Rise of the alcohol-free brands
Alcohol taps have been turned off but entrepreneurs are offering crafty and cool alternatives, writes Richard Holmes
While many South Africans fret under round two of a lockdown ban on alcohol sales, it’s not only the illicit booze traders who have enjoyed an uptick in fortunes.
Producers of booze-free beverages, from de-alcoholised wine to distilled non-alcoholic gin,have enjoyed a surge in demand across SA. It’s a sober silver lining for a category that was a minor player before the lockdown.
Johannes le Roux has long had an eye on the potential of the alcohol-free drinks market. He and Inus Smuts launched The Duchess in 2016, marketing their non-alcoholic "Gin & Tonic" as an "alcohol-free adult drink". Its upscale packaging and complex flavour profile is a far cry from sweet and fizzy soft drinks.
"Even before lockdown we had seen an incredible awareness and demand for alcohol-free drinks, whether for lifestyle or health reasons," says Le Roux. "It’s a category still in its infancy, but it’s something we see growing tremendously over the next few years."
That growth has accelerated sharply thanks to the ban on alcohol sales. In April The Duchess had a 150% year-on-year increase in sales, and hit its monthly sales target for May within the first week.
The lockdown has also opened up new channels to marketing for the brand. Online sales leapt from just 5% of volume to more than a quarter, and uptake in retail stores has soared.
"Our biggest customers used to be liquor stores," says Le Roux. "But during this period of working with the big retailers we’ve convinced them to create alcohol-free sections on the grocery side. That’s definitely a positive move for the entire category."
Retail channels have been important to growing volumes during lockdown, agrees Phillip Retief, CEO of Van Loveren Family Vineyards. From its cellars in the Robertson winelands Van Loveren produces the Almost Zero range of de-alcoholised wines; the alcohol is removed from the wine post-fermentation, using spinning-cone technology.
Though retailers were at first hesitant to move de-alcoholised look-alikes away from the wine aisles, "with the extension to the second lockdown we started pushing hard and sales have doubled in this short time," says Retief.
Crucially, the lockdown has sparked an interest in the category among wine-lovers who would normally turn their well-trained noses up at de-alcoholised wine.
"[The lockdown] has definitely assisted us in getting the product more traction," says Retief. "I think customers are purchasing out of curiosity and the mouth-feel related to wine."
"People are used to enjoying wine with their food," says Hein Koegelenberg, CEO of Leopard’s Leap in the Franschhoek valley, which offers red and white de-alcoholised wines under the Natura label. "So in lockdown you either drink de-alcoholised wine, or you have soft drinks. And to have Oros or cool drink with your meal? It’s just not lekker."
The Natura brand launched in 2019, after three vintages of trial-and-error. It accounts for just 4% of the cellar’s local sales, but that figure doubled during April, when alcohol sales were first banned.
"It’s been huge for us," says Koegelenberg. "All of a sudden we’re shifting a large amount of wine. We’ve actually run out of stock, so we’ve had to look at making the next vintage available early."
The beer market has also seen a flush of non-alcoholic brands — imported and locally brewed —arrive on local shelves over the past few years. SA Breweries offers Castle Free, Heineken has 0.0 and the dominant player in the craft industry,Devil’s Peak Brewing Company, has a trio of brews under the Devil’s Peak Hero label.
The lockdown has been a boon for these brands, says Elizanne Rauch, GM marketing for brand owner Signal Hill Products. "We have certainly seen increased demand, not only through sales from our regular stockists of Devil’s Peak Hero, but also through more outlets listing our product nationally. Our month-on-month increase from March to April was more than 350%."
Alongside a societal shift in attitude towards non-alcoholic drinks, "we’ve also seen a shift in the quality of the products on the market," notes Brendon Geary, head of buying at online retailer Yuppiechef. "I think the producers are getting it right. A few years ago a non-alcoholic beer wasn’t a great tasting beer. But that’s changed. It’s just a great craft beer, it tastes really good, whether it’s alcoholic or not."
Alongside Devil’s Peak’s Hero range, "The Duchess has been extremely strong for us," adds Geary. "In the lockdown period alone, we’ve seen a 500% increase in sales."
For larger players, the presence of a non-alcoholic brand in the stable has also generated valuable — if limited — cash flow during the ban on alcohol sales.
"The Covid-19 lockdown and ban on the sale of liquor has had a significant impact on our business," says Des Jacobs, MD of Signal Hill Products, "with Hero making up a small percentage of the overall lost sales in April.
"We expect that Hero will contribute more than 25% of our total sales in the future, and also help us to survive the lockdown by allowing us to generate sales from this category."
For the Van Loveren Family Vineyards — home to the high-volume Four Cousins brand, among others —the Almost Zero range is a drop in the ocean of wine that would ordinarily leave the cellars each month.
"It is still a very small part of our business," says Retief. "In April it was our only turnover so it will fill a few small gaps in terms of costs, which indirectly means it is now more than ever contributing to going-concern realities."
Far more valuable is the priceless marketing push that the lockdown has given the category. While there was dabbling and experimentation before lockdown, the past months of enforced sobriety have introduced countless South Africans to a new category of alcohol-free alternatives.
"Pre-Covid-19 we saw the start of consumers becoming more health-conscious, and we expect this trend to accelerate," says Rauch.
Le Roux, the shift is a tectonic category movement more than just a trend: "The alcohol ban has certainly fast-tracked the trial process as a lot more people are able, or are forced, to try no-alcohol alternatives. Our goal is that they realise that it is something they can continue once the ban is lifted."
Even then, fans of a tipple or two might not have a choice.
With the new Administrative Adjudication of Road Traffic Offences (Aarto) Act threatening a 0% blood-alcohol limit for drivers, the outlook for the non-alcoholic beverage category looks bullish. When we’re finally able to take up our favourite bar stool again, chances are it’ll be for one more glass of de-alcoholised cabernet for the road.
According to the Liquor Act, an alcoholic beverage is defined as a product containing greater than 1% of alcohol by volume. Most so-called non-alcoholic products on the market sing from this song sheet, even though many contain between 0.05% and 0.5% alcohol. If you’re avoiding alcohol for strict religious or health reasons it pays to read the label.
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