Matt’s Substack. https://mattfield.substack.com/
When I opened my laptop a few weeks ago after the Christmas break, the results of a survey dominated my newsfeed. Conducted by YouGov and published by the Portman Group (the UK drinks industry’s self-governing forum for Responsibility and Marketing Regulation), the headline was the continued rise in popularity of no and low drinks.
Before I go any further, and to offset the predictable January media blizzard on this topic, here’s some data: non-alc today still only accounts for approximately 1% of the total global drinks market and in the UK, the world’s most advanced non-alc market, it accounts for around 4% (caveat: definitive data is almost impossible to find, these are ballparks that give an idea of proportional size). This does not add up to an existential crisis for booze, at least not at a total industry level, but it does seem there is a sea change afoot for parts of the industry as drinker behaviour evolves for the long term.
What really stood out to me was a stat lower down in the text of the article: 39% of 18-24 year olds are not drinking any alcohol at all. More than a third.
There are two things I find remarkable about what this stat implies (admittedly not the biggest ever total sample size – 2197 – although YouGov’s credentials are generally not disputed).
The first is the proportion of this group that identify in this way ie avoiding alcohol altogether, not just as responsible consumers of alcohol. Other surveys conducted in the last few years support this trend – NHS statistics reported in 2021 put numbers at about the same level and regular research by Drinkaware also tallies directionally.
The second is just how abruptly this change of behaviour has manifested. For anyone over the age of 30, adults avoiding the use of alcohol in all circumstances would have just 5 years ago seemed exceptional, the reasons given normally binary like an allergy or a history of alcoholism in the family as opposed to a lifestyle choice. The British have habitually drunk alcohol for thousands of years, whether in moderation or in excess. It’s engrained in culture.
This heralds the sudden appearance of Generation Sober, an age group now regularly displaying behaviour and attitudes that are radically different to those of their immediate forebears . Another example, presented as “staggering” by the Today Podcast recently, was that in equal numbers 18-24 year olds in the UK believe in a strong man running the country as an alternative to democracy. I agree with Amol and Nick on this. It’s completely anathema to older British adults.
Researching the sober trend amongst the young online, I’ve observed a few reasons consistently given: increased awareness of all aspects of health, the sense of a need for being responsible in reaction to an uncertain world and future, the need for clear headedness in decision making (for example on first dates) and for personal safety (on a night out).
Intrigued by what this might mean for the industry, I spoke to Phoebe Stallan, 24, a content creator and dance instructor from Southend and Caius Royle 22, an undergraduate at Sussex University from Hackney, both of whom identify as long-term sober.
Cost appears to be the biggest driver amongst younger consumers
It turns out there’s another blindingly obvious reason for avoiding booze, and according to both Phoebe and Caius, non-alc alternatives too: cost. Both of them struggle to remember a time when anyone around them has ordered a non-alc brand when out. As Caius puts it, « What would be the point of ordering a drink that costs the same as the original but doesn’t even have the active ingredient in it?” It’s hard to fault that logic during a cost of living crisis. When I ask him what he orders at the pub with friends he says sparkling water with lemon as if it’s a slightly redundant question. Cost overwhelmingly seems to be the biggest driver of choices across the board in this peer group. Which alcoholic beer brand for those who do drink? “Budweiser. It’s the cheapest.” Seltzer brands also feature – they’re cheap and perceived to be healthier due to a lower calorie count (although they’ve never really taken off in the UK unlike RTD cocktails). Wine in any form is a total outlier.
It’s no surprise that cost is the major factor for 18-24’s who are the UK’s lowest earners and at the sharp end of a cost of living crisis. Up to 35% of 18-24’s in the UK are students. Sales data from the last quarter suggests that cost/ price has become the number one driver in purchase decisions in all areas of drinks in retail. I predict it will be the most decisive factor in all areas of the industry this year.
They both agree that Covid has had a long-term effect and has created self-consciousness around social gatherings that can lead to a sense of social anxiety. Social occasions have definitely evolved. Gaming is a major pre-occupation in leisure time, with alcohol, which diminishes alertness, skills and the ability to win, eliminated entirely. Phoebe’s social life comprises of much smaller gatherings, walks or brunches with one or two friends and during the day only. There’s no herd mentality around larger gatherings or nightclubs. She and her friends are hardworking and ambitious, and as with the gamers there’s no scope for booze to diminish any kind of competitive edge.
