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Attitudes towards Low- and Non-alcoholic Drink - UK - April 2015

“Cost is also a barrier hampering over-45s’ interest in the market and introductory offers or money-back guarantees could encourage trial to try to address the doubts about the quality of these drinks.”
– Chris Wisson, Senior Drinks Analyst

This report looks at the following areas:

  • Managing expectations of saving money on low/non-alcoholic drinks
  • Winning over older drinkers
  • Competing more efficiently with soft drinks
  • Following in German footsteps

Lower/non-alcoholic variants remain a niche part of alcoholic drink markets in the UK, with a quarter of adults having drunk them in the six months to February 2015. With many Brits cutting back on their consumption of alcohol on health grounds, there are opportunities for reduced alcohol drinks to thrive as less calorific options. However, they appear to be losing out to soft drinks, which are many drinkers’ preferred alternative to standard-strength alcoholic drinks for a variety of occasions. Links to being too expensive and having an unappealing taste continue to hamper the market.

Nevertheless, there have been encouraging signs of rising lower-alcohol beer sales since the introduction of the 2.8% ABV (Alcohol by Volume) tax band, with the segment being buoyed by an increasing number of high-profile operators. However, lower/non-alcoholic wines continue to struggle, largely due to perceptions of their inferior taste and a lack of innovation. An increase in NPD (New Product Development) activity, store visibility and marketing support is likely to be needed to drive these segments into more robust growth in the coming years.

This report covers the UK market for low/non-alcoholic drinks and explores consumer attitudes towards these variants. In all categories, non-alcoholic drinks refer to those which have an ABV of 0%, or have trace amounts of alcohol (eg 0.1% ABV).

Many consumers are cutting back on their consumption of alcohol, largely on financial and health grounds. Lower/non-alcoholic drinks remain a niche part of the alcohol landscape in the UK, a situation which is unlikely to change in the coming years. The lower-alcohol beer market is seeing slow growth, with a number of new operators such as Foster’s Radler boosting the visibility and credibility of the market. However, inconsistencies in the quality of these drinks are affecting consumer views and need resolving. Meanwhile, the lower/non-alcohol wine market has struggled in recent years, with a lack of NPD activity and marketing support also holding back volume growth.

Perceived poor taste is among the key reasons why sales growth has been limited in these markets. Only a quarter of adults drank at least one type of a low/non-alcoholic drink in the six months to February 2015, underlining how the majority of adults need convincing about their credentials. The lower-alcohol segment is likely to have to utilise sampling and/or promotional activity to win over the many sceptical consumers.

Brands also have to find ways of communicating value for money more effectively as just under half of drinkers would be interested in lower/non-alcoholic drinks if they were noticeably cheaper than standard-strength variants. While lower-alcohol drinks do benefit from tax breaks, many consumers appear to expect greater savings than these can accommodate. Rather than focusing on the absence of alcohol, brands should instead communicate what they have included which justifies their price. Examples of this include a complex production process, unique ingredients or added flavours such as citrus, all of which can make these drinks seem more premium.

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Table of contents

  1. Introduction

      • Definitions
        • Abbreviations
        • Executive Summary

            • The market
              • Market factors
                • The consumer
                  • Low/non-alcoholic drinks achieve only limited penetration
                    • Figure 1: Usage of types of alcoholic drinks in the past six months, February 2015
                  • Soft drinks dominate when standard-strength drinks are not desired
                    • Figure 2: Preferred alternatives to standard-strength alcoholic drinks on different occasions, February 2015
                  • Many consumers have realistic expectations of calorie contents of their drinks
                    • Lower-alcohol drinks suffer from some unfavourable associations
                      • Figure 3: Qualities associated with low/non-alcoholic drinks, February 2015
                    • Lower-alcohol drinks must compete harder on cost and taste
                      • Figure 4: Attitudes towards low/non-alcoholic drinks, February 2015
                    • What we think
                    • Issues and Insights

                        • Managing expectations of saving money on low/non-alcoholic drinks
                          • The facts
                            • The implications
                              • Winning over older drinkers
                                • The facts
                                  • The implications
                                    • Competing more efficiently with soft drinks
                                      • The facts
                                        • The implications
                                          • Following in German footsteps
                                            • The facts
                                              • The implications
                                              • Trend Application

                                                  • Help Me Help Myself
                                                    • Extend My Brand
                                                      • Generation Next
                                                      • Market Drivers

                                                        • Key points
                                                          • UK consumers continue to cut back on alcohol
                                                            • Figure 5: Trends in UK per capita consumption of 100% alcohol, 2006-14
                                                          • Reducing the Strength scheme
                                                            • Alcoholic drink prices continue to rise
                                                              • Figure 6: RPI indexed annual change for alcoholic drink prices versus all items except housing, 2000-14
                                                              • Figure 7: How consumers describe their financial situation, February 2015
                                                            • Changes to taxes on alcoholic drinks
                                                              • Figure 8: Excise duty rates and tax on a pint of beer at different strengths, as per 2015 Budget
                                                              • Figure 9: Excise duty rates on a pint of cider at different strengths, as per 2015 Budget
                                                              • Figure 10: Excise duty rates on 750ml bottles of wines at different strengths, as per 2015 Budget
                                                            • An ageing population could pose a threat to lower/non-alcoholic drinks
                                                            • Strengths and Weaknesses

                                                              • Strengths
                                                                • Weaknesses
                                                                • Who’s Innovating?

