Non-Alcoholic Drinks

WHITE PAPER

MAY 2019

N o n -A lco h o l i c Drinks

A GROWTH STORY

EXEC SUMMARY

Growth overview

EXEC SUMMARY

We've been watching the popularity of `non-alcoholic drinks' grow over the last 3 years, and according to new research commissioned by us here at Distill Ventures, their time has finally come. 61% of consumers want better choice when it comes to non-alcoholic drinks, while 58% are drinking more no and low abv drinks than last year.

In London, 55% of the most influential bartenders believe the no and low abv trend will grow in the next 12 months with 42% expecting non-alcoholic spirits and aperitifs as a focus alongside non-alcoholic beer, wine and other offerings.

While in the US, 83% of bar managers in Los Angeles think non-alcoholic cocktails are part of a growing trend. Already over 40% of restaurants in Los Angeles now offer a non-alcoholic specific drinks menu and in London we see even higher numbers, with 55% giving consumers sophisticated non-alcoholic choices.

Beyond bars and restaurants, we also see increased uptake of non-alcoholic drinks at home.

61 %

61% of consumers in the UK want better choice when it comes to non-alcoholic drinks.

58 %

of consumers are drinking more no and low abv drinks than last year.

42 %

of the wider London on-trade* are expecting non-alcoholic spirits to be key in their next 12 months sales mix.

83 %

of bar managers in Los Angeles agree that non-alcoholic drinks are part of a growing trend.

Sample size: CGA bartender influencers: 83

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DISTILL VENTURES

WHAT MAKES A NON-ALCOHOLIC DRINK? Here are our three criteria:

A GROWTH STORY

01. OCCASION Equivalency in both the preparation and presentation of non-alcoholic drinks, fitting in with other drinks on offer and making people feel included in occasions where alcoholic drinks are consumed.

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02. FLAVOUR Drinks that stay loyal to familiar flavours and textures while still innovating and experimenting with serve and ingredients.

03. CRAFT & SERVE Drinks whose preparation and presentation are crafted with equivalent levels of technique to alcoholic cocktails, drawing on mixology and culinary processes.

EXEC SUMMARY

"

REGARDLESS OF WHETHER YOU'RE DRINKING (ALCOHOL) OR NOT, YOU CAN HAVE EXACTLY THE SAME EXPERIENCE AS A GUEST (WHO IS): THE DRINK LOOKS THE SAME, IT TASTES THE SAME, IT IS GARNISHED THE SAME.

" Owner, cocktail bar in East London

RESEARCH

We have commissioned two data agencies specialising in global drinks trends, IWSR and CGA, to closely examine the market and provide us with first of its kind data. The studies clearly illustrate the growth of `nonalcoholic' drinks on menus and show that growth is being driven by both consumers and bars & restaurants.

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DISTILL VENTURES

A GROWTH STORY

360? GROWTH Looking at it from 3 perspectives:

01. THE ON-TRADE PERSPECTIVE

RESTAURANTS WITH THEIR OWN NON-ALCOHOLIC DRINKS MENU:

LA

NY

%

40 1/3

We compare and contrast growth in London, the US, and the rest of the world. The story isn't always the same.

02. T HE CONSUMER PERSPECTIVE

59% 43%

59% of consumers in the UK order non-alcoholic drinks on nights out when they're also drinking alcohol.

Out of the growing number of people interested in balanced lifestyles, 43% are going out at leastonce a week, and taking advantageof the variety of nonalcoholicdrinks available.

03. T HE PRODUCER & BARTENDER PERSPECTIVE

Creating fantastic and complex non-alcoholic drinks has its own challenges and is not easy, but the growth of consumer demand is encouraging experimentation and creativity from drinks professionals.

THE OPPORTUNITY

While complex and interesting nonalcoholic drinks are available in many bars and restaurants, with many being made from scratch on the premises, the big opportunity is making high quality ingredients more widely accessible.

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WHITE PAPER

Contents

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DISTILL VENTURES

A GROWTH STORY

08-09 Where are we now?

Some context

10-11 What do we mean by non-alcoholic drinks?

More than a soft drink

12-17 a growth story

The industry perspective

18-21 growing demand for choice

The consumer perspective

22-23 The technical challenges

The bartender perspective

24 The opportunity

Wider availability

D I S T I L LV E N T U R E S . C O M

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BACKGROUND

Where are we now?

SOME CONTEXT

i

in 2017

We announced the most exciting trend in the drinks industry was the emergence and growth of complex and interesting non-alcoholic drinks.

We had observed the rapid growth of wellness, the experience economy and noted how increased curiosity and demand for greater product and flavour choices had led to a surge in demand for high quality nonalcoholic drinks in major markets. There were new creations from bartenders, an increase in listings on menus and new products coming to market from entrepreneurs but at that point, little data to back up what we saw as this emerging opportunity.

i

in 2019

The scores are in. In the last two years both demand and supply have grown with people wanting more flavour, more choice, and less compromise from their drinks. There has been a noticeable swell of activity, and now we have data to tell a fuller version of the story.

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into the future

We will continue to monitor, collect data and analyse continuing growth with further studies.

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