Booze Makers Court Consumers With ‘Healthier’ Drinks

 

Source: wsj.com

Saabira Chaudhuri

July 24, 2016

 

From nonalcoholic martinis to cocktails frothed with chickpea brine, drink purveyors are hustling to satisfy consumers’ growing desire for what they see as healthier quaffs.

 

Packaged-foods companies have spent the past few years reformulating their offerings to cater to rising demand for healthier and more natural products. Until recently, booze makers have largely sidestepped this pressure.

 

“Alcohol has long had a free pass,” said Jonny Forsyth, global drinks analyst for research firm Mintel. “People have said, ‘I’m drinking alcohol-I just want to have fun and don’t want to think too much about it.’ “

 

That is changing. Alcohol makers are rolling out a host of gluten-free, vegan, low-sugar, all-natural, low- and no-alcohol drinks as they wake up to the idea that shifting consumer preferences could squeeze profits if they don’t react.

 

“In many occasions, people are drinking less and less alcohol but they want to keep that adult moment of conviviality,” said Julian Marsili, marketing manager for nonalcoholic beer at Danish brewer Carlsberg A/S. “You don’t want to be seen cheering with a Coke or a water, and therefore we offer the alcohol credentials: a bottle, foam, an adult-looking proposition without the alcohol.”

 

Many of the new drinks aren’t necessarily better for you, but consumer-goods experts say there is a growing perception, particularly among millennials, that “free-from” food and drinks are healthier.

 

Diageo DEO -0.22 % PLC, the world’s largest spirits maker, earlier this month said it was investing in a nonalcoholic distilled “spirit” called Seedlip, which it described as “a sophisticated alternative to alcoholic drinks.”

 

At the Dandelyan bar on the south bank of London’s River Thames, bartender Aidan Bowie uses Seedlip-which sells for £27.99 ($36.90) a bottle-to make a drink that tastes similar to a gin and tonic. Also on the menu: nonalcoholic espresso martinis.

 

Mr. Bowie said demand for alcohol-free drinks that rival their alcohol-laced counterparts in taste is growing. The bar now has a boozeless menu that includes a drink made from whey syrup, peach shrub, ginger and soda, and another made from Seedlip, ylang ylang and a herbal tonic.

 

Diageo is also testing a dairy- and gluten-free version of its Baileys liqueur, made with almond milk, and earlier this year launched a line of its Smirnoff vodka flavored with real fruit juice, which the company says is free of both gluten and high-fructose corn syrup.

 

Ivan Menezes, Diageo’s chief executive, has high hopes for the new Smirnoff fruit-juice range. “It leverages all the growing trends in food and beverage which have not yet been available in spirits at a mass scale,” he said earlier this year.

 

Andy Kerr, owner of London bar Discount Suit Company, said a few months ago the bar swapped egg whites for chickpea brine, making some cocktails vegan-friendly. The bar uses the brine to top off its Carrier Pigeon, a cocktail of lavender, lemon and Prosecco.

 

Not every bid to cater to consumers’ rising interest in “free-from” or seemingly healthier products is likely to catch on: Mr. Forsyth doesn’t expect the market for vegan cocktails to explode overnight, for example. But alcohol companies can’t ignore the broader shift in preferences.

 

“Health is more prominent in consumer minds today,” said Deirdre Mahlan, Diageo’s North America head, at a March conference. “Every day we see new statistics and articles about clean eating, the evils of sugar and the need to spend less time sitting down.”

 

In the U.K., adult consumption of alcohol fell 18% between 2004 and 2014, according to industry body the British Beer and Pub Association. In the U.S., declines have become apparent more recently: While consumption climbed 3.6% from 2004 to 2014, it edged down 0.9% between 2012 and 2014, according to the National Institute on Alcohol Abuse and Alcoholism.

 

Alcohol makers are scrambling to adapt.

 

Anheuser-Busch InBev BUD -0.13 % NV, the world’s largest brewer, has pledged to increase no- or low-alcohol beer to 20% of its global beer volumes by the end of 2025, up from less than 9% of volume in 2014. Heineken HEINY -0.21 % NV and Carlsberg are making similar moves, allowing them to target new segments and occasions while also enjoying higher profit margins.

 

The global market for low- and no-alcohol beer grew 19% to $9.96 billion last year from $8.37 billion in 2010, according to data from Euromonitor.

 

Brewers in the U.S. recently pledged to add nutrition labels to their beers, detailing calories, carbohydrates and alcohol levels-though not all ingredients, as some critics have urged.

 

Another area alcohol makers are eyeing is gluten alternatives. The U.S. market for gluten-free foods and drinks jumped to $11.6 billion last year from $4.9 billion in 2013, according to Mintel.

 

Distillers are joining their beer-brewing cousins in offering more gluten-free versions-even though spirits are already so close to gluten-free that European Union rules treat them as such. U.S. rules require a further process to eliminate all traces of gluten, a mix of proteins found in many grains.

 

Spirits International BV in June began selling a gluten-free version of Stolichnaya vodka in U.S. and South American liquor stores. Robert Cullins, chief executive of Stoli Group, said the drink is attracting interest not just from gluten-intolerant drinkers but from a broader community that associates “free-from” labels with better health.