THE BUZZ IN BOOZE FREE BEVERAGES Ruffell and Garage Project join a growing number of brewers and retailers who are disco
Posted: Thu Apr 28, 2022 10:41 am
THE BUZZ IN BOOZE FREE BEVERAGES Ruffell and Garage Project join
a growing number of brewers and retailers who are discovering what
has been dubbed the NoLo market: a growing market for no- to
lowalcohol beverages. Industry research forecasts that NoLo alcohol
volume will grow by 8 per cent between 2021 and 2025 compared with
the growth of regular alcohol at 0.7 per cent. The NoLo movement is
driven partly by a changing narrative around alcohol. Recent
studies have debunked long-held beliefs about the perks of alcohol
consumption - such as the one that a glass of red wine a day can be
good for the heart. Meanwhile, annual no-alcohol challenges such as
"dry January" and "sober October" on social media are gaining
traction. "People want to go out and have a good time at bars with
friends, and don't necessarily want either the calories or the
alcohol that come with higher-strength alcoholic beverages," says
Matthew Fergusson-Stewart, managing director of Spun Spirits. "It
is no longer about providing a drink for that one pregnant friend,
or abstaining. It is about having options available to suit your
lifestyle - moderation, not elimination," says Jasmin Wong,
co-founder of local bottle shop Temple Cellars. "It's the
possibility of having (an alcoholic) drink on some nights, and a
non-alcoholic one on others." One of the consumers who have
switched to non-acoholic beverages is 30-year-old S Shiva, who went
for a health checkup 2 years ago and was told he was at risk of
liver damage - a result of drinking hard liquor about 4 to 5 times
a week. In a bid to meet his health and fitness goals, he cut down
on hard liquor and turned to low-alcohol seltzers - flavoured
carbonated water mixed with alcohol - that contain just a fraction
of calories and sugar found in regular alcoholic drinks. Guilt over
pandemic binges may also be weighing on the minds of some
consumers. "I think we see people coming out of the lockdowns and
the situations we've had with Covid-19 and deciding to change their
lifestyle. Maybe they consumed more during lockdown and came out
wanting to consume less," says Ruffell of Garage Project. NoLo
beverages require some investment and expertise to get right.
Ruffell says Garage Project had struggled to replicate the taste of
beer without the alcohol. "We destroyed a number of batches that we
weren't happy with," says Ruffell. "It took a long time to get it
exactly to the point that we wanted." Heineken-owned Asia-Pacific
Breweries (APB), one of South-east Asia's biggest brewers, made its
foray into the zero-alcohol category in 2019 with Heineken 0.0. To
produce it, APB Singapore spent S$3.8 million to install a
dealcoholiser at its brewery. "This facility allows us to brew
Heineken 0.0 by gently removing the alcohol to produce a perfectly
balanced and great tasting zero-alcohol beer," says Gerald Yeo,
Marketing Director of APB Singapore. The investment appears to be
paying off. Sales of Heineken 0.0 at supermarkets and convenience
stores grew 22.8 per cent year-on-year in 2021, versus just 3.2 per
cent for its malts liquor business comprising beer, stout and
liquor. DIPL/BUS0119/Apr2022/MainTest Page 5 of 6 Pernod Ricard,
meanwhile, has a brand team based in its Paris headquarters
dedicated to developing NoLo brands for the group. The world's
second largest wine and spirits seller had also bought a majority
stake in Ceder's, an alcohol-free spirits maker, in January in
2021. Japan's Kirin Holdings is expecting sales of its
non-alcoholic beverages to grow by 18 per cent this year compared
with 2021. In 2020, its subsidiary Kirin Brewery rolled out
low-alcohol Kirin Ichiban Zero Sugar after 5 years of research and
development and 350 test prototypes. A Kirin Holdings spokesperson
says it will now focus on the sales of its no-alcohol beer Kirin
Greens Free and continue to develop other innovative NoLo
alternatives such as Kirin Karada Free that contains just 5
calories per 100 ml. One benefit of offering NoLo beverage is the
potential for better margins. Alcohol duties vary by alcohol
strength and the type of beverage. At S$60 per litre of beer, the
alcohol duty in Singapore for a regular pint (473ml) with a 5.5 per
cent comes to S$1.55. Duties on wine and other spirits stand at
S$88 per litre. The alcohol duty, which goes to the government,
limits the amount that retailers can pocket when they mark up the
price of a product. The less alcohol there is in a drink, the less
duty needs to be paid. Over at Garage Project, cost savings from
alcohol tax have made the brewery's NoLo options more affordable.
Over at APB, the alcohol category remains the key contributor of
revenue. But the company is looking to continue scaling the
zero-alcohol segment. APB's Yeo says the introduction of
zero-alcohol beers will complement the company's existing portfolio
of beers by providing more choices to consumers across drinking
occasions, which is key in cementing its market leadership. APB is
looking to cultivate NoLo consumption patterns at restaurants and
cafes. To do so, Yeo says the company plans to use the influence of
social media celebrities to reach out to young consumers to cut
down on drinking and switch to non-alcoholic options instead.
