By Mike Foster, Founder and Creative Director, Straight Forward
With the end of lockdown in sight and a growing movement to more healthy ways of living, attention is turning once again to the non-alcoholic drinks market. And there is a real sense of optimism about the growth potential for the NoLo sector, with the emergence of health-conscious younger audiences and new premium brands launching.
The sector has been slow to develop and define itself, dogged in the past by low quality products and poor public perception. But much of that has changed in recent years, with the UK regarded as having the most mature NoLo spirits markets – with no less than 11 brand launches last year – and an emerging NoLo beer sector that embodies everything that is good about the craft beer movement.
The NoLo drinks market has been steadily growing in the UK, rising from £8,417m in 2005 to £12,126m by 2019, according to Statista. And the outlook is very positive, with the UK NoLo sector expected to grow by 22% between 2019 and 2024, according to IWSR. Beer is the fastest growing segment of NoLo in the UK, but still only represents 2% of the overall beer market (IWSR). And with no real category leaders across the NoLo market, you can see why new entrants are being enticed.
There are several factors driving growth in NoLo, but at the heart of these are three key areas of consumer focus: wellness, moderation and consideration. These cut across all types of NoLo drinks: beer, spirits and into teas and other fruit and health drinks.
The health movement has grown significantly in recent years, and has been accelerated by the pandemic. At the end of last year 40.42% of people claimed to now eat a healthy/balanced diet ‘very often’, according Statista/Kitchen Stories, and around the same time, the Portman Group announced that 23% of people who drink alcohol said they would consider switching some drinks to NoLo in the next six months.
As we emerge from lockdown there will be a real sense of freedom and a need to come together in groups. Consumers will want to celebrate with friends and loved ones, but many will equally want to make the right choices, so they can they drink and stay healthy.
NoLo brands can be part of this new ‘healthy hedonism’. And younger audiences represent a real growth opportunity. Generation Z don’t have the same drinking culture and rituals as older generations. According to GWI, 63% Gen Z outside of US say they drink alcohol ‘less often’ or ‘never’. And there is also clearly potential with older audiences that want the taste and experience of drinking but as part of a healthier lifestyle.
Best of both worlds
With such broad growth potential, the smart way forward for the sector is marketing according to shared behaviours and experiences. And arguably there are two groupings here. One is all about sophistication, individuality and empowerment. This is predominantly spirit and aperitif brands focused on premiumisation. Seedlip is a key player, launching in 2014 with its upscale gin, available from Selfridges with a price tag of £35. Everleaf is another notable brand. The aperitif was created by botanist and owner of fashionable London bar The Hide Paul Matthew. And, of course, there is Three Spirit, described by the Daily Mail as “booze free, but not buzz free”.
The other grouping is focused on indulgence, ritual and reward. Many of the NoLo beers fall into this sub-category, such as Small Beer. With a well-told, artisan brand story, Small Beer was the first brewery to focus solely on low-strength beer and is committed to using recycled paper and card and has slashed its water usage.
But while there are now several well-publicised NoLo brand success stories, the market nevertheless poses complex challenges to new entrants and established drinks manufacturers. The sector is still finding its true identity, it’s still to win over large swathes of consumers and there are no established category norms.
Marketers looking at NoLo, can learn a lot from the experiences of plant-based marketing and the recent mainstream appeal of vegan foods. Understanding people’s need to make the right choice, plant-based food brands have been able to excite and entice people that are not strict vegans or vegetarians. Many brands have learned the hard way not to use healthy ‘restrictive’ language or to preach about health benefits, but rather to focus on great flavours and experiences. The sector’s still not entirely finding its own feet away from being a ‘meat substitute’, but it’s been on an incredible journey.
Building on the experiences of plant-based marketing, there are several key things that NoLo brands should focus on to overcome challenges and drive success:
Embrace customisation & individuality
There is real potential for new brands is to capture the mood of people who don’t want to go with the accepted flow. These are people who want to make their own choices and customise to suit their needs and tastes.
Creating a quality product and a premium brand is critical to success. All the indicators point to successful brands focusing on quality, luxury, passion and positivity.
Tell strong brand stories
Many of the successful new NoLo brands have clear and engaging stories that underpin their marketing.
Create memorable experiences
People need to experience NoLo for themselves. Experiential builds on all the elements of individuality, premiumisation and storytelling and helps drive brand loyalty.
Establish a new design language
We’re starting to see this with some of the new entrants, but the market needs to establish a recognisable design language and clear design frameworks.
Stand out on the shelf
Many of the newer brands are driving sales via e-commerce, but NoLo brands need take their rightful place on supermarket shelves so they are obvious to consumers and form part of a positive consumer journey
There is a clear opportunity for the NoLo sector to part of the new zeitgeist as we move out of lockdown. While many of the big players have made significant moves in the beer market, it’s likely to be new entrants, unincumbered by the past, that will eventually lead the NoLo category. The keys to success are going to be premiumisation, individuality, experience and stand-out, both online and offline.