Wholesalers need to take advantage of the low- and no-alcohol category, says Katie Jenkins
Despite dry January being out of the way, low- and no-alcohol beverages continue to be a growing trend. In a short space of time, the value of the category has grown rapidly, with more than £43m spent on low- and no-alcohol beer in the off-trade last year – a 28% annual increase.
Alcohol consumption in the UK is falling, driven by growth in teetotalism and mindful drinking by the masses, as well as a changing population mix. This has led to to a rise in alcohol-free drinking occasions.
The growth of low- and no-alcohol drinks is highest in the on-trade, which creates a massive opportunity for foodservice wholesalers, especially when you consider that one in four visits to pubs is now alcohol-free.
However, recent research from KAM Media found that only half of the customers are satisfied with the range available in pubs and restaurants. This leaves room for improvement – something wholesalers can help with.
The research identified that many of the outlet owners are excited about the low and no opportunity, with two-thirds said to have increased their range of brands in 2019. Meanwhile, nearly three-quarters of them see the growth of category as an opportunity to upsell customers to more premium drinks.
Being a relatively new category, many pub owners also told us that they want further advice on how to better display and communicate their low- and no-alcohol range. In fact, with more than two in three licensees wanting extra support with how to better satisfy these customers, it’s a great opportunity for wholesalers and suppliers to facilitate collaborative growth.
The opportunity doesn’t stop at foodservice. Convenience wholesalers are also set to benefit. More than a third of UK adults have consumed a low- or no-alcohol drink at home, and the figure nearly doubles when you analyse Generation Z and Millennials specifically.
With one in 10 UK adults saying they have consumed a low- and no-alcohol variant with their lunch at home, and nearly one in five with their evening meal, it can’t be long before they appear as part of a meal deal.
According to The Retail Data Partnership, unit sales of non-alcoholic beer in convenience stores has doubled in the past six months, and distribution has trebled, albeit from a very low base. However, the top five SKUs accounted for more than 80% of non-alcoholic beer sales.
However, pricing can be a sore point, with many assuming that consumers will not be happy paying a premium for a non-alcoholic drink.
Yes, 63% of consumers do expect low and no variants to be cheaper than alcoholic equivalents, ideally about 20% lower. But only 13% say the current prices actively put them off purchasing. Interestingly, Generation Z and Millennials are much more accepting on price.
With more than one in three adults intending to cut down their alcohol consumption in 2020, the consumer demand for this new category is set to grow as new, quality brands are brought to market.
The low and no drinking occasion is not going to disappear, and wholesalers need to ride this wave and take advantage.
Katie Jenkins is the marketing director of KAM Media