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Spirited away: How the alcohol-free trend is stirring up the liquor aisle

January 20, 2021

If you’ve found yourself wandering over to the liquor cabinet more than usual during the Covid-19 pandemic, you’re not alone. Alcohol sales in the US were up 54% in March 2020 compared to a year previously, while online sales skyrocketed nearly 500% in late April, according to Nielsen

In general, Americans over the age of 30 are topping off their glasses 14% more, with women opting to pop bottles more than men. Reports of heavy drinking, which is defined as four or more alcoholic drinks within a couple of hours, increased 41% in women, according to research from Indiana University and RAND Corporation.

Meanwhile, the US government’s latest Dietary Guidelines for Americans changed its recommendation on men’s alcohol intake, suggesting gents imbibe only one drink per day instead of two. The recommendation for women, which is one drink per day, stayed the same.

Although beer, wine, and cocktails offer a quick escape from the pandemic doldrums, there is a tradeoff when it comes to our health and wellbeing. In an effort to make us all feel a little less shaken and stirred the next morning, a number of startups have started offering low or alcohol-free alternatives to some of our favorite beverages, seeking to provide the same flavor, mouthfeel, and satisfaction as the original product.

Ben Branson, founder of UK alcohol-free spirits maker Seedlip, views this as part of something much larger that will fundamentally change what we drink.

“Globally, we are at the beginning of a paradigm shift in the role drinks play in peoples’ lives, with several bigger cultural forces at work. This means the timing and need for quality, adult non-alcoholic options have never been more relevant,” he tells AFN.

“I think people are also becoming increasingly mindful of their health, the origins of their food and drink, and the influence social media-led lives have on consumption. We very much see this as a growing movement, not a trend or fad.”

Diageo, one of the world’s largest alcoholic drinks companies, acquired Seedlip in 2019 after making an investment through its venture arm in June 2016.  

Branson’s not alone in viewing this fledgling category as a signpost for something greater.

“This is a movement. This isn’t a trend any more than dairy alternatives or plant-based meats or gluten-free or organic,” says Marcus Sakey, co-founder of zero-proof beverage maker Ritual.

The Chicago-based startup claims its “spirit alternatives” have the same taste and smell of traditional liquors, without the alcohol or calories. Diageo is a minority shareholder.

Consumers have latched on quickly to the alcohol-free craze, Sakey tells AFN, with Ritual outselling its projections by 80% during its first year. You can find the startup’s versions of gin, tequila, and whiskey at large liquor retailers and increasingly at supermarkets across the US.

“We’re moving into BevMo shortly and we are aggressively targeting grocery. That’s our expected primary sales channel,” Sakey says. “We expect that by the end of 2021 we will be available nationwide at larger retail grocery chains.”

Healthier options

According to Genie Living Drinks co-founder Alex Webster, the continued awakening around environmental and human health is driving curiosity in this new wave of beverages. He reports that the company’s online sales are up 400% year-on-year.

But while most of us want to make the right choices about what we put in our bodies, we don’t always want to compromise on satisfaction.

“People love water, obviously, but your taste buds need a sensation other than those things,” he tells AFN. “They want to treat themselves to a delicious flavor. Traditionally we have reached for either sugary drinks or alcohol. There was nothing in between [those].”

Genie launched in the UK in January 2019 with a line of vegan kombucha and probiotic drinks that are low in sugar and calories. The founders noticed how ‘millennials’ in the US were guzzling kombucha — a fizzy, fermented tea-based drink originating in Asia — and how the drinks menus at most restaurants had been stagnant for years.

“Healthy drinks come and go, but kombucha has the complexity of flavor that people really like as part of their daily routine,” Webster says. “There’s also the fact that it has a bit of caffeine to offer a pick-me-up in the afternoon, instead of an energy drink that’s full of all sorts of things you don’t want.”

The company decided to call its other product line “live soda” as a nod to the good-for-you probiotics it contains, while aiming to hit the sweet spot between a soft drink and a health-focused beverage, It’s also working on a new drink that centers around a vitamin additive instead of live probiotics. 

No alcohol, low alcohol, and CBD

A number of other startups have entered the alcohol-free market. Among them are New York’s Kin Euphorics, which makes beverages with adaptogens, nootropics, and botanicals to boost your mood. Fellow Big Applers Curious Elixirs offer alcohol-free and organic drinks with no added sugar. Then there’s Carlsbad, California’s Drink Monday with its botanical-based alcohol-free gin; while Los Angeleno Ghia’s booze-free beverages have a Mediterranean inspiration.

