UK leads the ‘non-alc’ sector with 271 premium launches in the past year

By Jo Gilbert

Published: 15 May, 2019

The UK is at the forefront of innovation in the ‘what to drink when you’re not drinking’ sector, new research has found – ahead of usual trendsetter, the US.

Despite spearheading the craft beer and cannabis movements over the past few years, the US is playing catch-up to the UK in the low and no sector, where a rash of products have been released of late.

In the past 12 months alone, there have been 271 ‘premium soft drink’ launches in the UK, while the number of non-alc spirits jumped from four in April to 42 just six months later in October 2018.

The launches are part of an explosion of interest and investment into the low and no alcohol category over the past few years, driven largely by British brand, Seedlip.

“This isn’t a fad,” said Shilen Patel, co-founder and non-alc lead at Distill Ventures, which commissioned the research and helped Seedlip secure investment from drinks giant Diageo.

“I think London and the UK has been the leader partly because we have an incredibly vibrant entrepreneurial food and drink scene in this country. The trade has really got behind it, whether that’s Ryan Chetiyawardana offering a non-alc drink for every alcoholic drink, or Sainsbury’s promoting it on shelf. There’s a sense that people are not only taking these products seriously, but founders are trying to make exceptional liquid.”

The research on the rise and opportunity around low and no was revealed at a round-table event last night, part hosted by Scout co-founder, Rich Woods.

Woods, whose drinks menu included a non-alcoholic wine made from wild chamomile and left-over banana skins, is co-founder of Scout, which forages all its ingredients from the UK and locally in London – including the Hackney Marshes.

Part of the discussion came down to price, and how much consumers are willing to pay for a drink that excludes alcohol – and therefore alcohol duty.

“Where we are in East London, guests wouldn’t pay more than around £7.50 for a non-alc cocktail,” said Woods, who is also former head of spirit & cocktail development at Sushisamba.

“But some of the top bars I’ve consulted for are looking to charge anywhere up to £18, because of the higher cost per unit ingredients. I’d argue more knowledge and expertise goes into creating non-alcoholic drinks, because ethanol, like sugar, carries so much flavour. The amount of raw ingredient I have to use to achieve the finished product I want to deliver, means the cost per unit is so much higher. Appreciating that comes down to knowledge and education. There’s a big difference between what consumers think a non-alcoholic drink is and the know-how that goes into it.”

The challenge around creating complex non-alc drinks and margin is partly why the soft drinks companies have failed to infiltrate this space, Patel believes.

While they have focused on refreshment, the founders who have had success are those who are “thinking hard about occasion and flavour”.

He said: “With soft drinks, it’s fair to describe them as short and one dimensional. Creating a non-alc drink that has flavour, depth, mouthfeel and length is really hard. These processes are really involved. I think the demand has taken soft drink companies by surprise. They're not looking at social occasions and what consumers expect in terms of choice.”

According to Distill’s 2019 whitepaper, (carried out by the IWSR and CGA), growth in the sector is driven by consumer demand: 61% of consumers reported they want better choice when it comes to non-alcoholic drinks.

In addition, interest in non-alc drinks doesn’t mean consumers are going out less.

Distill reports that in the UK, 59% of people are ordering non-alcoholic drinks on nights out when they are also drinking alcohol.

In London, 55% of restaurants have a non-alcoholic offering, compared to 40% in LA.

In New York, the trend is less developed, with a divide emerging between the East and wellness-driven West coasts.

Just over 80% of bar managers in Los Angeles believe non-alc cocktails are part of a growing trend.

In New York, the opinion is reversed: 71% of bar managers don’t see non-alcoholic cocktails and drinks as part of a wider trend, despite incremental revenue generated from non-alcoholic drinks being almost evenly split between LA and New York.

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