How Covid gave boost to non-alcoholic beverages

Karan Jain, a Mumbai-based importer of British gin and tonic mixers, is tirelessly working the phones to bring in more non-alcoholic beer because the demand has been soaring.For his three-year-old company that runs the Bevs.in website, business has never been this good, as consumption of non-alcoholic and low-alcohol beverages (with alcohol content of 0.0-0.4%) has been on the rise. Partly brought on by the vagaries of the Covid-19 virus outbreak that shut down liquor vends in many cities over sustained periods last year and recently, the ‘adult’ soft beverages category -—as it is called — has both grown and evolved. In fact, it has closely mirrored the explosion in gin drinking, say industry observers. The non-alcoholic beverage market was valued at Rs 52,400 crore in 2015 and is expected to have grown at a Compounded Annual Growth Rate of 17.6% till last year, according to a PwC study.Jain’s company has been growing at a 4-time pace over the past year, he says, selling mixers and drinks from brands like Franklin & Sons, which makes ales, tonics and elderflower lemonades. People want to drink ‘better’ at home and are happy to pay up, he adds, with order sizes on average often going up to Rs 4,500.“Our growth has been achieved in less than a year, since March and April 2020 were locked down. Before 2020, we only sold offline through partner stores but online sped up business by 3-4 years,” Jain says.According to market and consumer data provider Statista, the non-cola carbonated beverages market in India was three billion litres in 2016 and is estimated to touch about 4.2 billion litres this year. During the second Covid-19 wave, while alcohol sales were restricted, non-alcoholic beverages were available online or in supermarkets, says Sepoy and Co's cofounder Angad Soni.Svami, a tonic water company that launched in 2016, has seen 2 times growth in the pandemic year, says Aneesh Bhasin, its co-founder.Businesses like Svami, Sepoy and Co, Gunsberg and Bengal Bay have quickly moved beyond the staid tonic water market to broaden their product range into flavoured and low-calorie tonics, ginger beer and ginger ales, and interesting varieties of nonalcoholic cocktails, says Vikram Achanta, founder of Tulleeho, a drinks training and consulting firm. Achanta says having ‘new-age’ entrepreneurs at the helm helps businesses, without specifically commenting on how much the non-alcoholic category has grown in the past year. 84098921For Svami, consumption at home is a big focus now and it is building a drinking guide for the indoors, says Bhasin, adding that when it launched, 70% of its business came from bars and events.Jimmy's Cocktails, which has raised $1 million in its nearly two-year journey, has seen a 20-time monthon-month growth over the past year and home consumption has pushed its D2C economics.“In a way, it may have been a temporary measure; when alcohol outlets were closed, that led to a spike in business,” says founder Ankur Bhatia. “There is a global trend of these types of drinks being popular, but are we completely there yet? Maybe not.”Ginsberg, a Punjab-based ginger beer firm, says it is growing at 5 times, selling about 5,000-8,000 bottles a day since it went online during the pandemic.PUSH FROM BIGGIESThe big push has come from the bigwigs of the trade. Kingfisher launched two such products in 2020, while Hoegaarden, Heineken and Budweiser also sell their own non-alcoholic variants.Online grocer BigBasket, for instance, carries 14 such brands and 80 products in its portfolio. The egrocer has seen a 3-time growth in this business since the pandemic hit. While the traditional cola business is about 30 times the size of the non-alcoholic category, it has grown a tad slower than these ‘adult beverages’, says Seshu Kumar Tirumala, national category head at BigBasket. “It has probably gained salience due to being lower in sugar etc, than colas and juices,” Tirumala says.For premium food superstore Foodhall, the non-alcoholic beverages category has been rising since May 2019, but the pandemic gave a fillip to sales. Two years ago, the top three brands were Kingfisher, Heineken and Budweiser, which took up 45%, 35% and 20% share, respectively, once they launched. But by the financial year 2020-21, the scenario had changed.The closure of liquor shops boosted this category tremendously and Hoegaarden was the fourth to launch a product in the segment.Overall sales in the category grew by 200%, with Budweiser becoming the number one brand with a 35% share, followed by Heineken and Kingfisher, both at 25% share, and Hoegaarden making up 15%.The year saw regular stockouts due to increased demand, with a similar trend playing out this year as well.According to a survey conducted online by market research firm Mintel, nearly one-third of Indians between the ages of 25 and 34 reduced their beer intake between 2019 and 2020. More than two in five (41%) of those surveyed said they were interested in switching from standard strength beer to low- or no-alcohol variants.Separately, internal research by Svami also suggested that Gen-Z globally were drinking much less than their predecessors. The company broke all flavours of favourite drinks like rum and coke, used spices and flavours like vanilla and with a little backward integration, created a non-alcoholic version. In the last year alone, 25% of its sales have come from these types of products.

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