Beyond Booze: Navigating the Rise of the Non-Alc Market

Dan Gasper (0:10)

Uh, good morning, all. Uh, nice to see some familiar faces. Um, for those of you I haven’t met, uh, my name is Dan Gasper, um, and I’d like to start today by thanking you for coming to a talk about non-alc at a booze show. So, thank you. Um, so why am I here in front of you all today? Uh, um, so, uh, I’ve been working in spirits for 23 years now. Um, I spent my early years working in corporate booze, uh, sales, marketing, that kind of thing. Um, and in 20— 2008, I fell in love with startups, and, uh, I became a coach for founders, um, much before kind of a lot of people were getting into the space of being a founder of their business. Um, I’ve now coached founders of drinks companies for about 15 years. I’ve coached about 100 different founder-led businesses. Um, I co-founded a business called Distill Ventures in London back in 2013, um, and in 2021, I founded, uh, my company today, uh, which is called The Ardent Company, uh, based in Los Angeles, California. So my journey in non-alc started, uh, meeting a very, very nice gentleman who some of you will know. Uh, his name is Ben. Um, he, uh, came into our office and complained that when he ordered a non-alc drink in some of London’s finest cocktail bars, uh, he was, uh, treated like a second-class citizen—his words. Um, um, he was served a sugary, revolting mocktail, um, and was generally treated quite badly because he wasn’t drinking. Um, he wanted to change the way the world drank. Um, his brand, Seedlip, started that. Um, but the game has changed. Um, last week, I walked into a— a bar in LA, uh, with a colleague, um, and I asked the bartender—rowdy cocktail bar in Echo Park, and I spotted the Ritual range was sat on the back bar, um, and I inquired what these products were, and she lent across the bar and told me, “Get with it, the world is changing.” Uh, so thank you to David, to Ben, and to all the other pioneers who’ve, uh, uh, who founded non-alc businesses, uh, for choosing a quite difficult path, but a different path.

Dan Gasper (2:23)

So, um, first, I just wanted to talk a little bit about, you know, the last 12 months have seen some really quite big changes. So, firstly, from a consumer perspective, you know, yes, there were less people drinking in Dry January, um, but more people are, you know, in— including moderation in what they do. And, you know, I think there’s a few stats flying around, but whether it’s 70 or 80% of, uh, non-alc drinkers also drink alcohol, um, the— the kind of non-alc consumer is moving from what was a very early adopter and is starting to kind of seed into that early majority. No longer, if you ask for a great non-alc beverage, you’re met with that kind of second-class citizen piece. Uh, the world’s waking up, which is great. Um, and non-alc sales patterns are starting to mirror that of alcohol, which is also a really interesting piece. You know, consumers are now buying more non-alc products in-on than they do in those kind of Dry January or Dry July, if you’re from other parts of the world. So, some really big, interesting changes going on in consumer habits. Um, but also the channel focus is beginning to change as well. You know, non-alc stores continue to grow in kind of volume and quality, and there’s some amazing ones out there. If you haven’t been to, uh, New York’s ones, I really recommend that you visit Spiritless. Um, and if you’ve you’ve never been to a Boisson before, get in there, it’s amazing. Soft Spirits in LA as well, big shout out. Um, and, you know, while regular retail is waking up to that opportunity as well, you know, you used to walk into most bigger stores and they would laugh at you about non-alc. They’d tell you, “There’s the soda.” Uh, but that’s changing, too. So, there’s lots of really exciting stuff going on in this last year. Um, I think also for a lot of brand owners, um, that the, uh, there’s been a realization of the limitations of DTC. Um, there’s a— you know, and there’s a big opportunity to actually focus in the on-trade, uh, which I think is really opening up, and to drive kind of trial, awareness, and discovery in the on-trade. So, those are some of the big changes that I’ve noticed, and we’ve noticed as a company, in the last 12 months.

Dan Gasper (4:18)

So, I guess, um, where are we today? Everyone likes some numbers. I thought I’d give you some numbers. Um, here’s a few. Um, yes, Millennial drinkers are, you know, drinking less. There was also a big piece that came out just a couple of days ago about that Gen Z drinking less as well. Thank you. Um, and, you know, um, that is— that’s a— a sizable change. Um, there’s big stats coming out of IWSR last year, which I think, David, you’ve always kind of checked, you know, this $11 billion statement is a chunky one, and I absolutely agree it is just the beginning. Um, and the fact that, again, that these kind of drinkers of non-alc are, you know, um, are, uh, expected to grow quite dramatically out of all the spaces. This is the kind of— one of the hottest categories in, uh, s— in sophisticated drinks. So, a little bit about why non-alc is continuing to grow, kind of building on some of the themes that we’ve already touched on as a panel. Um, you know, consumers are increasingly concerned about overall health and wellness. That is a trend that is not going away, um, and increasingly about, you know, reaping the rewards of health benefits of, uh, you know, not taking as much alcohol in, uh, reducing alcohol intake, and subsequently sugar and calories. I think we’ve all now learned just about to count calories. No? Some of us maybe? Yeah, okay. Um, and, uh, this newfound focus on moderation, not abstinence. You’re not drinking, uh, because you’re trying to save money. You’re not drinking because you’ve got— many of the reasons that David talked about earlier: you’ve got a big meeting the following day, you’re in the middle of a diet, you’re pregnant, you’re— um, your friend is pregnant across the way and you want some solidarity. Um, for whatever those reasons, people are cutting back, um, and cutting out bits of booze. It doesn’t mean they’re not drinking; it just means that they’re choosing to drink non-alc sometimes.Dan Gasper (5:58)

