Zero-alcohol companies look to capture millennial and 'sober curious' drinkers

This is exactly the kind of user a clutch of companies are now looking to target across bigger metros. This is why Ishan Arora describes his one-year-old spirits business, as one that involves ‘tiger striping’, that refers to alternating non-alcoholic and alcoholic drinks.  Arora, the founder and CEO of Catwalk Botanics which makes four types of non-alcoholic spirits like 0% vodkas and gins, says the term is largely embraced by "sober curious" communities—who are looking to reduce the amount of alcohol they are having at a party by alternating between alcoholic and non-alcoholic beverages during a night of drinking to cut down the overall consumption without the social pressure.

Arora is clear that his brand is for moderation and not for teetotallers, though he'd be quite happy if they consumed it, too, since it mimics the flavours of vodka and gin without the extreme bitterness. "The Indian market is very pro-alcohol in general and this category is probably just under 1% of the entire business right now. Consumers for the kinds of spirits are few and far between but we're fine with that for now because that's quite enough to sustain business. This is not a mass product," he said. His beverages are available at about 20 restaurants across Bengaluru, Delhi and Mumbai and is also now available at most modern retail outlets as well as online. 

Also read: Tax troubles: The roadblock in India’s beer market boom

Everything from adaptogens like lemongrass and antioxidants like ashwagandha go into Catwalk and are brewed over a few months using monk fruit as a sweetener and is produced and bottled in New Delhi.   

Consumption interest

A sizable number of companies across India, big and small, including Catwalk, Sober, Sobriety Sips and the bigwigs in the beer industry are now experimenting in creating non and low alcohol spirits, including beer,  wine, gin, whisky and others. What's driving this trend is a cohort of drinkers who are now looking to cut down on their consumption. There is also some—perhaps very limited—interest from non-consumers of alcohol as well. Early days of the category saw a lot of non-alcoholic beers being produced which paved the way for these businesses and now several independent companies have joined the bandwagon, creating various types of distilled and dealcoholized spirits.

"The low or no alcohol segments, especially 0% alcohol beer, is shaping up well," said Vinod Giri, director general of the Brewers Association of India. The association represents AB InBev, Heineken and Carlsberg here. “It’s early days and the base is small, but the trends are encouraging. Most of its consumption seems to be coming from non-drinkers during social occasions who cannot have alcohol for whatever reason, by choice, or health reasons or for post-occasion driving responsibility. This category does eat into some occasions associated with the larger alcoholic beverage market, both in spirits and beers, but there is little evidence that it materially affects alcobev sector. There is some argument that it builds familiarity with the taste of alcohol, reduces barriers to trial and thus may even help recruit new consumers," he said. 

Non-alcoholic spirits, on the other hand, are still too new to even capture the market of. Companies like Sober, and Catwalk, are still trying to make their mark here because of the newness of the business. Giri cited data from London-based drinks consultancy IWSR, that non-alcoholic beer sold about 50,000 hectolitres in 2023 in India, or about 630,000 cases. Each case has 24 cans each of 330 ml, growing 16% over the previous year. The two years before this, the sales for the year stood at 43,000 and 36,000 hl each. Sales in 2020, prior to covid were also 50,000 hl, coming back to the same figure. In contrast, in 2023, the beer market grew 6.5%, with sales reaching over 31 million hl, or about 400 million cases.

Also read: The hottest beer in America doesn't have alcohol

A look at the market

Globally though, they now make up about 2% of the entire beer market, which shows its potentially disruptive nature. More recently, non-alcoholic wines and spirits have gained some traction and at the same time traditional spirit producers in the industry are innovating to launch non-alcoholic alternatives to their existing product lines. For instance, Beefeater, the world's most awarded gin, introduced Beefeater 0.0 in January, capturing the essence of its full-strength gin in a non-alcoholic form in January this year. Heineken makes its 0% variant already and Ab InBev makes Hoegaarden and Budweiser 0.0 here.

These categories, especially 0% beers, are impulse purchase categories where quick commerce platforms have helped in discoverability and immediate supply, unlike delayed purchase from supermarkets. Quick commerce is the fastest growing segment in the fast moving consumer goods (FMCG) industry and has become very relevant for the food and beverages industry, as per industry data. In 2019, the entire FMCG industry had just 1-2% of its sales coming from ecommerce channels but that has gone up to 10% this year with 70% of it coming from quick commerce platforms.

Delhi-based Sober's parent company, V9 Beverages Pvt. Ltd.'s co-founder Aditya Aggarwal who also sells the Samsara 'pink' gin brand under another entity Spaceman Spirits Lab, said the idea for this company which began in 2020 came out of the gin business and was propelled by the subcurrent of curiosity around the no and low alcoholic beverages category and people's general focus towards having a more healthy lifestyle. "In terms of pricing, our products are at par with their regular spirit counterparts. They also have a similar distribution channel and we expect profitability in 24-36 months," he said.  Sober's products are water-based or hydrosols made from distilling fresh flowers, leaves, fruits, etc.

Also read: GST Council set to amend alcohol tax laws, enable dispute settlement

Pre-covid, following a tried and tested method, international no/low-alcohol spirits’ brand owners were beginning to target the on-trade channel to seed demand, utilising mixologists at high-end hotels or bars to develop no-alcohol spirits-based cocktails. But since then it is in the last six to twelve months that momentum appears to be returning, Jason Holway, senior market consultant, IWSR told Mint. "There is an interest in moderation amongst younger legal drinking age consumers, the appeal to female consumers of well-made, no alcohol products and the appearance of such products in appropriate on-trade venues (after work bars or pubs)," he said.

However, there is as yet little opportunity of this type beyond tier 1 and 2 cities, according to him. One barrier to the growth of this segment in India is likely to remain price points they're offered at, particularly relative to soft drinks. "Distillers and brewers operate within a highly bureaucratic environment and, while no/low-alcohol products may offer the prospects of breaking out of these constraints and offering new routes to market, that has not happened yet," added Holway.