirits to bridge the awareness and engagement to the new non-alcoholic space in mainstream Australia.
“While supermarkets have helped, the broader exposure to consumers (non-lead grocery buyer) tied to the increasing food and take-home offering of premium P&C will help normalise the ‘grab one for tonight’ habit that non-alcoholic beer and RTDs are increasingly filling.”
This is evident in Naked Life’s recent launches.
“This season’s new range of Mojito, Sangria, Cosmo and Espresso Martini have all been well received, with Mojito and Cosmo providing the clear leaders in the P&C channel.”
Howlett echoes Andrew’s sentiments and believes the biggest challenge is creating awareness of the category within the channel.
“Consumers are not only unaware of the zero-alcohol category but also unaware that you can purchase these products at convenience stores and petrol stations.”
Despite the lack of awareness by the consumer, the channel is very important to AVL, and as the category continues to grow, this has been reflected in the sales within P&C, with their strongest performers being the McGuigan Zero Shiraz, McGuigan Zero Sauvignon Blanc, and McGuigan Zero Sparkling.
“People are going to continue to reduce their alcohol intake and so it makes sense that these products are available in more than just the bottle shop. A lot of consumers are grabbing these products on-the-run too and so it’s only natural that they are available in these channels.”
Roland Thiemann, Marketing and Innovation Lead, and Simon Hancock, Sales Director, both from Modus Operandi Brewing Company, said that P&C plays a key role in expanding its non-alcohol range NORT into alternate channels beyond liquor and grocery.
“The P&C landscape continues to change, and retailers are having to embrace new and emerging categories. One such category is zero/non-alcohol. We have seen strong growth of this category in liquor and grocery over the past three years, and that has started to pick up in the P&C channel too.”
Thiemann and Hancock state that the category is forecast for significant growth over the next five years, which will see alternate channels benefit and that building awareness to drive conversion is a key opportunity for P&C as consumption grows.
While increasing awareness is critical, so is ensuring retailers are effectively positioning non-alcohol products.
Howlett says that AVL sees success when key supermarkets and retailers implement dedicated zero zones as a tactic to help consumers better navigate and engage the category.
“Previous trials of off-location stands have shown a 150 per cent increase in sales. 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 Febfast, Dry July, healthier lifestyle, mid-week drinks would also help, as well as in-store tasting programs to help support.”
Andrew says it is important that retailers create a destination that cross sells to the customer, as often consumers will have more than one person in the household reducing or abstaining.
“As a new category, the habits need to be built side by side with simple availability knowledge for the consumer. This, combined with understanding who and what the non-alcoholic buyer is consuming, will help build a better, more attractive offering in stores. All of this however takes time, and in most cases, space and good category strategy, which isn’t always plentiful in P&C.”
Backing traditional flavours and leading brands that can provide quality tasting products, which people will repurchase is also crucial, says Andrew.
“There are a lot of new entries whose taste is not up to scratch, which damages the category as a whole by providing a disappointing experience to new consumers.
“Taking that on board, back leading brands like ourselves, which can offer that range while keeping the fridge uncluttered or hard to decipher for new consumers.”
This article originally appeared in the April/May issue of Convenience & Impulse Retailing magazine, which can be read in full here.