Brits are turning to booze in lockdown. But sales of low & no drinks are still on the up – so what’s motivating shoppers?

You can’t blame Brits for turning to booze. Society has changed beyond recognition in the space of a month. The news is a rolling cycle of doom. Simply going outside can incur a fine. To make matters worse, you can’t even visit your local to drown your sorrows.

So it’s no surprise shoppers are filling their trolleys with alcoholic drinks. In the third week of March, sales of beer, wine and spirits in the mults were up 67% compared with the same period the year before [Nielsen]. It seems moderation has gone out of the window along with normal life.

Theoretically, it should be a tough environment for low & no-alcohol drinks. Yet one of the industry’s most pervasive trends is still going strong. That’s right: despite the fact Brits are all but confined to their homes amid a global crisis, sales of low & no-alcohol drinks are still on the up. Indeed, as Brits stocked up on the hard stuff in the third week of March, low & no sales also saw a 32.5% uplift [Nielsen].

Although it’s behind the sales growth of alcoholic drinks, it’s still an acceleration of pace for the category, which saw a 13.4% gain to £143m over the full year period [Kantar 52 w/e 26 January 2020]. So what’s going on here? And how does this fit into the wider context for low & no?

 
Low & no alcohol sectors by value   
       
  Value (£m)  % growth market share
Cider   17.3 28.0 12.1
Beer   45.2 40.0 31.6
 Wine   71.4 -6.0 49.9
RTDs   3.8 112.0 2.6
       
Source: Kantar 52 w/e 26 January 2020      
       
  Value (£m) % growth  
Brands 125.5 23.5  
Own label 17.5 -27.4  
  • Value sales of low & non-alcoholic drinks have surged 13.7%, buoyed by the massive influx of NPD. However, the number of shoppers who actually bought into the low & non-alcoholic drinks category fell 6.3%.
  • There’s an upside to this: those that stayed in the category bought more. A lot more. Frequency of purchase grew 14.9% and shoppers purchased 7.2% more per trip.
  • Promotions are playing a key role in upping category spend, says Kantar analyst Rhiannon Hinton.
  • Suppliers have also upped their game when it comes to taste: 11% of low & no beer drinkers now say they choose the drinks because of their taste. In fact this is now the second-biggest motivator. The days of mocking alcohol-free beers as tasteless and bland (mentioning no names) are well and truly over, then.
  • Of the retailers, Waitrose overtrades the category more than any other. Value sales of low & no drinks in the posh supermarket were up 51.5% last year. Tesco, unsurprisingly, has the biggest, commanding 34.4% of all low & no sales.
 

The rise of low & no in recent weeks is a sign of the national mindset. Although booze sales are skyrocketing, let’s not forget that a sizeable proportion of spend has transferred from the out-of-home arena. Even if Brits are drinking more than usual, they haven’t completely abandoned their aspirations of a healthy lifestyle.

“We are speaking to people who are working from home and getting healthier because they’re doing things like yoga, eating healthier, but perhaps hitting the bottle too much and turning to low & no - there is a massive opportunity,” says Alex Carlton, founder of zero-proof spirits brand Stryyk.

It’s an opportunity that was growing well before the coronavirus changed our national behaviour. Over the past couple of years, low & no has grown from a much-maligned niche into a category that justifies serious space in the likes of Tesco. In the past year, sales have grown £17.2m [Kantar]. Admittedly this isn’t a huge increase when placed in the context of mainstream fmcg - after all, there are individual beer brands who rake in more than that on a yearly basis. But the percentage rate of growth is astonishing. Low & no-alcohol beers, cider and spirits were up 40%, 28% and 112% respectively in Kantar figures. Which is not to be sniffed at.

“The category is in its infancy and its scale is unprecedented when you think about where we could be in five to 10 years if people continue to moderate their lifestyles,” says Carlton.

Key to this success, he says, is its relatively recent breadth in appeal to go beyond teetotallers. “It’s like people have become flexitarians - people now understand the benefits of having a daily product that fits into their rituals without excess.”

Then there’s the health angle. “Low & no-alcohol products generally have lower levels of fat and as a result are increasingly favoured because they don’t compromise the aspiration for wellbeing, fitness, and body-beauty by which millennials and generation Y judge themselves and others,” adds Alex Gordon, CEO of cultural insight firm Sign Salad.

