The drinks industry has taken a hit over the last two years. Manufacturers and operators have had to adapt due to the pandemic and the rising costs of raw materials, supply chains, and energy. In addition, consumers look for sustainability, smart drinking, low or non-alcoholic products, and healthier ingredients.The impact of the current squeeze on consumer spending has been mitigated by those who have not spent during the pandemic and are now looking at spending more on experiences they’ve missed out on. For example, some missed out on their first drinking experiences due to the lockdown.Premiumisation is seeing considerable growth, with consumers stating that premium products taste better and smoother, and the quality of ingredients is higher. In addition, some consumers believe premium alcohol brands are purer and thus help avoid bad hangovers. Behavioural science-based research shows an inherent perception that promoting a product as high quality means it will have a better taste.Richard Shotton, the author of ‘The Choice Factory’, stated at the Innovate 2.0 Virtual Conference (March 2022) that “there is a huge body of work that suggests that what we experience in terms of taste and things is what we expect to experience. So if you set people’s expectations positively, they will interpret the same taste better than if you have no pre-setting of their expectations.”What does this mean for companies?There’s room for innovation, but taste remains important when deciding whether a product is premium. Investing in branding without considering better-tasting ingredients and formulas doesn’t guarantee success.The era of the value-conscious consumer, driven by the cost of living crisis, means they are looking for value for money when purchasing alcohol. Forty-nine per cent of those responding to Vypr’s nationally representative research among a sample of 5,000 British adults stated that they looked at price in terms of value, offers and size when choosing what alcoholic brand to buy. Only 8% that they would look at low-calorie or carbohydrate versions. Quality over quantitySo, if the cost of living impacts every household, why is premiumisation rising?First, families are cutting back on other items in their shopping baskets. Only 37% of consumers stated that they would cut back on alcohol purchases compared with 57% reducing their spending on eating out or ordering takeaways – reinforcing that alcohol in the home hasn’t been as affected.
Only 37% of consumers said they would cut back on alcohol purchases: whereas 57% pledged to reduce spending on eating out or takeaways.While consumers are cutting back on daily purchases, they aren’t necessarily looking at cheaper options for alcohol overall. Instead, 46 % of consumers were buying more premium products, highlighting that while other areas of food and drink are switching to lower-cost and value brands, premium alcohol is managing to weather the storm a little better.Behaviour does change, and deeper impacts of the cost of living, due to significant energy price rises, may see consumers begin to switch to other brands, such as discount retailers’ brands at a lower price point.The health-conscious consumerThe ‘NoLo’ market has been growing significantly beyond the beer sector with new products launched in the wines, spirits and mixed drinks sectors.54% of consumers have bought alcohol-free versions of alcoholic drink brands, with health, both physical and mental, being a driving force for adoption by consumers. Along with the apparent health benefits, 38% of consumers choose alcohol-free versions for the taste.As a result, brands will need to continue investing in this sector as they continue to develop NoLo versions of their mainline products.Green brands and productsAlthough consumers are focused on the cost of living, they are interested in the background and sustainability of brands. A small change from ‘Premium Recipe’ to ‘Responsibly Sourced’ saw an increase in purchasing intent from 78% to 91 %. However, ‘tick box’ sustainability is seen as negative.What’s next?Along with the sustainability angle, many consumers pointed out that they’d be more likely to favour a brand with an authentic story and ethical values. Clear brand values and presentation can give the consumer confidence that the product is a good one, even if not marked as premium. This view can be seen in the uptake of craft beers from smaller producers, as these brands tend to have more character and backstory.
Ben Davies, Vypr founderInnovation and consumer-driven evidence will be the pillars of driving success and product development.Agile innovation and NPD methodologies that increase customer testing and validation will create the pathway for the beverage industry.In addition, real-time insights will become ever more important as behaviours frequently change as external pressures such as the cost of living, climate change and legislation around food and drink continue.Vypr compiled research quoted through a nationally representative sample of 5,000 from its panel of 65,000 consumers. More information here: https://vyprclients.com/the-future-of-the-alcoholic-drinks-industry-2/ .