They’re incredibly health-conscious. In at home occasions, kombucha and tea-based drinks are popular; pre-preparing them is all part of the experience. There’s a specificity to knowledge: of calories, the different effect of moderate vs binge drinking, how alcohol affects different parts of the body as well as mental health. “Everyone I know thinks like this” Phoebe tells me. I challenge her on vaping, also ubiquitous amongst this group and obviously contradictory. “I don’t get it either” she says. “It’s like the devil”.
An inclination by younger and less well off consumers to pay a premium for non-alc brands seems questionable
I come away from these chats with doubts about the YouGov survey’s finding that young adults are now the biggest consumers of non-alc brands, and this is reinforced by a conversation I had with James Shillcock, Chief Commercial Officer of CleanCo, now the biggest selling independent non-alc spirits brand in the UK, also making major in-roads in the US (another advanced market showing very similar patterns in consumer behaviour to the UK in certain states).
An older and more affluent group of Sober Curious drinkers seem a bigger prize
CleanCo has now clocked up 2 million bottles sold since launching in 2019. The brand fits neatly into the “direct replacement” category of non-alc spirts, deliberately engineered for lovers of the original versions of gin, vodka, rum and tequila who are looking to reduce alcoholic intake (other sub categories include “botanical” like Botivo, and “functional” like Three Spirit. All appealing to sub-set consumer groups and slightly different need states). People reading this may know that CleanCo has a celebrity founder too but I’m keen to focus on commercial strategy as the building blocks of its success.
It seems a stretch that if you’re aged between 18-24 and never been an alc-spirits fan, you’re going to be in the market for a substitute faithful to an original you didn’t enjoy in the first place. CleanCo’s core target are 25-35 year old “self-improvers” who amongst other things tend to identify as responsible professionals, everyday athletes and cocktail lovers. The brand is inclusive and welcomes older and younger drinkers too.
James agrees that the last 12 months have seen the biggest shifts since the non-alc category came into being. In consumer terms, the stigma that existed in ordering a non-alc option in public when CleanCo launched in 2019 has over the course of 2023 evaporated – it’s now socially acceptable to bar-call non-alc on a night out, where just a year or two ago people would have been self-conscious. James has also picked up a new, previously unseen behaviour in the trade – outlets and wholesalers from the on-trade space are actively looking for non-alc brands to put on menus, as a result of increasingly audible demand from end-drinkers. It’s received wisdom that brand equity is built in the on-trade.
This is all part of the long-term strategy that James and his team wrote before CleanCo’s launch with clear stages: first, create availability and grow the category via (national grocery) retail; second, provide an exact substitute for drinks with existing popularity in visible aisles adjacent to the spirits aisles in store; latterly make it as straightforward as possible for gatekeepers in bars and restaurants to place non-alc alternatives on menus by keeping the names of cocktails the same, and provide them with a brand name that people have been clocking when shopping in recent years and add an evolved bar-call:. CleanG&T, CleanMargerita. On-trade presence then boosts perceived value in the off-trade space and a trade eco-system is created that builds sustainable growth over the long-term. As a start-up initially and now a scale-up, CleanCo has punched above its weight as a David to Diageo’s Goliath with its enormous resources in innovation and marketing investment in brands like Gordons and Tanqueray . The key has been taking the lead on growing the category in partnerships with the big retailers by forging close relationships with buyers, owning analysis of the shopper data and driving category growth working hand in hand as the data evolves. Cocktails have also been key to growth in the category having boomed in popularity during Covid lockdowns – they give non-alc brands a handle in engineering authentic experiences.
CleanCo’s success is testament to the growing numbers of the “Sober Curious”, i.e. drinkers who consciously choose to drink less alcohol without eliminating it altogether, often substituting in the non-alc version of an alcoholic fave.
Summer and Christmas have become the biggest sales peak periods for non-alc rather than January
The sales data backs this up. As James tells me, December ‘23 was the first time ever that a December month has exceeded January in terms of total sales revenue (at a total category level). Mintel reported similar results in June last year. The conclusion to draw for brands? That periods when people find themselves frequently in potentially excessive drinking occasions present bigger sales opportunities than periods of total abstinence. I saw this for myself at a New Year’s Eve party where the same guests bought both alcoholic and non-alc bottles to avoid getting too smashed. All of this coincides with the recent emergence of damp vs dry Jan.
In category terms, as James concedes, it is in fact lager that has blazed a trail for the industry.
