Boom times for booze-free brands

While South Africans grumble at the continued ban on alcohol sales under lockdown, it’s not only the illicit booze traders that have seen an uptick in fortunes.

Across SA producers of booze-free beverages – from de-alcoholised wine to distilled nonalcoholic gin – have enjoyed a surge in demand. It’s a sober silver lining for a category of the market that was a minor player before lockdown restrictions began to bite.

Johannes le Roux is one entrepreneur who has long had an eye on the potential of the alcohol-free drinks market. Le Roux and Inus Smuts launched The Duchess in 2016, marketing their nonalcoholic "gin & tonic" as an “alcohol-free adult drink”; its upscale packaging and complex flavour profile a far cry from sweet and fizzy soft drinks. 

“Even before lockdown we had seen an incredible awareness and demand for alcohol-free drinks, whether it’s for lifestyle or health reasons,” says Le Roux. “It’s a category still in its infancy, but it’s something that we see growing tremendously over the next few years."

That growth has been sharply accelerated thanks to the ban on alcohol sales. In April The Duchess saw a 150% year-on-year increase in sales, and hit its monthly sales target for May within the first week.  

The lockdown has also opened up new channels to market for the brand. Online sales leapt from just 5% of volume to more than a quarter, and uptake in retail stores has soared.

“Our biggest customers used to be liquor stores, but during this period of working with the big retailers we’ve convinced them to create alcohol-free sections on the grocery side. That’s definitely a positive move for the entire category,” says Le Roux.

Retail channels have been key to growing volumes during lockdown, agrees Phillip Retief, CEO of Van Loveren Family Vineyards. From their cellars in the Robertson wine lands, Van Loveren produces the “Almost Zero” range of de-alcoholised wines; the alcohol removed from the wine post-fermentation, using spinning cone technology. 

While retailers were at first hesitant to move de-alcoholised lookalikes away from the wine aisles, “with the extension to the second lockdown we started pushing hard and sales have doubled in this short time,” says Retief.

Crucially, the lockdown has sparked an interest in the category among wine lovers who would normally turn their well-trained noses up at de-alcoholised wine. 

“[The lockdown] has definitely assisted us in getting the product more traction,” says Retief. “I think customers are purchasing out of curiosity and the mouth-feel related to wine.”

“People are used to enjoying wine with their food,” agrees Hein Koegelenberg, CEO of Leopard's Leap in the Franschhoek valley, which offers both red and white de-alcoholised wines under the Natura label. “So in lockdown you either drink de-alcoholised wine, or you have soft drinks. And to have Oros or cooldrink with your meal? It’s just not lekker!”

The Natura brand launched in 2019, after three vintages of trial-and-error, and though it accounts for just 4% of the cellar’s local sales, that figure that has doubled over the past month.

“It’s been huge for us,” says Koegelenberg. “All of a sudden we’re shifting a large amount of wine. We’ve actually run out of stock, so we’ve had to look at making the next vintage available early.” 

The beer market has similarly seen a flush of nonalcoholic brands – both imported and locally brewed – arrive on local shelves over the past few years. SA Breweries offers Castle Free, Heineken offers “0.0”, while dominant player in the craft industry – Devil’s Peak Brewing Company – has a pair of brews under the Devil’s Peak Hero label.

The lockdown has been a boon for these brands, says Elizanne Rauch, the marketing general manager for brand owner Signal Hill Products: “We have certainly seen increased demand, not only through sales from our regular stockists of Devil’s Peak Hero, but also through more outlets listing our product nationally. Our month-on-month increase from March to April was more than 350%.”

Alongside a societal shift in attitude towards nonalcoholic drinks, “we’ve also seen a shift in the quality of the products on the market. I think the producers are getting it right,” notes Brendon Geary, head of buying at online retailer Yuppiechef. “A few years ago a nonalcoholic beer wasn’t a great-tasting beer. But that’s changed. It’s just a great craft beer, it tastes really good, whether it’s alcoholic or not.”

Alongside Devil’s Peak’s Hero range, “The Duchess has been extremely strong for us, adds Geary. “In the lockdown period alone, we’ve seen a 500% increase in sales.” 

For larger players, the presence of a nonalcoholic brand in the stable has also generated valuable – if limited – cash flow during the ban on alcohol sales. 

“The Covid-19 lockdown and ban on the sale of liquor has had a significant impact on our business, with Hero making up a small percentage of the overall lost sales in April,” adds Des Jacobs, MD of Signal Hill Products. “We do anticipate that Hero will contribute more than 25% of our total sales in the future, and also help us to survive the lockdown by allowing us to generate sales from this category.” 

Similarly, for Van Loveren Family Vineyards – home to the high-volume Four Cousins brand, among others – the “Almost Zero” range is a drop in the ocean of wine that would ordinarily leave the cellars each month. 

“It is still a very small part of our business,” says Retief. “Ironically in April it was our only turnover so it will fill a few small gaps in terms of costs, which indirectly means that it is now more than ever contributing to going-concern realities.”

Far more valuable is the priceless marketing push that lockdown has given the category. While there was dabbling and experimentation before lockdown, the past weeks of enforced sobriety have introduced countless South Africans to a new category of alcohol-free alternatives.

“Pre-Covid-19 we saw the start of consumers becoming more health conscious, and going forward we anticipate this trend accelerating,” says Rauch. “We would say [lockdown] has entrenched a growing trend.”

For Le Roux, founder of The Duchess, the shift is a tectonic category movement more than just a trend: “The alcohol ban has certainly fast-tracked the trial process as a lot more people are able, or are forced, to try no-alcohol alternatives. Our goal is that they realise that it is something they can continue once the ban is lifted.” 

Even then, fans of a tipple or two might not have a choice. 

With the new Administrative Adjudication of Road Traffic Offences (Aarto) Act threatening a 0% blood-alcohol limit behind the wheel, the outlook for the nonalcoholic beverage category looks bullish. When we’re finally able to take up our favourite bar stool again, chances are it’ll be for one more glass of de-alcoholised Cabernet for the road.