Adapted from Business Times article titled: “The Buzz in Booze Free
Everages” dated 29 January 2022 written by Claudia Tan. ANSWER ALL
QUESTIONS 2. Describe how the following environmental forces have
affected the market for NoLo beverages and determine their impact
on the success of Garage Project in Singapore. (i) Sociocultural
environment; (8 marks) (ii) Regulatory environment; (8 marks) (iii)
Competitive environment.
a growing number of brewers and retailers who are discovering what
has been dubbed the NoLo market: a growing market for no- to
lowalcohol beverages. Industry research forecasts that NoLo alcohol
volume will grow by 8 per cent between 2021 and 2025 compared with
the growth of regular alcohol at 0.7 per cent. The NoLo movement is
driven partly by a changing narrative around alcohol. Recent
studies have debunked long-held beliefs about the perks of alcohol
consumption - such as the one that a glass of red wine a day can be
good for the heart. Meanwhile, annual no-alcohol challenges such as
"dry January" and "sober October" on social media are gaining
traction. "People want to go out and have a good time at bars with
friends, and don't necessarily want either the calories or the
alcohol that come with higher-strength alcoholic beverages," says
Matthew Fergusson-Stewart, managing director of Spun Spirits. "It
is no longer about providing a drink for that one pregnant friend,
or abstaining. It is about having options available to suit your
lifestyle - moderation, not elimination," says Jasmin Wong,
co-founder of local bottle shop Temple Cellars. "It's the
possibility of having (an alcoholic) drink on some nights, and a
non-alcoholic one on others." One of the consumers who have
switched to non-acoholic beverages is 30-year-old S Shiva, who went
for a health checkup 2 years ago and was told he was at risk of
liver damage - a result of drinking hard liquor about 4 to 5 times
a week. In a bid to meet his health and fitness goals, he cut down
on hard liquor and turned to low-alcohol seltzers - flavoured
carbonated water mixed with alcohol - that contain just a fraction
of calories and sugar found in regular alcoholic drinks. Guilt over
pandemic binges may also be weighing on the minds of some
consumers. "I think we see people coming out of the lockdowns and
the situations we've had with Covid-19 and deciding to change their
lifestyle. Maybe they consumed more during lockdown and came out
wanting to consume less," says Ruffell of Garage Project. NoLo
beverages require some investment and expertise to get right.
Ruffell says Garage Project had struggled to replicate the taste of
beer without the alcohol. "We destroyed a number of batches that we
weren't happy with," says Ruffell. "It took a long time to get it
exactly to the point that we wanted." Heineken-owned Asia-Pacific
Breweries (APB), one of South-east Asia's biggest brewers, made its
foray into the zero-alcohol category in 2019 with Heineken 0.0. To
produce it, APB Singapore spent S$3.8 million to install a
dealcoholiser at its brewery. "This facility allows us to brew
Heineken 0.0 by gently removing the alcohol to produce a perfectly
balanced and great tasting zero-alcohol beer," says Gerald Yeo,
Marketing Director of APB Singapore. The investment appears to be
paying off. Sales of Heineken 0.0 at supermarkets and convenience
stores grew 22.8 per cent year-on-year in 2021, versus just 3.2 per
cent for its malts liquor business comprising beer, stout and
liquor. DIPL/BUS0119/Apr2022/MainTest Page 5 of 6 Pernod Ricard,
meanwhile, has a brand team based in its Paris headquarters
dedicated to developing NoLo brands for the group. The world's
second largest wine and spirits seller had also bought a majority
stake in Ceder's, an alcohol-free spirits maker, in January in
2021. Japan's Kirin Holdings is expecting sales of its
non-alcoholic beverages to grow by 18 per cent this year compared
with 2021. In 2020, its subsidiary Kirin Brewery rolled out
low-alcohol Kirin Ichiban Zero Sugar after 5 years of research and
development and 350 test prototypes. A Kirin Holdings spokesperson
says it will now focus on the sales of its no-alcohol beer Kirin
Greens Free and continue to develop other innovative NoLo
alternatives such as Kirin Karada Free that contains just 5
calories per 100 ml. One benefit of offering NoLo beverage is the
potential for better margins. Alcohol duties vary by alcohol
strength and the type of beverage. At S$60 per litre of beer, the
alcohol duty in Singapore for a regular pint (473ml) with a 5.5 per
cent comes to S$1.55. Duties on wine and other spirits stand at
S$88 per litre. The alcohol duty, which goes to the government,
limits the amount that retailers can pocket when they mark up the
price of a product. The less alcohol there is in a drink, the less
duty needs to be paid. Over at Garage Project, cost savings from
alcohol tax have made the brewery's NoLo options more affordable.
Over at APB, the alcohol category remains the key contributor of
revenue. But the company is looking to continue scaling the
zero-alcohol segment. APB's Yeo says the introduction of
zero-alcohol beers will complement the company's existing portfolio
of beers by providing more choices to consumers across drinking
occasions, which is key in cementing its market leadership. APB is
looking to cultivate NoLo consumption patterns at restaurants and
cafes. To do so, Yeo says the company plans to use the influence of
social media celebrities to reach out to young consumers to cut
down on drinking and switch to non-alcoholic options instead.
Adapted from Business Times article titled: “The Buzz in Booze Free
Everages” dated 29 January 2022 written by Claudia Tan. ANSWER ALL
QUESTIONS 2. Describe how the following environmental forces have
affected the market for NoLo beverages and determine their impact
on the success of Garage Project in Singapore. (i) Sociocultural
environment; (8 marks) (ii) Regulatory environment; (8 marks) (iii)
Competitive environment.