San Francisco-based Haus, on the other hand, sits in between alcohol-free beverages and their full-blown counterpart. Its aperitifs are lighter in alcohol than whiskey, but pack a slightly stronger punch than wine.

Good Day’s CBD cold brew and UbU’s hemp tonic – read AFN’s reviews here

Cannabidiol (CBD) is finding its way into the beverage aisle, too. CBD is a compound that occurs in the cannabis plant which is thought to have calming, anti-anxiety effects when consumed. Californian CBD-infused sparkling water startup Infuzed Brands which raised $8.6 million in June 2020. New York’s Recess promises its CBD beverages will leave you feeling calm, focused, and creative. With eye-catching packaging, US-based Mad Tasty’s watermelon kiwi, grapefruit, and ‘Unicorn Tears’ flavored drinks pack 20 milligrams of hemp extract per serving. Daytrip, Vybes, Lumen, and Dram are a few other CBD beverage brands making booze-free waves.

Our relationship with alcohol is on the rocks

The (zero) proof may be in the purchasing patterns, but what is driving thirsty consumers in the West to swap out that sweet buzz for a stone-cold dose of sober reality? Between economic uncertainty, civil unrest, and the devastating toll of Covid-19, it can feel like there’s never been a better time to twist the top off a cold one. 

“It’s really about balance. We’re not anti-alcohol and in fact, most of us really enjoy a cocktail,” Sakey says.

“The reasons for ‘zero proof’ are myriad: you’re pregnant, you’re driving, you’re dieting, you’re training or exercising, it’s Wednesday night at 5 pm or Saturday at 1 am and you’ve already had a handful. It’s the perfect third drink. It’s a way to make ‘half-caff ‘versions and save a bunch of calories.”

These new alcohol-free experiences may not come all that cheap, however. Ritual, for example, labels its beverages as a premium product.

Genie’s drinks cost roughly £2.50 ($3.30) per bottle, while a Recess 12-pack will set you back $60. A six-pack of Mad Tasty’s Unicorn Tears sells at $30 and Curious Elixirs’ pre-mixed cocktails start at $35 for eight drinks.

Now that cannabis is essential, it’s time to roll out the tech. Read more here

A 500 ml bottle of Kin Euphorics’ Night Cap, which pours out 11 servings, will set you back $39. Seedlip’s range starts at $32 for an individual bottle, or $89 for a trio.

“It sounds funny to people, but it actually costs more to make a non-alcoholic version of tequila, gin, or whiskey than it does to make tequila, gin, or whiskey,” Sakey suggests.

With half of all US households experiencing some loss of employment since March 2020, however, premium beverages may be out of the budgeting for many. 

But as the low-no alcohol space matures, prices may fall; and it has already put in a few years of serious legwork. Although it may seem like it’s just landing, these beverages have been around for a number of years. Rather, startups are seeking to fill other niches. Seedlip, for example, started with the goal of filling what it saw as a gap in bar menus.

“There were just a handful of sub-standard options and the non-alcoholic category was in its infancy,” Branson says. “Fast forward to today and there are supermarket shelves dedicated to low and no alcohol options, bar menus dedicated to it, 100-plus products to choose from, [and] a dynamic ecosystem of venues, communities, literature, retailers, producers, investors, and societal groundswell all driving at changing what we drink.”

Are we permanently on the wagon?

For Ritual, the pathway to permanency on liquor store shelves is simply a matter of getting its drinks in front of consumers. 

“The thing that we’re tackling right now is frankly just introducing people to the category,” Sakey says.

“The vast majority of people have not realized there are non-alcoholic spirit alternatives that taste the same, bite the same, and can be used in the same proportions. Just give them a choice.”

A large part of Ritual’s recipe for success has been partnerships, he says, including tie-ups with brands and social media influencers. The startup has partnered with the Spartan Endurance Race as well as Peloton instructors. It’s also an official ‘Dry January’ partner of V8 and has developed several custom cocktail recipes using its juice.

“In the last 18 months, nonalcoholic beer sales are up 38% nationwide year-over-year and now represent 2% of the entire domestic beer market,” Sakey says.

“That is staggering. This is not just a bubble or a blip.”

Have you been pouring yourself low-or-no-alcohol drinks lately? What do you think of the trend? Head over to LinkedIn to join the conversation here.

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