As The No-Alcohol Category Grows, One Brand Sees 454% Growth
Giesen’s 0% wines are dealcoholized via a spinning cone unit that gently distills wine into three … [+]
Giesen Group
While there are plenty of reasons for skipping alcohol, be it for an evening or a lifetime, there’s one thing that’s for certain: taste should never be sacrificed. Producers have grown wise to this and over the last few years a large crop of alcohol-free wines offer (non)drinkers a wide range of options. Now, there are crisp, bone-dry rieslings made by legendary Alsatian producers, crunchy zweigelts, soft Champagne-style bubbles and aperitivo-style vermouths, all sans alcohol.
Recently, New Zealand’s Giesen reported a whopping 454% growth in shipments to the US in fiscal year 2022. The strong performance highlights growing consumer demand for quality alcohol-removed wines.
Giesen’s 0% wines are dealcoholized via a spinning cone unit that gently distills wine into three layers: aroma, body, and alcohol, removing the latter in the process. Currently, they offer a wildly popular sauvignon blanc, a rosé, a red blend, and a Pinot Grigio. A riesling will follow in fall of 2022.
The sauvignon blanc is the top-selling premium tier (priced over $12) wine in the United States, according to NielsenIQ. President Mark Giordano of Giesen Group importer Pacific Highway Wines notes “the Giesen 0% rosé is the number two selling nonalcoholic rosé (Nielsen, 4 weeks ending 6/30/22). We anticipate a continued fast pace and exciting success with the rest of the line extension over the coming months.”
Late last year, NielsenIQ’s SVP of Account Development, Kim Cox noted there was a 315% increase in online non-alcoholic and low-alcoholic beverage dollar sales in the latest 12 months versus a 26% increase in alcoholic beer, wine and spirits e-commerce sales. Today’s numbers (week ending 6/30/2022) noted that non-alcoholic wine sales are up 22% over the last 52 weeks.
Online beverage marketplace Drizly announced that the 4th of July weekend of 2022 saw nearly twice as many non-alcoholic wine and beer sales as compared to 2021.
What’s the draw? Not a staunch shift to sobriety, but a change in mindset. For ages, the phrase ‘I am not drinking alcohol’ was a definitive code for sobriety, pregnancy, or designated driving. Now, the choice is more mindful. Perhaps you have to be up early, maybe you just don’t feel like it, maybe you’re pacing yourself — a second of sobriety doesn’t require a reason.
The category is only going to expand. A recent Hinge survey of Gen-Z users found that 75% of users stated grabbing drinks was no longer their go-to for a first date Gen-Z singles are 46% more likely to prefer first dates that don’t involve drinking, compared to the millennial generation before them. Gen Z aside, over half of hinge users preferred non-alcoholic dates — “they want to be in the right state of mind while getting to know their potential partner.”
Nielsen found that 66% of millennials are actively working on lowering their alcohol drinkers, and a whopping 78% of non-alcoholic beverage buyers are purchasing alcoholic beer, wine or spirits.
Part of the category’s growth is fueled by the new diversity. Up until a few years ago, the number of non-alcoholic SKUs was relatively limited, restricted to a few no-proof beers and a couple of brands of alcohol-free wines. Now, there are dozens of brands making over a hundred different options. (Particular favorites include Leitz, Acid League, Blurred Vines and Studio Null, in addition to Giesen.) Likewise, non-alcoholic bottle shops have become hotspots for the non-alc — there’s Sipple in Houston, Awake in Denver, and The Open Road in Pittsburgh. Boisson’s has five different locations across New York and one in Los Angeles.
“This is an opportunity to show consumers that craft and premium alcohol-removed wine are available in many styles,” says Giesen Group Chief Winemaker Duncan Shouler.