Beer has paved the way for the non-alc category
Commercially, Heineken 0.0% is way out in front following years of strong investment. Guinness is catching up, having had a strong Q4 in the off-trade (not reflected in the graph above). Lucky Saint, with the holy trinity of an exceptional product, beautifully crafted brand and dynamic founder, is another David vs Goliath success story and is the star in the indie category; their PR machine has been out in force this month. As you’d expect, there’s a direct correlation with investment levels over time – ref Heineken 0.0’s global sponsorship of Formula 1 – but also the foundational strength of the core brand, especially in the on-trade (see Carlsberg above). As with CleanCo’s strategy, there’s now a concerted push by beers in the on-trade (pubs).
I know from my experience of working in drinks that beer has the lowest barriers to entry when it comes to non-alc, for both producers and drinkers; it has a lower ABV than both wine and spirits – there’s less to take out – and so taste and preservative are less dependent on alcohol. And of course, as referenced above, it’s the cheapest to try serving by serving, making it less of a financial commitment for drinkers. Non-alc lager has come a long way since the era of Kaliber, launched by Guinness in 1986 and rebooted via several campaigns featuring the likes of Billy Connolly and Dom Joly over the period of about 20 years. Millions were invested in it, it had an overwhelmingly blokey profile and it didn’t prevail, losing value gradually before finally being discontinued, even as the Sober Curious were slowly waking up.
In terms of incoming innovation, 2024 non-alc RTDs. could blow up on the back of the recent boom in RTD cocktails, another off-trade success story in line with the post Covid cocktail fad combined with the increased pressures of the cost of living. Olipop, a pre-biotic soda with founders from Diageo, is going great guns in the US and could scale in UK grocery stores soon; question incoming though: when do non-alcs end and soft drinks begin?
As to the existing category, if beer has lead the way and spirits are finding their groove, where does this leave the wine industry (my own passion area)?
Producing quality non-alc still wine is problematic, sparkling is a different proposition
Firstly, let’s draw a line in the sand between still and sparkling. Having done extensive research and testing myself, I’ve come to the conclusion, not shared by everyone, that making non-alc still wine to an acceptable standard simply isn’t possible. Alcohol is too integral to structure, especially in red wine. The still whites I’ve tried just taste like jazzed up grape juice. Several connoisseurs I know in the industry tell me that kombucha and tea-based alternatives will prevail.
Sparkling is a different proposition, with bubbles going a very long way to creating the requisite taste and sense of occasion. Nozecco, the bargain grocery brand, have reported a record breaking Q4 in 2023, Kylie’s non-alc has blown in recent years and premium brands like Wild Idol present a respectable offering in terms of quality. Watch this space for more innovation.
Can wine break taboo by leaning into health to appeal to health-conscious younger drinkers?
For wine overall, the consumer trend towards sober amongst 18-24s and the cost of living, presents two new problems compounding two existing problems: at a total global level, sales are in their seventh consecutive year of decline (results for 2023 just published are gloomier than ever) and I know from my own working experience the extent to which the industry has consistently failed to break down barriers and connect with younger audiences entering legal drinking age: young people everywhere are swerving wine in their droves. I will be devoting a lot of attention to this in future posts.
As a prelude to that, and to take this article full circle, to recruit young drinkers the wine industry might have to take on health head-on. This is taboo territory for booze marketing but I’ve been thinking for a while that the category might have no choice but to take a forward position on health. Interestingly, Chat GPT, having in answering preceding questions, already emphasised the need for prioritising a responsible approach, agreed when i briefed it:
And there seems to be a case slowly building via credible channels and influencers:
Social media is making choice increasingly binary, relentlessly presenting consumers with the tangible health benefits or risks to anything we might choose to consume. How could wine lean into this in a responsible way?
Wine might also need to lead the conversation on how moderate alcoholic consumption in the right situations could be beneficial to emotional and societal, if not physical, health.
It seems it might be time for wine to make some moves that are as radical as the attitudes of the new generation of drinkers. More to follow.
Conclusions and predictions:
- Cost will be the biggest driver in the industry for 2024 and beyond, especially in terms of consumer behaviour but also brand/ corporate activity
- The legacy of Covid continues to have a massive effect on consumer behaviour and brands’ response
- Key investment periods for non-alc brands moving to traditional industry peaks (Summer and Q4)
- More “sober life” activity appearing in influential areas of culture from events to podcasts (ref They Think It’s All Sober)
- All eyes on RTDs: off-trade, on-trade and e-comm
- Innovation in wine to continue but likely to be limited due to cost pressures