“People now understand the benefits of a product that fits into their rituals without excess”

Finally, let’s not forget that it’s cheaper than full-strength booze (most of the time). “While the price of a pint of beer or a shot has risen, salaries have either plateaued or declined. Thus, a round of beers is a significant investment for younger consumers, whereas a round of low & no-alcohol drinks is more affordable,” Gordon says.

In beer and cider, at least, it’s booze-free versions of the premium brands that are making the most progress. The undeniably mainstream Beck’s Blue is still the market leader, with value sales of £16.6m, but its sales are declining at 6% as competitors such as Heineken and Peroni raise the stakes [Nielsen 52 w/e 25 January 2020].

Indeed, Heineken 0.0% was the fastest-growing drink in the entire low & no category last year, shooting up £6.3m to £14.5m. Peroni’s alcohol-free Libera beer, meanwhile, was the second fastest, adding £3.3m in its first full year of trading.

Craft brewers are getting in on it too. BrewDog, notably, has boosted its alcohol-free range with a 0% version of its bestselling Punk IPA - which after just months on the market is already the 10th best-selling low & no beer, with sales of £1.7m [Nielsen].

Smaller independents are also churning out exciting NPD - the likes of Big Drop Brewing and Infinite Session, for instance. However, there is a note of caution here: most are yet to make a serious financial dent.

“It will be interesting to see whether any craft brands manage to make a splash as for now shoppers are flocking to more recognisable brands - especially as we are also seeing the big four really manage to capitalise on the trend by utilising promotions,” says Kantar analyst Rhiannon Hinton.

Plus, low & no-alcohol beers “can easily be stocked alongside their alcoholic counterparts”, says Budweiser Brewing Group’s head of category management Sunny Mirpuri. Which lends itself particularly well to spin-offs from the big names.

Of course, what works in beer doesn’t necessarily translate to other areas of the market. Over in spirits, the picture is very different. Rather than mimicking their branded counterparts, newcomers like Seedlip and Ceder’s are positioning themselves as a new breed of botanical distillate.

So far it seems to be working. The two brands (owned respectively by Diageo and Pernod Ricard) account for the top five best-selling SKUs in the subcategory. Seedlip’s Grove 42 is leading the pack, having quadrupled sales to £2.4m [Nielsen].

That’s despite unashamedly high prices: at the time of writing, a bottle of Seedlip Grove 42 was £22 in Waitrose. Interviewed by The Grocer late last year, Seedlip’s founder Ben Branson said he didn’t need to justify that price. “We need to educate rather than it be about justification. I can tell you that it costs more to make a bottle of Seedlip or [sister brand] Aecorn than most alcoholic products on the market,” he said.

In fact, he went so far as to suggest that lower-priced, newer entrants to the market were “a concern for the consumer”. “It’s a fragile category and we want people to have the best experience possible,” he argued.

Stryyk’s Carlton agrees on the need for quality. But for him, that isn’t confined to the Seedlip way of doing things. He believes there’s room for brands such as his, which aim to “mirror” full-strength tipples. “We keep iterating our ingredients and recipe to get closer to the spirits,” he says. The omens are good: Stryyk has sealed a deal to launch into a major mult over the coming weeks, and the brand’s ‘Not Gin’ is already the 10th best-selling non-alcoholic spirit on the market without any supermarket presence [Nielsen].

Pernod Ricard is another player diverging from the tried-and-tested Seedlip proposition. The Beefeater owner is venturing into relatively unknown territory for the low & no category: dark spirits. It launched the 0% Celtic Soul last year, claiming the category lacked “a compelling dark spirits offering” at the time. It’s currently the eighth-highest selling non-alcoholic spirit with value sales of £168k [Nielsen].

Scotch giant Whyte & Mackay, too, attempted to crack the puzzle, but without removing booze from the equation altogether. In 2019 it claimed an industry first with Whyte & Mackay Light, a 21.5% abv spirit drink aimed at whisky fans who are seeking a lighter tipple.

