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Knowing your crowd to maximise your revenue: the opportunities around low and no alcohol

Amongst the many booming sectors of the hospitality industry, the Low and No alcohol market has been a widely discussed and interesting one. With nuanced definitions, rising trends and increased growth of no and low drinks, there seems to be an opportunity for the hospitality industry.  At this year’s Better Hospitality Conference, we held a panel of industry experts to delve deeper into the various aspects of low and no alcohol drinks. Our panellists offered a range of insights from commonly accepted definitions to tips on how to leverage low and no alcohol drinks to drive customer loyalty, increasing footfall, and boosting profits.

Expert Speakers:

Jasmine Awad, Head of Policy, Partnerships and Community at Mercato Metropolitano (chair)

Denise Hamilton Mace, Editor of Low No Drinker Magazine

Luke Jenkins, Managing Director at Mercato Metropolitano

Laurence Brown, Insight Manager at a market research consultancy, KAM

First up – what exactly are Low and No alcohol drinks? What is the definition?

Before the discussion dives deep into the opportunities in the No and Low alcohol drinks category, Jasmine asks the panel whether there exists a common definition of what are classified as Low and No alcohol drinks (NoLo). What, for example, stops Coca Cola from being classified as a no-alcohol drink? The panel agrees that although there is no universally accepted definition, there are some acceptable guidelines. One of the reason Coca Cola isn’t considered in this category is because low and no alcohol drinks are generally drinks which are traditionally produced with alcohol included.

A very helpful definition is given in Alex Okaru and Dirk Lachenmeier in their paper, Defining No and Low (NoLo) Alcohol Products, published in Nutrients Sept 2022.

“NoLo alcohol products are beverages (such as beer, spirits, wine, and cocktails) that normally contain ethanol as an ingredient but are produced with ethanol completely removed or significantly reduced.”

When it comes to alcohol content, Denise offers some helpful insights, which she stresses aren’t legal:

  • No alcohol or alcohol free drinks in the UK have an ABV of up to 0.05% (this is the same alcohol content as a ripe banana, or a brioche bun). In other countries it varies, for example in the USA it’s up to 0.5% and in Spain it’s up to1%. In some countries the level is set legally, in others there are just guidelines.
  • Low alcohol drinks have an ABV of less than 1.2% 
  • Dealcoholised drinks which are drinks in which the alcohol content is reduced or removed by one way or another have an ABV up to 0.5%.
  • There is a very useful list of low and no alcohol requirements in different countries available on the UK government website.
Defining a ‘no alcohol drink isn’t always easy. Take Botivo for example. It’s not supposed to be a substitute for any specific alcoholic aperitivo… but it is marketed as an aperitivo. It is not specifically marketed as ‘no alcohol’ – just as itself. But it is perceived by its market as an alternative to an alcoholic drink.

Are they automatically more healthy?

The WHO says that no amount of alcohol is healthy – but again, is Coca Cola any healthier? Bear in mind that Coca Cola scores about the same on the pH scale as battery acid. All the members of panel agree that ‘healthy’ is a very loose term in this context. Afterall, Low and No drinks are meant to be alternatives to alcoholic drinks so discussing the ‘health’ aspect of these drinks would be rather irrelevant. However, customers who might be cutting down on alcohol could potentially view this category as the ‘healthier’ choice.

Are low and no alcohol drinks cheaper, and how are they made?

Of course, low and no alcohol drinks can be cheaper, Laurence confirms, but not necessarily. Luke, agreeing with Laurence, adds that at Mercato Metropolitano, “ We offer LoNo at the same price. In terms of quality these products are on a par with alcohol – sometimes they are better.” Denise also highlights that “even in an alcoholic drink, alcohol is the cheapest ingredient. Making a quality low and no alcohol drink is difficult and expensive.” She further explains that there are two ways to go about it:

  1. Ferment the drink, allow alcohol to form, and then take the alcohol out – this is very expensive.
  2. Brew to a lower alcohol content, then stop. But the problem with this method is that alcohol is a great holder of flavour, so manufacturers going down this route need to carry out a lot of expensive research and effort in order to make the drink taste really good.

Denise then went on to explain that some very high end low and no alcohol drinks are only available exclusively in fine dining restaurants, giving some interesting examples. “Ama Brewery are the best example, they sell a high-end Sparkling Tea from 1.5-2.7% and is only available in high-end restaurants and Selfridges (they are trying to break into Harrods). French Bloom have also just launched the most expensive (I believe) low/no drink on the market at £109 a bottle for their new La Cuveé Vintage. And a third premium brand is Wild Idol.”

It’s a big market and it’s growing?

Low and No alcohol drinks are clearly an emerging category, but it seems that they are not necessarily cheaper than their alcoholic counterparts. So, it begs the question, how big is this market and is it growing?

In 2022 the percentage of adults drinking alcohol at least once a week was 90%. In 2023 it was 87% and in 2024 it’s 77%.

About 40% of restaurant visits don’t involve alcohol and 31% of visits to the pub are now alcohol-free. Laurence adds that, “1 in 4 of those on an alcohol-free visit choose water, which is a huge opportunity for venues to drive spend per head through exciting non-alcoholic options”. This year’s report by Kam Insight provides a deeper dive into the latest statistics about the low and no market.

Increasingly the hospitality industry is waking up to the fact that it’s missing out on a significant source of revenue by ignoring this group of customers.

Luke explains, “six months ago we realised that we weren’t putting enough effort into tackling this market segment. We know the biggest consumers are always going to be drinking alcohol but nevertheless the low and no alcohol drinks should no longer be hidden away in a dark cupboard – we need to dust off the cobwebs.”