                                                                    • Beer dominates lower-alcohol NPD activity
                                                                      • Wine’s lack of lower-alcohol NPD appears to be impacting on sales
                                                                        • International inspiration
                                                                        • Market Performance

                                                                          • Key points
                                                                            • Lower-alcohol wines gain marginal traction
                                                                              • Figure 11: Off-trade value and volume sales of still & sparkling wines under 5.6% ABV and beers under 2.9% ABV, 2012-14
                                                                            • Lower-alcohol beer showing encouraging signs of growth
                                                                            • The Consumer – Usage of Alcoholic Drinks

                                                                              • Key points
                                                                                • Low/non-alcoholic drinks achieve only limited penetration
                                                                                  • Figure 12: Usage of types of alcoholic drinks in the past six months, February 2015
                                                                                  • Figure 13: Usage of low/non-alcoholic drinks as a proportion of total category users, February 2015
                                                                                  • Figure 14: Repertoire of usage of types of low/non-alcoholic drinks in the past six months, February 2015
                                                                                • Still wine fares poorly in the lower-alcohol segment
                                                                                  • Three in 10 users of lower-alcohol drinks are increasing their usage
                                                                                    • Figure 15: Usage of low/non-alcoholic drinks, February 2015
                                                                                • The Consumer – Occasions for Consumption

                                                                                  • Key points
                                                                                    • Standard-strength alcoholic drinks are popular in and out of home
                                                                                      • Figure 16: Occasions for drinking standard-strength alcoholic drinks, February 2015
                                                                                    • Soft drinks dominate when standard-strength drinks are not available
                                                                                      • Figure 17: Preferred alternatives to standard-strength alcoholic drinks on different occasions, February 2015
                                                                                      • Figure 18: Combined preference for low/non-alcoholic drinks as alternatives to standard-strength alcoholic drinks on different occasions, February 2015
                                                                                    • Low-alcohol drinks could thrive in the on-trade
                                                                                      • Tapping into more niche occasions
                                                                                      • The Consumer – Perceptions of Calories in Alcoholic Drinks

                                                                                        • Key points
                                                                                          • Consumers have realistic expectations of calorie contents of beer
                                                                                            • Figure 19: Perceptions of the calorie content of a pint of beer (568ml), by strength, February 2015
                                                                                          • Many drinkers overestimate wine’s calorie content
                                                                                              • Figure 20: Perceptions of the calorie content of a large glass of wine (250ml), by strength, February 2015
                                                                                          • The Consumer – Perceptions of Low/non-alcoholic Drinks

                                                                                            • Key points
                                                                                              • Lower-alcohol drinks suffer from some unfavourable associations
                                                                                                • Figure 21: Perceptions of low/non-alcoholic drinks, February 2015
                                                                                                • Figure 22: Perceptions of low/non-alcoholic drinks, by gender, February 2015
                                                                                              • Millennials emerge as the advocates
                                                                                              • The Consumer – Attitudes towards Low/non-alcoholic Drinks

                                                                                                • Key points
                                                                                                  • Summary of attitudes towards low/non-alcoholic drinks
                                                                                                    • Figure 23: Attitudes towards low/non-alcoholic drinks, February 2015
                                                                                                  • Reduced alcohol drinks struggle to compete against soft drinks
                                                                                                    • Figure 24: Attitudes towards the health credentials of low/non-alcoholic drinks, February 2015
                                                                                                  • Winning over the taste sceptics
                                                                                                    • Figure 25: Attitudes towards the taste of low/non-alcoholic drinks, February 2015
                                                                                                    • Figure 26: Attitudes towards low/non-alcoholic drinks with significant differences, by gender, February 2015
                                                                                                  • Cost is a barrier to market growth
                                                                                                      • Figure 27: Prices of selected alcoholic drinks, 10 March 2015 (excludes promotional prices)
                                                                                                      • Figure 28: Attitudes towards the image and cost of low/non-alcoholic drinks, February 2015
                                                                                                    • Improved visibility could boost the market’s fortunes
                                                                                                      • Figure 29: Attitudes towards the availability of low/non-alcoholic drinks, February 2015
                                                                                                  • The Consumer – Target Groups

                                                                                                    • Key points
                                                                                                      • Four target groups
                                                                                                        • Figure 30: Target groups, February 2015
                                                                                                      • Sceptics (29%)
                                                                                                        • Disengaged (29%)
                                                                                                          • Health-aware (23%)
                                                                                                            • Lower-alcohol Fans (19%)

                                                                                                            Companies Covered

                                                                                                            • H P Bulmer Holdings PLC
                                                                                                            • Heineken N.V.
                                                                                                            • Kopparbergs Brygegeri AB

                                                                                                            Attitudes towards Low- and Non-alcoholic Drink - UK - April 2015

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