 
Top ten low & no alcohol brands   
       
    Value (£m) % growth
1 BECKS BLUE 16.6 -6.0
2 HEINEKEN 0.0 ALCOHOL FREE 14.5 76.7
3 BAVARIA 0.0% 5.8 -7.0
4 EISBERG 5.7 -14.5
5 BREWDOG NANNY STATE 5.2 14.0
6 KOPPARBERG MIXED FRUIT ALCOHOL FREE CIDER 4.0 15.6
7 KOPPARBERG STRAWBERRY & LIME ALCOHOL FREE CIDER 3.6 37.2
8 PERONI LIBERA 0.0% 3.3 13,992.0
9 ERDINGER ALKOHOLFREI 3.1 12.6
10 BUDWEISER PROHIBITION BREW ALCOHOL FREE 2.8 -19.5
       
Source: Nielsen 52 w/e 25 January 2020      
  • Heineken has played a blinder. Its 0.0 lager has racked up the biggest gain of the year of any low or non-alcoholic drink, adding a cool £6.2m on volumes up 69.7%. If it continues on its current trajectory, it could well knock the long-standing Beck’s Blue from the top spot over coming months.
  • Indeed, while Beck’s owner Budweiser Brewing Group may dominate the full-strength beer category, its alcohol-free beers have struggled. Prohibition Brew, launched in 2017, has lost almost a fifth of its value – that’s the worst performance of any brand in this report.
  • BrewDog’s Nanny State ale may be the fifth-bestselling low & and no brand, but the recently launched alcohol-free (or ‘AF’) version of its core Punk IPA is quickly gathering steam, with £1.6m in value sales under its belt already.
  • Seedlip’s Grove 42 is right on the cusp of smashing into the top 10 with £2.4m in sales. However, if you were to combine the value of its three top SKUs – Grove 42, Spice 94 and Garden 108 – Seedlip would be halfway up the rankings already. Its total sales of just over £5m would make it bigger than the likes of Peroni. Watch this space.
  • Eisberg was the only wine to make the top 10. In fact, despite its £960k loss, the Halewood brand is still a far stretch bigger than its closest competitor, Black Tower, which has also suffered a decline of 6.4% to £2.6m over the past year.
 

Wine decline

So it seems opportunity can come in many forms. But amid all this growth, there’s a wine-shaped elephant in the room. Low & no wine was the only part of category to see a decline. Its 6% drop - equating to £4.5m - seems far more than a marginal blip.

Six of the UK’s top 10 biggest low & no wine brands are suffering. Market leader Eisberg, for instance, is down 14.5% to £5.7m, while Gallo is down 12.6% to £2.3m [Nielsen].

“Wine drinkers would rather swap out alcohol than compromise with a low-alcohol alternative”

For Kingsland Drinks head of marketing and product management Jo Taylorson, that’s down to taste. “One of the biggest challenges facing wine in alcohol-free terms is that it is a more difficult product to make in a way that replicates the taste profile of standard wine,” she says.

However, Dan Harwood, head of wine education at Eisberg owner Halewood Wines & Spirits, says this decline is largely thanks to the ‘low’ portion of the market (wines up to 5.5% abv) rather than the ‘no’.

“Wine drinkers would rather choose to swap out their alcohol completely for a few nights a week than compromise with a low-alcohol alternative,” he says.

The figures back up his point. Because completely alcohol-free versions of big brands are, slowly but surely, gaining traction. Hardys and Lindeman’s, for instance, both debuted in the category last year and pulled in respective gains of £598k and £500k [Nielsen].

The same is true of sparkling wines: Nosecco Edizione Speciale and Freixenet’s 0.0% prosecco both racked up strong £1.2m gains to hit £2m and £1.6m respectively. In fact, they were the two fastest-rising low & no wines last year.

Other players are going the opposite way. Yellow Tail, for instance, is rolling out lower-alcohol wines at a higher abv of around 8.5%. Its ‘Pure Bright’ pinot grigio rolled out into Tesco in the autumn, as the brand announced it had developed a four-strong range spanning sauvignon blanc, chardonnay and rosé SKUs which were “being investigated for launch” in numerous markets. Pierre Chavin is doing something similar.

As the UK social distancing measures continue, consumers may just appreciate that extra abv. But for the moment, the thirst for lower proofs shows no sign of abating. So here’s to a lockdown of moderation.

William Reed - the publisher of The Grocer - has launched an exhibition exclusively for the low & non-alcoholic drinks sector. For more information visit low2nobev.com.

 

Innovations in low & no 2020

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