Why we should tackle this market – it’s a criminal lost opportunity for upsell. In some locations it’s essential.

Consider the religious demographic of your location

In Luke’s case, he goes on to explain how the market is quite complex and can be different in different locations. For example, “We have this site in Mayfair, and another site in Elephant and Castle. And now we’re about to open a new market in Ilford which is a predominantly Muslim and a no alcohol drinking are.”

Mercato Mayfair

He further highlights how in the past they have used demographics to target customers for their community market. He mentions how the community in Ilford and the people that live there are now proactively driving the decisions they are making for the market. “They are talking to us about our products and how they should be sold. The Ilford community is making us diversify with our drinks and is pushing us to think about what we need at what price points, and what drinks those people enjoy and what they come back for.”

Through this process of opening another site at Ilford, Luke reflects about how religion plays a part in the market. He says, “We’re finding that much of the community won’t step foot in an area that serves alcohol, so now we’re looking at the development of the Ilford market in a different way.”

The Low and No market is no longer an afterthought

Denise also brings out the fact the Low and No market has always been an afterthought but now the market wants to feel seen. There is an increased demand for high quality adult drinks, some of which include a little alcohol. She adds, “Not tackling the market is a crying shame, a missed opportunity for upsell. Just offering water is missing a trick because this market is happy to pay money for a good quality low alcohol beer or cider, rather than make do with the ubiquitous elderflower and soda.“

It can also bring in drinkers

Laurence makes an additional point, “it’s all part of building loyalty – you’re investing in your customer base as a whole. When people go out to a restaurant they have expectations – they want an experience they can’t conjure up for themselves at home. There’s a halo effect with non-drinkers – if they enjoy a restaurant, the next time they will bring their friends (who maybe are drinkers).”

“It’s important to keep in mind why people go to the pub, sense of community, to socialise, it doesn’t have to be about drinking. The venue of tomorrow (and today) may include a VR headset you wear with your mates (see Innis and Gunn, ‘beer goggles’); whereas 200 years ago it might have simply been a place to meet up with neighbours (as it is today), neither are dependent on alcohol, but to socialise.”

Low and no has the potential to increase footfall and revenue

In Luke’s experience, he says, “Having Lo and No alcohol drinks on the menu is a bold statement, but now we put them in the centre. As a result we are finding people are spending longer on our sites, and they are spending more. It’s a clear benefit to us to include these drinks.” Illustrating with an example, he adds, “At a bar in Canary Wharf which we’ve only been running for a couple of months where we have a good quality range of low and no alcohol we’ve already seen an increased footfall – however we won’t know about the effect on revenue until next year.”

Talking about the comparison between vegan and No and Lo drinks trend, Laurence says that the motivation behind veganism and behind reducing alcohol intake are quite different. “People are cutting down on alcohol primarily to save cost, and secondly due to health concerns. These are different motivations to what’s happening in food where the motivation is to do with the environment, animal husbandry and so on. However, the trend toward veganism has now plateaued.”

Agreeing to this, Luke explains how they experience a reduction in sales when they promote veganism but promoting lo and no alcohol drinks has lead to a sales upturn.

How to approach the Low and No alcohol market successfully

Moving on to how the industry can tackle this market, the panel through their collective experience offers some practical insights and takeaways.

Think of all the touchpoints – ensure your staff are well trained

The panel agrees that, as a given, to be a success the drink itself needs to taste good but Denise pointed out that there are many other factors that help to sell a drink (with or without alcohol). She says one needs to consider:

  • The ambiance – the building, the music and so on
  • The information given on the menu
  • The glass, and the presentation
  • The bar and waiting staff – how the drink is served and poured by a human

On her mention of the importance of staff as ambassadors for low and no alcohol drinks, Luke emphasises on the point and adds “we ask our Low and No suppliers to come over and train our staff.”

Bask in the sunshine of giants

Laurence explains that when drinks giant, Diageo, launched Gordon’s 0.0, this opened up the Lo and No category for the much smaller Seedlip. “We need an element of patience here… gradually the market will grow of its own accord.

The main takeaways with regard to low and no alcohol drinks

Laurence outlined the three most important contributors to successfully selling low and no alcohol drinks:

  • You need to offer a good range – there needs to be a reasonable choice and all the products must be of good quality.
  • The visibility needs to be good – advertise the range in a central spot on your menu, or make sure its visible at the bar, not just at the back of a fridge.
  • Make sure your staff are well trained and motivated – they need to be enthusiastic ambassadors for your lo and no alcohol range.

You need a minimum of two of these contributors, but ideally you need all three.

The difference in the trends between low versus no alcohol

Denise brings to light that currently sales of no alcohol drinks outpace low alcohol ones. She offers that a possible explanation could be because drivers are confused by low alcohol – they don’t know if it’s safe to drive after drinking them or not.”

However, she also mentions that “In the future, low alcohol sales are set to grow at a faster rate.” Beer is growing the most. Compound annual growth rate (CAGR) for beer 2022-26 is 7%, which for an emerging FMCG  category, is quite significant; CAGR is 2% up on 2018-2022. 70% of that growth is predicted to be from low/no (mostly no-) beer (and cider). By 2035 the market is predicted to have a total value of $1.8 billion.

Good tasting wine is proving very difficult to produce, but if they solve that (and they are working on it hard), it would do well too.

To conclude

Summarising the session, Jasmine stresses on the panel’s unanimous opinion in saying that the low/no alcohol category could no longer be brushed aside by restaurateurs and caterers. It is not just a significant and fast-growing source of revenue, it’s also a fundamental part of the whole offering. Not offering a selection of good quality alternatives to alcoholic drinks also reflects badly on the reputation and on branding.

Ignore it at your peril!

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