Between non-alcoholic spirits, beers, wines and mocktails, the options for consumers have boomed over the past few years, but the rise of this category has also presented a challenge for retail buyers – raising questions of where in the store these zero proof products belong. Now, as retailers expand their NA offerings, some stores such as Washington-based Town & Country Markets, are creating sets exclusively dedicated to the new wave of non-alcoholic adult beverages.
Town & Country, which operates six stores in the Pacific Northwest, introduced new dry shelves for non-alcoholic alternatives in February, featuring a variety of brands across subcategories including spirits (Seedlip, Lyre’s, Wilderton), wine (Noughty, Teetotaler and Fre among others), beer (Athletic Brewing, Partake) and mocktails and botanical drinks (Mocktails, Dry Botanicals Mingle). The specialty retailer also placed the fast growing NA beer brands in its refrigerated section as well, merchandised next to alcoholic beers.
Dwight Richmond, director of center store at Town & Country, told BevNET the demand for a non-alcoholic adult beverage section had been rising significantly over the past year as consumers have sought out zero-proof alternatives, and the influx of new products rendered the old method of sticking NA drinks on shelf wherever merchandisers could find space had become obsolete.
“Historically, we had never handled this category correctly in grocery, we had always looked at it as either part of soda or part of juice or part of mixers,” Richmond said. “And as I really started to do my research, I realized that this is a lifestyle category, it is not a trend category. For a trend category you can usually stick it in any given place and it’s a trend, it will do well. [For a] lifestyle category, you need to meet the customer where they are.”
Richmond has a history of taking a transformative approach to building beverage sets; while at The Fresh Market in 2019 he led an overhaul of the retailer’s entire beverage offerings which brought in a wave of emerging, better-for-you brands and products. Prior to that he served as global grocery purchasing coordinator at Whole Foods and has also held positions at Earth Fare and CA Fortune.
He compared the non-alcoholic adult beverage set to the development of the plant-based meat category. While brands like Impossible and Beyond Meat initially targeted vegans and vegetarians, Richmond noted the end goal is to encourage meat-eating consumers to adopt more flexitarian diets. In turn, retailers have had to adapt to this shift and many have now rebuilt their meat sections to include sets exclusively for plant-based alternatives. Non-alc, he said, is emerging “exactly the same way” and retailers need to respond to the shift in consumer behavior.
“Its baseline is women who are trying to moderate due to pregnancy or when you want to include family members who can’t drink for whatever reason or even just anybody drinking for celebration purposes,” he said. “But its real end goal will be the consumer who says ‘I want to just chill on alcohol today today, but I don’t want to sacrifice that flavor.’”
To build the set, Richmond said he took away space from glassware and some overloaded spirits sections. The shelves are placed adjacent to the alcohol section of the stores, but are also distinctly separate so that consumers can avoid going down the alcohol aisle in order to browse – noting that some religious shoppers of faiths that forbid drinking will avoid the alcohol section of the store entirely.
Since the reset in February, Richmond said non-alcoholic adult beverage sales have been up about 12% month-over-month, and Town & Country is preparing to increase marketing around the set this summer, with a focus on rosés planned for July.
While there is additional marketing and education costs associated with creating a new set, Richmond said he saw minimal risk in embracing the category.
“There’s always an argument that if you’re putting innovation in a space that is already high velocity, there is a potential for lost sales,” he said. “That argument can be made, but I would argue too that beer, wine and spirits overall has started to sort of plateau and we’re seeing that more clearly through COVID that [sales] numbers are beginning to flatline out. So innovation is being cried out for in this space saying, ‘OK, what’s next?’ The ready-to-drink space is really proving that the category is starving for innovation. This is just another angle on innovation.”
Town & Country is not the only retailer to begin dedicating exclusive space to non-alc alternatives, however. Ana Yoo, purchasing director at Los Angeles-based specialty grocer Erewhon, said the chain has had non-alcoholic adult beverage shelves at its stores since last year, including cold box and dry sections. Yoo said Erewhon has also expanded its selection of NA drinks over the past 12 months, and its set now includes brands like RTD mocktails Little Saints and Hiyo, non-alc aperitif Ghia and functional beverage brand Kin Euphorics, alongside beers like Athletic Brewing and Rationale Brewing.
In most Erewhon locations, the NA drinks are merchandised near the alcoholic beverages; however, in the retailer’s two locations without liquor licenses, the set lives within the general beverage section. According to Yoo, the space in the refrigerated section was mostly allocated by drawing from other beverages, such as coffee, sparkling drinks and kombucha, while shelf stable space was pulled from beer and wine among other categories.
Since expanding its category offerings, Yoo said non-alc adult beverage sales have increased 150% over the past year and she anticipates the growth to continue at a steady rate.
“This is a category that I did not honestly, being in this space, expect to go in this direction,” Yoo said. “But it’s nice to see that there’s a continuation of the dryness or the non-alcoholic trend and we see that reflected in the retail side.”
While many retailers are expanding their facings in the category, however, not all are making the leap to dedicated sets just yet. Liquor chain BevMo, a subsidiary of delivery app Gopuff, has continued to expand its brand selection but is for now merchandising NA products within their respective categories (i.e. non-alc beer goes in beer, functional drinks are found with mixers or other non-alc drinks). However, on its app, Gopuff has a special section for non-alc adult drinks.
“We are keeping a close eye on the segment and are excited by its growth in popularity. With access to consumer insights, we’re able to monitor trends and adapt our assortment accordingly — and quickly,” a Gopuff spokesperson told BevNET via email. “We’ve identified two distinct buckets among consumers: alcohol replacement (e.g., Heineken 0.0, Fre, Ritual, etc.) and functional alcohol alternatives (e.g., HOP WTR, Kin, Recess, etc.). We’re keeping a pulse on what our customers are gravitating toward in both categories to drive our non-alcoholic beverage strategy and ensure both Gopuff and BevMo remain preferred destinations for adult beverages, including non-alcoholic items.”
But if growth in the category continues, more retailers could follow. Bill Gamelli, CEO of RTD brand Mocktails, said his brand initially left the U.S. market several years ago, facing difficulty finding proper placement and support in retail and challenges educating consumers on the product’s use occasion, and instead focused on the U.K. where NA products were on the rise. Now, as the company returns to the U.S., he said the way buyers have looked at the brand has changed, and he hopes dedicated sets like Town & Country’s soon become the norm.
“We think that this is just the front edge,” Gamelli said. “We do believe given another year that this will become the norm. Every store in America will have to do something like this because there’s so many consumers looking for an alternative.”