Too much of a good thing: “Premium, Low, and No” beverages surge in popularity

While most other businesses have been forced to close their doors during the COVID-19 lockdown periods in Australia, bottle shops selling alcoholic drinks have been deemed essential and allowed to remain open.

A Melbourne brewing company even released a limited edition 'Dan Andrews: Get on the Beers' product to honour the Victorian Premier who famously urged people in lockdown to "have all your mates around to your home and get on the beers."

Drinking alcohol has always been part of Australian culture. Almost every part of our social lives involves having an alcoholic drink, including weddings, corporate promotions and even funerals. Perhaps one of the Aussiest things ever is the 'shooie', where sports stars celebrate victory by drinking beer from their sweaty boot (you really have to be Australian to get it).

So, with much of the country under extended lockdown periods, one might expect that Australians have consoled themselves with copious amounts of alcohol. Instead, we have steered in the other direction and we are drinking less than ever before.

It is part of a global trend where consumers are choosing to drink less but adopt premium products - gravitating toward low and no alcohol content at the same time. It is a trend that is based around quality over quantity and healthy lifestyles over utter inebriation.

It is a trend that even Premier Andrews has subscribed to. Because while he may have urged others to “get on the beers”, he admitted that he would also be taking the premium approach. When asked if he was going to “get on the beers” after announcing the end of a lockdown period, the Premier responded by saying: “I don't know that I'll be drinking a beer tonight; I might go a little higher up the shelf.”

What is premiumisation?

The nation's thirst for more premium products became heightened during COVID lockdown periods. The Liquor Retailing in Australia Report from February 2021 outlines trends and statistics from 2016-21. It shows that while pubs and clubs were shut for long periods, profits were up because there was a greater demand for premium products. Consumers were drinking less, but paying more for a quality product.

In truth, this premiumisation trend started before COVID was even knocking on our doors. A Euromonitor 2019 Lifestyle Survey found that consumers were looking for a more personal experience from their brands and gravitated toward alcoholic brands that spoke more about who they are, rather than what they own. They wanted "high-quality products that provide a truly meaningful experience".

Walk into any liquor retailer and you can see it first hand. Domestic beers have been engulfed by craft beers, like holdout houses resting between giant skyscrapers in a rapidly growing city centre. These craft beers alone were responsible for 17% of total retail liquor industry growth in 2017, which has shown no signs of slowing since then.

Likewise, premium vodka and gin labels continue to thrive while consumers are reaching for the top shelf and not the bargain basement for their wines as well, with red wine labels over $15, rosé, and prosecco soaring in popularity.

The psychology behind this trend is simple, consumers are seeking an enhanced at-home experience in the absence of being able to have a premium experience at a licensed venue.

Australians are not sitting at home getting on the beers, they are quietly sipping smaller quantities of products they perceive to be of higher quality to enjoy an experience, rather than just get falling-down drunk.

Low and no alcohol products surge in popularity

A few decades ago, the concept of non-alcoholic products would have been perceived as absurd. Outside of a few niche brands of beer and wine available on supermarket shelves as an alternative for those who do not drink, the concept of low or no alcohol products was just not something we considered.

That has changed dramatically. When licensed venues were open in 2021, 29% of customers drinking beer chose a low or no alcohol option and 20% chose no/low spirits as well.

The No.1 key trend listed in the Liquor Retailing in Australia Report is that beer consumption has risen due to the greater prevalence of low-alcohol beer products. Currently, these no-low beers account for 80% of the total no-low beverage market.

We have seen new products land on the shelves, with Heineken and Peroni launching zero percent alcohol options while the famous Gordon's gin also released a no-alcohol variant in 2021. This ties into premiumisation, allowing people to have a premium experience without feeling pressured into consuming alcohol.

Dry July drives Sober-curious movement

It is all intrinsically tied to a new culture dubbed 'sober curious’ that has more and more Australians, particularly young Aussies, breaking from our alcohol culture and experimenting with life without booze. We have seen entire months dedicated to it, with Dry July and October encouraging people to take a month off the drink for their health and wellbeing.

Many people, like influencer Olivia Rogers, are extending their sobriety long beyond the 30 days mandated by these challenges.

"I sort of realised that it wasn’t helping my intentions to be healthy, to be the best version of myself, and for my mental health, that I was doing something that was so detrimental," she said.

That doesn't mean Olivia has shunned having a glass of wine on date nights or special occasions, it just means she is choosing zero alcohol alternatives.

How to position low and no alcohol products to consumers

One of the keys to the successful marketing of low and no alcohol products has been to fuse the concept with premiumisation. The supermarket variants of zero alcohol beer and wine are a hard sell because they don’t provide the experience consumers are craving.

As mentioned previously, Heineken, Peroni, Gordon’s, and other brands have achieved great success by positioning their products as premium as a sales incentive and finding an audience that is willing to pay top dollar for beer and spirits with no alcohol content.

This is not a trend that is going to go quietly into the night. IWSR forecasts that these no and low alcohol products will grow by 16% between 2020 and 2024 while beer with no alcohol has already claimed a 5% share of the total market.

This means that retailers will need to be savvy and adopt strategies to meet this rising demand. Where low and no alcohol products might have been hidden on a back shelf previously, they now demand prominent fridge space for grab-and-go purchases.

It is also recommended that these products share real estate with their full-strength cousins, rather than a dedicated no alcohol section. This is likely to inspire consumers to think twice about their purchase and maybe gravitate toward the no alcohol alternative.

Finally, the key to success is through education. Staff should be well trained on these products and share their knowledge with consumers. There should be clear signage and messaging inviting customers to try a no-alcohol alternative. External promotion is important as well, to entice people who don't drink at all into a bottle shop to purchase zero alcohol products.

The game is changing, low and no alcohol products are demanding their spot in the limelight. The retailers and producers that respond by running targeted promotions for their products are going to capture the greatest share of this growing market.