Grant Caunter, CEO and Founder of State of Play, said that the early stage of the low-to-no category needed more customer trust, as many consumers had had a negative experience.
"A brand like Heineken launches and invests in Heineken zero, then consumers re-consider and give it a go," said Caunter.
When big brands invest in new ideas and deliver on quality, customers have a good experience with a concept they previously may have been wary about. Caunter emphasised that purchase intent was functional, with consumers' simple desire for a beer, without the alcohol content, now being fulfilled by this category.
Following this stage, international and domestic players and brands enter the market with versions of the zero percent beverages category. These options are all manufactured in the same breweries, using the same alcohol removal technology. Independent players who enter the market with unique products and unique formulation techniques establish a premium in the zero category. Caunter said this segment of the zero percent, low-to-no alcohol market jumped into action in April of 2021.
The premium comes from the taste and the release of dry-hopped IPAs and Hazys in New Zealand. With the increase in zero brands and improvement in the drinking experience, the zero categories also replace the low (two percent) category stuck in no-man land.
The third and current stage is the transition from functional purchase intent to emotional and social purchase intent.
More drinkers are buying a zero percent option because they want the flavour experience and to continue enjoying the social element of drinking beer without alcohol. This means that choosing the zero percent beer is no longer a trade-off but rather a consumer demand, which creates growth opportunities for independent breweries to take off and offer premium and unique flavour experiences to those looking to have the social and emotional benefits they receive from cracking a beer with dinner, friends and family, whilst also having the chance to enjoy a versatile range of offerings in the zero percent category.
"State Of Play is a dedicated zero brewery with the authority to push the alcohol-free occasion. Compared to a year ago, the social stigma of drinking a zero has faded, and now the choice is applauded."
Caunter explained that the next phase was the big marketing push from the international brands as their alcohol portfolio declined. Independent brewers will treat the zero category like craft 15 years ago.
"There will be innovation, we will see dry bars pop up, collaborations with adjacent brands will attract whole new consumers, and the retailer will reinforce their commitment to the segment's visibility as it builds a fuller, higher value basket. The breweries that commit will get stronger. Consumers will support those that are true to the segment's values."
Significant challenges facing the zero percent category involve creating leading brewing and packaging technology. For independent breweries in New Zealand, this involves a pasteuriser and contract brewing through businesses such as B Studio or Steam. Caunter said that this model only works with significant volumes per SKU, meaning that the next 18 month requires a continued effort to be competitive with the internationally imported zero percent beers while reminding consumer why investment into independent, locally crafted and brewed zero percent beers offer them a more unique and valued experience.
Caunter predicts that consumer demand will follow the rapid growth seen in international markets and may even be quicker, given the high quality of New Zealand brews.
State of Play has launched two innovations: Sunbreaker Ale with Ginger, Lime, and Honey and an alcohol-free mix six pack.
"I am finding this is turning into a weekly shop as the three brews lend themselves to be enjoyed at different moments of the week."
Caunter stated that the beer market was generally experiencing a dullness with a sharp decline, with major New Zealand brands maneuvering to the low-crab space, driving this trend with brand messaging on televisions and billboards.
"The advertising is functionally led to tie into the consumer growth trends around sugar and wellness. For independent zeros, the message is not one of compromise; rather, you can enjoy more beer quality experiences without the penalty of alcohol."
With New Zealand re-emerging post-pandemic, Caunter said there were new stories to share and tell, with consumers more interested in hearing the stories and values of local brands, which will drive future growth.
State of Play is a brand born from a time of re-invention, and it is personal and real. It was launched to give drinkers a good choice.
"When you hold a State of Play, you are obviously enjoying an alcohol-free beer. There is a State of Play beer for the hophead aficionado, for the just got home from work moment, the BBQ, the game, and the brew for admiring the fresh-cut lawns. It is for all drinkers across all beer occasions, and some new ones too."
Caunter continued that Woolworths and Foodstuffs invested in the zero category with the proper range and visibility. The shopper journey for zero percent beverages in the past tended to be confusing, with no dedicated section for the category to thrive. However, this has changed with the rapid expansion of the category, making the consumer experience in the zero-percent beverages category straightforward, enjoyable, and more accessible.
The next growth channel for zero-percent beers will be in specialist retail, where it is easy to shop with a range of international and independent brews.
On-premise, sales of the zero percent category need to catch up, with Caunter suggesting this might be related to the difficulty involved with the proposition of having a zero-percent option on tap. Despite this, when on sale in on-premise locations such as bars and restaurants, it sells, meaning it may be a space where growth is possible.
Read more from the November issue below:
