How a slew of non-alcoholic beverages has sprouted in the Indian market

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November 16, 2020 6:58 AM

Brands like Schweppes, Jade Forest, O’ Smart and Sepoy & Co. have added ginger ale to their portfolio of products

According to research by Mintel, 38% of Indians wish to switch from standard-strength beer to low- or no-alcohol versionsAccording to research by Mintel, 38% of Indians wish to switch from standard-strength beer to low- or no-alcohol versions

Beverage brands are in a rush to please teetotalers and those looking for ‘healthier’ alternatives to alcohol and carbonated drinks. Several no-alcohol beers, low-alcohol and low-sugar beverages have hit the market lately. United Breweries, the maker of Kingfisher beer, launched two products under its non-alcoholic beverage portfolio — Kingfisher Radler and Heineken 0.0. The former, introduced in India in 2018, is a malt and fruit juice mix, while Heineken 0.0, launched in 2019, is a non-alcoholic beer. AB InBev, the makers of Budweiser beer, forayed into the non-alcoholic beer segment in 2019 with Budweiser 0.0 and Hoegaarden 0.0.

Brands have also been experimenting with creating non-alcoholic clones of popular alcoholic drinks like gin and tonic, and rum and Coke. Svami is one such brand. After dabbling in the mixers category, it has developed three non-alcoholic ready-to-drink beverages. Ginger ale is another popular non-alcoholic beverage among those looking for healthy alternatives to alcoholic drinks. Brands like Schweppes, Jade Forest, O’ Smart and Sepoy & Co. have added ginger ale to their portfolio of products.

Will these new beverage variants be able to disrupt the carbonated soft drinks category?

Making a pint

According to research by Mintel, 38% of Indians wish to switch from standard-strength beer to low- or no-alcohol versions (LNA). This trend is especially prominent among younger consumers in the 25-34 age group — 41% of young beer drinkers are willing to switch to low/ no-alcohol beers.

Ramesh Viswanathan, chief new business officer, United Breweries, says that adult consumers are looking for “refreshing alternatives to current non-healthy choices in the market”.

While the novelty of these products could help them cut through the clutter of ‘better-for-you’ carbonated drinks, pricing is what will determine how quickly they achieve scale in India. “These brands are nowhere close to competing with the cola makers on price,” observes Prabhtej Singh Bhatia, founder, Simba, a craft beer company.

In terms of price, these brands have slotted themselves snugly between cola drinks in cans and bottled beers. For example, a 300 ml can of Kingfisher Radler costs Rs 45 — Rs 5 more than the price of a 300 ml can of Diet Coke. Svami’s ready-to-drink, zero-alcohol beverages are priced at Rs 95 per 200 ml bottle. “We expect our products to be consumed occasionally, and not as frequently as carbonated drinks. We have chosen to put ourselves in the same bracket as Red Bull and non-alcoholic beer,” says Aneesh Bhasin, co-founder, Svami.

Kingfisher Radler and Budweiser 0.0 claim to have 30% less sugar, and Heineken 0.0 60% less sugar, than carbonated soft drinks. Despite this, these beverages are, by and large, positioned as alternatives to alcoholic drinks. Hence, their pricing is competitive when compared to alcoholic beers. “As the demand for LNA beers increases and more mainstream beverage brands enter this category, non-alcoholic beers can start competing with adjacent categories such as carbonated soft drinks and juices,” says Rushikesh Aravkar, food and drink analyst, Mintel India.

Sober strategy?

A nascent segment that targets a niche clientele may find it hard to achieve scale in a price-conscious country like India. Creating awareness, experts say, will be critical.

Brands like Budweiser 0.0 and Hoegaarden 0.0 are available across all modern retail outlets and e-commerce portals in the top urban centres. United Breweries, which stocks its products in 40,000-50,000 retail outlets, is undertaking widespread sampling to boost sales. It has tied-up with Swiggy and Faasos to let customers sample Heineken 0.0 for free.

Because of the non-alcoholic nature of the product, Svami’s Bhasin hopes to build awareness by making the beverages available at airports and movie theatres.

Read Also: How brands have made the transition from offline to online

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