Millennials and Generation Z are consuming far less alcohol than previous generations. University College London has found that the percentage of 16- to 24-year olds who do not drink at all (lifetime abstainers) increased from 18% in 2005 to 29% in 2015. In the US, this decrease in alcohol consumption is not only a generational fad, given that about half of American adults are actively trying to drink less. With the overall trend towards lower alcohol consumption, where does this leave alcohol brands and what impact will it have on alcohol advertising?

The move to mindfulness

The no- or low-alcohol phenomenon is largely driven by younger generations, with social media campaigns such as #SoberCurious #DryJanuary and #MindfulDrinking helping it to gain traction. A healthier lifestyle is one of the key motivating factors for decreasing alcohol consumption – millennials are largely responsible for driving a $4.2-trillion global wellness market. This age group also sees getting drunk as uncool and something old people do. The impact of social media and the potential for unseemly or embarrassing behaviour to be recorded and posted in a public domain also make them more mindful of their alcohol consumption. More interestingly, 90% of this generation considers marijuana to be a safer alternative to alcohol.

Low-or no-alcohol

While no-alcohol brews account for just 5% of the beer market, sales have outpaced that of alcoholic beer five to one over the past six years and the 2018 “GlobalData Report” showed that nonalcoholic beer is the fastest-growing segment in the beer industry. AB InBev has committed to making 20% of its beer volume no- or low-alcohol by 2025, so alcohol companies certainly have realised the need to invest in alternatives if they still want a seat at the bar. To that end, we have seen a number of mocktails and other nonalcoholic drinks making their appearance.

Diageo, the world’s largest spirits maker, acquired a majority stake in nonalcoholic spirit brand Seedlip this year, while Heineken already has its 0.0% MAXX. Coca-Cola has also managed to get in on the action to compensate for decreasing soda sales: it has launched its four Bar None alcohol-flavoured drinks in Atlanta in the US and a low-alcohol “alcopop” combination of cola and shochu in Japan. Locally, Castle Free and Bavaria are top alcohol-free contenders. Duchess alcohol-free gin and tonic is also a domestic favourite, and is making its mark internationally. 

Is it sustainable?

While finding a low- or nonalcoholic alternative doesn’t appear to be a problem, making money from the phenomenon seems more difficult. Mocktails, with their heavy fresh juice component and attendant wastage, carry a hefty price tag without the return provided by traditional cocktails, which make their buck from the spirit content. Similarly, it costs a great deal more to produce nonalcoholic brews, so the question to be asked is: “Who will foot the bill?” Consumers have a mindset that “less alcohol” should mean “costs less” and consequently, they don’t seem too keen on picking up the tab. Conversely, bars and restaurants aren’t recovering margin, either through the true drinks cost or through any increase in the price of their food. In fact, the experience in “sober bars” is that, perhaps as a combination of the mindful consumer type and the lack of drunken inhibition reduction, the food and especially snack consumption traditionally associated with alcohol declines significantly.

The fact is, the low- and no-alcohol on-premise value chain just isn’t that attractive financially and no-one seems to be making it sing.

The impact on advertising

So, is the trend significant enough for brands to be switching their ad budgets away from alcohol advertising towards alcohol-free advertising?

We think not. First, consumers, and especially the government, are increasingly suspicious of “gateway advertising”, where nonalcoholic variants are a proxy for alcoholic brand awareness. Second, distribution and pricing are just too out of line with our mass drinking market. And finally, these low- or no-alcohol brands are likely to be eviscerated by forthcoming cannabis-based beverages, which, once legalised, are likely to rapidly fall in price and gain consumer traction.

Our prognosis is that few of these variants will prove self-sustaining, that the total quantum of SA alcohol advertising is likely to shrink dramatically and is likely to be outlawed within five years, and that the sober-curious will migrate to cheaper, better cannabis drinks to satisfy their beverage and social needs in future. You heard it here first.

  • Steve Miller is head of strategy at DUKE.


the big take out

The total quantum of SA alcohol advertising is likely to shrink dramatically in the next few years.

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