How can alcohol brands respond to consumers drinking less than ever?

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The younger generation are drinking less alcohol than ever before.

Today’s consumers are more health conscious than ever before and seeking out healthier product alternatives as result. With greater awareness about the health risks of heavy drinking, inevitably consumer attitudes and buying decisions towards alcohol are changing.

In the UK, a fifth of consumers are choosing not to drink alcohol and over 41% are looking to moderate their overall alcohol intake, by lessening the volume consumed while raising the quality or by turning to NoLo (No and Low alcohol) products.

Overall, this shift in consumer mindset will drive a pivotal change that will continue to shape the alcohol market in the future. Here are five predictions for the future to help your brand stay ahead of the trend:

Quality is king

Millennials and Gen Zs are drinking less and would rather pay more for quality over quantity. Expect a surge of brands launching new products or repositioning tired ones in an effort to capitalise on these changing demands. The challenge that NoLo products will face is that consumers may not be prepared to pay a higher price or even the same price for a NoLo product as they would a regular strength alcoholic drink.

Brands will have to justify the NoLo product’s price point and unsurprisingly we will see brands in this segment leaning towards a premium proposition in order to do this. NoLo brands may not primarily communicate the absence of alcohol, but turn their attention to communicating the unknown ingredients, provenance and the complexities of the production process.

A time and a place

Expect to see NoLo brands venturing into new and untapped consumption moments to help set themselves apart from their competitors, while educating the consumer on how and when to enjoy their product. Before occasion strategies are developed, marketers will need to understand why their target consumer choose (or may choose) to moderate their alcohol consumption and then the occasions that they will consider switching to a NoLo product.

Take Millennials who reportedly choose not to drink alcohol because of their career ambitions, perceiving alcohol as a potential inhibitor to their professional success. This poses an opportunity for NoLo brands to tap into the after-work drinking occasion by marketing themselves as an alcohol-free alternative, which will ease the consumer tension of wanting to be social in the week, without risking a hangover.

Mix it up

Fever Tree carved out a space for themselves in a well-established and highly competitive category, by spotting a gap for a high-quality tonic to go with a premium gin. Until then, nobody realized that the gap existing. Expect to see consumer appetite for the type of product that helps facilitate a quality drinking experience increase at a significant pace.

Enter a new breed of healthy mixers developed with the purpose of pairing with both NoLo and quality-centric alcohol products, for those consumers who are choosing to moderate their alcohol intake. We’ve seen the emergence of low-sugar craft sodas such as Soda Folk and Kix, but we’re yet to see the launch of a healthy mixer brand in partnership with a NoLo product or the release of a pre-mixed product of this kind.

Marketers of these healthy mixers will focus on communicating the nutritional value of the ingredients and how the combined flavour profile of the mixer and NoLo delivers a taste experience that can stand shoulder-to-shoulder with the quality of a standard strength alcoholic serve.

Sizing up the startups

We’ve seen how market leaders such as Heineken and Gordons rapidly introduced NoLo variants of their best-selling product to market, but a true pinnacle moment for the category was the launch of Seedlip in 2015.

Seedlip was first hatched in a start-up environment and became famous for being “the world’s first alcohol free distilled spirit”. After a successful launch, Diageo owned incubator group Distill Ventures bought a 20% stake in the business. The brand is due to launch a third product in the range this month.

Other startup brands were seen putting their new innovations to the test in July (2018) at The Mindful Drinking festival, a non-alcoholic drinks event organised by Club Soda, which saw over 50 brands from the low and no-alcohol category, including both startups and market leaders, gather together.

One of the many NoLo brands present was Ceder’s, an alcohol-free gin created with South African botanicals that launched in July 2018. This start-up brand signed a deal with Pernod Ricard who will assist in the launch and distribution of this new product in the UK.

We will see more market leaders rolling the dice and investing in startup innovators to help propel them quickly into this new territory.

Legals

In December (2018) the government will be producing some guidelines to accompany the current NoLo drinks labelling legislation. The purpose is to support consumers in making informed decisions before they buy a NoLo product.

For now, there are less legal barriers and restrictions on how a brand can market their NoLo product, which means inevitably there will be brands pushing the boundaries in their communications. Currently non-alcohol products are exempt from the rule that prevents brands suggesting their product is preferable because of its alcoholic strength (or lack thereof). Therefore, we will see brands highlighting their product’s health credentials and drawing comparisons between their product and regular strength drinks, in order to appeal to a health-conscious consumer on their way to switching.

With the NoLo category growing at a phenomenal speed and with key opinion leaders predicting it will account for 10% of the total alcohol market in five to ten years, now is the time for brands to consider their no and low-alcohol product offering.

Charlotte Johnson is an account manager at Impero

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