Liquid Thinking

In the first throes of the pandemic, besides all the cook at home kits and Zoom birthday parties (may they rest in peace), something else was flourishing. Non-alc spirits were on a roll, with no less than ten new brands launching in the UK in 2021, as well as numerous spin-offs of existing products.

But in 2022, things have considerably slowed down, as consumers continue to face a bit of a knowledge gap when it comes to what they are and how to consume them. As the predicted functional revolution has failed to happen, we ask, has no-low innovation hit a wall?

It’s a very simple question. Let’s just be blunt about it. Why are non-alc spirits not better yet? There’s no doubt that when Seedlip came on to the scene in 2015, it answered a genuine need. With non-alc options for those wishing to abstain at that point consisting of a sugary soft drink, or well, not much else, the market duly ramped-up delivering everything from a non-alcoholic tequila, to a non-alc version of a bitter Italian aperitif.

From 2017 to 2021 there was a rapid flurry of activity, as numerous new brands launched. Today, there are well over 150 non-alc spirits brands available globally, with many having numerous products in their portfolio. According to data from the IWSR, the global market for no-low products now sits at US$10 billion.

Their growth has been undeniable and it’s clear that no-low spirits are no longer a niche to be ignored. Growth hit +6% in volume in 10 key global markets in 2021, says the IWSR, with total non-alc claiming a 3.5% volume share of the drinks market.

Though this brand-new category has hit the ground running, achieving outstanding success for something that simply didn’t exist seven years ago, there are signs that the category is at worst, beginning to stall and at best, in need of a bit of a rethink.

Sensorial stalls

Back in 2020 and 2021, in the throes of the pandemic when health-concerned and socially deprived consumers were bursting for something new to do, leading figures in the industry predicted the category was ready to take a more sensorial route.

After starting as a category of direct spirits replacements, the next wave of its evolution was tipped to be functional, with products that didn’t just offer a complex taste, but delivered health, wellness, and experiential benefits too. Products containing everything from adaptogens and nootropics, to GABA that replicates and stimulates the feeling of alcohol, began to launch.  Just look at Sentia Spirit for a glimpse of what the future could have been.

However, come 2022, and things seem to have substantially stalled in both scale and ambition. In fact, things have been notably quiet. And any products that have launched are treading a more known path.

If 2019 to 2021 was the drinks ‘space race’ where brands were clamouring over each other to launch new non-alc ‘spirits’ liquids that deliberately didn’t aim to align to any full-strength liquid or flavour profile (we’re looking at you, Three Spirit, Everleaf, Zeo, Caleño, and Senser), then 2022 has been defined by products that directly replace and mimic drinks consumers already know. Put simply, the functional revolution hasn’t happened.

Where is the ambition?

So where’s the ambition? Well, non-alc may be growing, but that doesn’t mean its yet fully understood. And one of the biggest stumbling blocks when it comes to unlocking growth is the category’s relationship to alcohol itself.

Consumers still expect products that claim to taste like or replace a product such as a bourbon, to actually taste and perform like one. Many simply don’t. And whether the category wants to admit it or not, liquid quality is still a massive issue. Expectations and reality still don’t match. And for brands, there is a real danger that once consumers have sampled a bad product, they are unlikely to risk trialling another.

The vast majority of consumers are still trying to get their head around what a no-low spirit is, and what it isn’t. As such, the conceptual leap to understand liquids that are brand new, and nothing alike in flavour to a full-strength product has proved a bit of a stretch.

In the same way that a vegan or veggie may not always be looking for meat-substitutes, it entirely makes sense that brand new flavour profiles and brand new serves, are something consumers may want. But, in a market where direct alcohol substitutes have proved a disappointing experience and consumers still don’t understand why products cost so much, brands launching new liquid profiles have a hill to climb.

An industry readjustment

Which may be part of the reason why ambitions seem to have been scaled back this year, with new launches leading on liquids and flavour profiles that consumers at least have some hope of understanding. Some of the most notable recent launches have included Raspberry, Rhubarb & Ginger, Blood Orange and Classic Spiced Dry flavours from Halewood Artisanal Spirits-owned brand, Whitley Neill. Lyre’s has also added a Highland Malt to its expansive range.

So, perhaps it’s not that innovation has stalled, rather that brands have made a necessary readjustment to meet consumers where they’re at in terms of their level of understanding. While the category previously raced ahead in its liquid development, it did so by leaving consumers behind. Arguably, with the experience of trying to shop for no-alc spirits in bars and retail still so thoroughly disappointing and confusing, it’s left its route to market behind too.

Barriers to education

A massive obstacle to achieving greater awareness is availability. There may well be hundreds of products out there – including from major full-strength brands such as Tanqueray and Gordon’s – but beyond the high-end bars, few other outlets have truly embraced them. Head into any mid-level bar or pub and there is usually nothing. And if there is, bar staff and consumers alike often don’t know how best to mix or serve them.

Purchasing online theoretically should be simpler. But with no standardised language to describe the category, especially when it comes to non-alcohol aligned products, if you don’t already know what you are looking for, what do you search for? Though the emergence of mid-strength products – including the 10% ABV new launch from MasterChef finalist, Billy Wright, named DECEM – seem to offer a solution to the taste and quality issues no and low has seen, what do you search for to find them?

An identity crisis

It's less of an innovation crisis that the category is suffering, instead, it’s a full-on identity crisis. Though the need for no and low has been well established, there is no brand in the market that has successfully figured out how to reach and educate consumers not already engaged with it.

As a strategic design agency, with wellness trends ramping up, we say it entirely makes sense that functional benefits could and should be something that brands explore. And yet the cognitive dissonance for consumers is still too large for there to be any scale to demand for them. Yet.

Brands need to get back to basics. And the lack of innovation so far in 2022 suggests they are doing just that, concentrating on making better quality liquids, at accessible prices, and leading on flavours, alcohol-styles, and serves that consumers already understand and crucially, at price points that make sense. In many ways, prior to this year, the category was not only running before it could walk, it was breaking world records.

When the category has mainstream awareness and relevance beyond its key calendar dates of ‘Sober October’ and ‘Dry January’ it will be in a better position to take consumers with them, with their innovation of new liquid types. Right now, exciting as they are, without all the necessary sales, on-premise, retail and industry infrastructure, and crucially aligned and understandable packaging cues in place, they just seem alienating.

Interested in finding out more about what this might mean for you and your business?

Please contact us at hello@thecabinetagency.com or 0207 101 3939