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Researchers investigate how to produce premium, zero-alcohol wine as demand surges beyond Dry July
Winemakers are working to capitalise on the growing popularity of zero-alcohol wine, as more Australians choose to curb the booze beyond Dry July.Key points:
- Like meat substitutes, wine drinkers can be turned off alcohol-free alternatives because it doesn’t taste the same
- An Adelaide researcher has been investigating how to replicate the wine experience without the alcohol
- Alcohol-free wine is a growing space for winemakers and restaurants
However, one of the biggest turn-offs for wine drinkers has been that alcohol-free versions simply do not taste the same.Australian Wine Research Institute research scientist Wes Pearson has spent the past two years conducting sensory research on how to make the flavours and sensations of non-alcoholic wine as similar to the alcoholic version as possible.Mr Pearson said while no or low-alcoholic beer had tasted close to the full-strength version for some time, wine had lagged.He said the reason for that was because there were fewer ingredients to play with in winemaking.”You’re working with grapes, fermented grape juice,” he said.But Mr Pearson said non-alcoholic wines were a lot better than they used to be, especially sparkling and white varieties.”They often have a tiny bit of sugar in them, and they’ve got bubbles in them, so all of those things can add to that experience of replacing the alcohol,” he said.”So those are good tools that you can work with.” Wes Pearson is researching how to improve the likeness of non-alcoholic wine.(ABC News: Evelyn Manfield)Mr Pearson said red wine was particularly tricky to replicate because of its typically higher alcohol concentration.”That would be the holy grail, to make a shiraz with no alcohol in it that tastes like a traditional shiraz,” he said.To make alcohol-free wine, producers typically remove the ethanol through a spinning cone technology, which extracts alcohol using steam.But removing alcohol adds an extra step and therefore cost, which consumers can find hard to justify.So, to keep the cost down, producers often use cheaper grapes, Mr Pearson said.”If you’re starting with poor materials you’ll end up with a poor finished product,” he said.He said his research would be expanding at the end of the year to look at what grape varieties worked best and what could be done on the vineyard to help the alcohol removal process later on.Mr Pearson said the research would help smaller Australian wine producers get the insights needed to make the best products possible.Non-alcoholic wines rising in popularitySteering this research has been the wine industry’s desire to improve their non-alcoholic offerings due to increasing consumer demand.Wolf Blass, in South Australia’s Barossa Valley, has won plenty of awards for its red wines.
Kerrin Petty says customers are keen to try non-alcoholic wines, as long as the flavour is there.(ABC News: Evelyn Manfield)Chief Supply Officer Kerrin Petty said zero-alcohol wines were a growing space for the company.”A third of our consumers would choose low-alcohol wine if they could find it and the flavour was at the quality level they expect,” he said.”So that’s really the chase for us, to make sure the quality that we’re delivering is in line with our consumers’ expectation.”Mr Petty said feedback from consumers indicated people wanted a non-alcoholic beverage, rather than a soft drink, that they could consume on a special occasion.”So, when people are out socialising and other people are drinking and they don’t want to drink for whatever reason, that alternative is just important,” he said.Diners driving demand for non-alcoholic drinksLeigh Street, in Adelaide’s CBD, is a popular dining strip filled, but not all potential visitors to the street want to drink alcohol.Shobosho, a restaurant and bar on Leigh Street, has potential customers contacting the restaurant ahead of time to enquire about their non-alcoholic offerings.Venue manager Charlotte Martin said the restaurant had expanded its zero-alcohol wine list to five different options, along with mocktails and non-alcoholic beers, in the past six months.”We really noticed people asking for it a lot more so we decided to start exploring those options and seeing what we could provide for people,” she said.
Low-alcohol red wines can be challenging to produce.(ABC News: Evelyn Manfield)DrinkWise chief executive Simon Strahan said research from his organisation showed there were a range of reasons people were opting for non-alcoholic alternatives.”Certainly, people want to be able to drive, and we found around about 28 per cent of people use that as their primary reason,” he said.”But overall, we saw people wanting to cut back on alcohol intake, have lower calorie options, lower carb options [and] making sure they could wake up the next day and feel refreshed.”It seems unusual, but 18-to-44-year-olds are twice as likely to consume zero and low-strength alcohol products, versus those aged over 45, based on the DrinkWise research.”Pivot after Chinese tariffs imposedAustralian Wine and Grape chief executive, Tony Battaglene, said the push to diversify the industry’s products was also important because of how punishing the Chinese tariffs had been.”It’s been a really difficult time,” he said.”So, the last two years, when we lost that $1.2 billion market overnight, people have rapidly looked to try and diversify markets … [to] Korea, Thailand and Hong Kong.”But he said no-alcohol and low-alcohol products were also a significant part of diversifying.”By far the biggest growth category for consumers has been no and low-alcohol and we’re seeing young consumers, in particular, who are moving towards these options,” he said. .