So, I wanted to talk just a little bit towards the end of my— my presentation about the kind of non-alc landscape today. Um, we at Ardent see the non-alc, you know, landscape evolving into these two very kind of interesting spaces. So, you’ve got, um, a lot of brands are much more focused on flavor, you know, um, drinks focused on delivering that excellent flavor experience where that’s the most important part of it. Uh, if you haven’t tried, uh, Visitor, it’s a really delicious 0.5% alcohol, uh, beer. Uh, if you haven’t tried NON, check out wine alternatives and the future of, uh, that space. Uh, I think probably most people know what Ghia is, but it’s delicious, uh, and they’re a great company. Um, on the other side, you’ve got that kind of more functional piece. This is much more better-for-you drinks that are delivering a kind of, uh— let’s call them “buzzy benefits,” um, my colleague’s words, um, but, um, you know, if you haven’t tried any of these, you know, De Soi is an amazing brand coming out of California. Uh, Solbrü, again, kind of a spirit alternative, um, uh, really kind of playing around with the mushroom space. So, these are the two big kind of spaces that we, uh, see the kind of category evolving into. To further, you know, define that down, in that kind of flavor space, um, there’s a category of kind of what I call non-alc non-alc, uh, which is very much the brands on the left-hand side. They’re kind of real, brilliant alternatives to alcohol. And then there’s a kind of, uh, less defined space, but I guess more kind of like slightly more playing in the aperitif space, um, where you’re kind of like building on brands like Figlia, which is from here in New York, Pathfinder, and, uh, and Tenneyson from down in Texas. So, lots of really interesting spaces there in the flavor-forward category. And then really, you know, I guess one of the kind of— I guess this is the cutting edge, I guess, maybe, maybe of non-alc, is this idea of function. Um, you know, function and alcohol, you know, alcohol can be quite dysfunctional at times. Um, I think we’ve all had those moments. Um, so these are a collection of different spaces where we see people really moving into functional. There’s a more mindful, better-for-you drinks, the likes of, um, Aplós, Rasas, Vada from here in New York again, uh, Parch, if you haven’t tried it, it’s delicious. Um, then there’s people giving you a real— uh, not sure if it’s a functional buzz, but a real buzz in the cannabis space. Um, if you haven’t tried Artet, it’s an amazing product. This is, on the right, is Pamos and their Mai Tai, uh, again, delicious. And then this third space is this kind of far more adaptogenic, slightly nootropic, um, still very buzzy, um, Bon Buzz—clues in the name—uh, delicious, and Kin, I think most people in this room have probably tried it. If you haven’t, go out and try it. So, that’s kind of how we see the kind of categories evolving. It will continue to evolve, you know. Um, if booze is at 5:00 p.m. in the afternoon and it’s journeying consumers, you know, alcohol is still at, you know, 5:00 p.m. midnight. It’s not even dawn yet. This is a category that’s going to keep developing, keep growing, um, and I guarantee this presentation will be different next year.

Dan Gasper (9:13)

So, um, can I just sense check in the room, who, uh— who has a non-alc brand at the moment? Okay, awesome. And who’s thinking of starting a non-alc brand? Okay, okay. Few hands, excellent. Okay, well, this last piece, uh, is for, uh, I guess, more for the smaller group of hands, those thinking of starting. But I thought I’d just talk on my last slide about five keys to success if you are a founder of a non-alc brand. This is our view. First up, build a really distinctive brand. I can’t tell you enough. You’ve seen how craft spirits has evolved into, uh, kind of 2.0 brand-forward space, you know. The quality of brand needs to be exceptional. Get— get really clear on your consumer proposition: What is that benefit? What do you do for a customer? Where do you fit in their lives? Um, make sure the liquid is the best you can be before you launch. You are only new once in this world when you launch your brand, and there are far too many people who go to a flavor house, try three different recipes, choose the best one, and fire it into the market, and wonder why it doesn’t succeed. You know, I know from speaking to some of, uh, my fellow panelists that 500 versions of the same drink is how you get good, good, and I implore you, do not launch before it’s amazing. Um, we’ve got the entire bar trade to come and give you some very honest opinions, so go out and speak to bartenders and get them to play with it before you launch anything. Um, meet your customers. I think, um, a lot of the time, uh, it’s very easy to get other people to do your sampling, but I would implore you as a founder is to go and do your own samplings. It’s not beneath you; it’s where your public are, it’s where the people will give you very honest feedback. It’s not what your mom and dad are going to tell you, it’s not what your colleagues are going to tell you, it might not be even what your investors are going to tell you—it will be a version of the truth, so go and do those samplings. Another really important one, uh, DTC is only going to get you so far. It was an amazing, uh, uh, uh, gift to this particular space during, uh, COVID, and, you know, a lot of people had 80% of their sales DTC, 20% of their sales on and off-trade, but that is changing very, very quickly. It can become 20/80. So, I implore you, you know, engage the community of the bar world and the off-premise, you know, because they are the people that are real mavens and are going to tell people about your brand. And last, but by no means least, believe. Um, you know, you will have naysayers who say they don’t get it, um, but as the bartender in Echo Park told me, uh, the world is changing. Thank you very much.