THE BUZZ IN BOOZE FREE BEVERAGES Ruffell and Garage Project join a growing number of brewers and retailers who are discovering what has been dubbed the NoLo market: a growing market for no- to lowalcohol beverages. Industry research forecasts that NoLo alcohol volume will grow by 8 per cent between 2021 and 2025 compared with the growth of regular alcohol at 0.7 per cent. The NoLo movement is driven partly by a changing narrative around alcohol. Recent studies have debunked long-held beliefs about the perks of alcohol consumption - such as the one that a glass of red wine a day can be good for the heart. Meanwhile, annual no-alcohol challenges such as "dry January" and "sober October" on social media are gaining traction. "People want to go out and have a good time at bars with friends, and don't necessarily want either the calories or the alcohol that come with higher-strength alcoholic beverages," says Matthew Fergusson-Stewart, managing director of Spun Spirits. "It is no longer about providing a drink for that one pregnant friend, or abstaining. It is about having options available to suit your lifestyle - moderation, not elimination," says Jasmin Wong, co-founder of local bottle shop Temple Cellars. "It's the possibility of having (an alcoholic) drink on some nights, and a non-alcoholic one on others." One of the consumers who have switched to non-acoholic beverages is 30-year-old S Shiva, who went for a health checkup 2 years ago and was told he was at risk of liver damage - a result of drinking hard liquor about 4 to 5 times a week. In a bid to meet his health and fitness goals, he cut down on hard liquor and turned to low-alcohol seltzers - flavoured carbonated water mixed with alcohol - that contain just a fraction of calories and sugar found in regular alcoholic drinks. Guilt over pandemic binges may also be weighing on the minds of some consumers. "I think we see people coming out of the lockdowns and the situations we've had with Covid-19 and deciding to change their lifestyle. Maybe they consumed more during lockdown and came out wanting to consume less," says Ruffell of Garage Project. NoLo beverages require some investment and expertise to get right. Ruffell says Garage Project had struggled to replicate the taste of beer without the alcohol. "We destroyed a number of batches that we weren't happy with," says Ruffell. "It took a long time to get it exactly to the point that we wanted." Heineken-owned Asia-Pacific Breweries (APB), one of South-east Asia's biggest brewers, made its foray into the zero-alcohol category in 2019 with Heineken 0.0. To produce it, APB Singapore spent S$3.8 million to install a dealcoholiser at its brewery. "This facility allows us to brew Heineken 0.0 by gently removing the alcohol to produce a perfectly balanced and great tasting zero-alcohol beer," says Gerald Yeo, Marketing Director of APB Singapore. The investment appears to be paying off. Sales of Heineken 0.0 at supermarkets and convenience stores grew 22.8 per cent year-on-year in 2021, versus just 3.2 per cent for its malts liquor business comprising beer, stout and liquor. DIPL/BUS0119/Apr2022/MainTest Page 5 of 6 Pernod Ricard, meanwhile, has a brand team based in its Paris headquarters dedicated to developing NoLo brands for the group. The world's second largest wine and spirits seller had also bought a majority stake in Ceder's, an alcohol-free spirits maker, in January in 2021. Japan's Kirin Holdings is expecting sales of its non-alcoholic beverages to grow by 18 per cent this year compared with 2021. In 2020, its subsidiary Kirin Brewery rolled out low-alcohol Kirin Ichiban Zero Sugar after 5 years of research and development and 350 test prototypes. A Kirin Holdings spokesperson says it will now focus on the sales of its no-alcohol beer Kirin Greens Free and continue to develop other innovative NoLo alternatives such as Kirin Karada Free that contains just 5 calories per 100 ml. One benefit of offering NoLo beverage is the potential for better margins. Alcohol duties vary by alcohol strength and the type of beverage. At S$60 per litre of beer, the alcohol duty in Singapore for a regular pint (473ml) with a 5.5 per cent comes to S$1.55. Duties on wine and other spirits stand at S$88 per litre. The alcohol duty, which goes to the government, limits the amount that retailers can pocket when they mark up the price of a product. The less alcohol there is in a drink, the less duty needs to be paid. Over at Garage Project, cost savings from alcohol tax have made the brewery's NoLo options more affordable. Over at APB, the alcohol category remains the key contributor of revenue. But the company is looking to continue scaling the zero-alcohol segment. APB's Yeo says the introduction of zero-alcohol beers will complement the company's existing portfolio of beers by providing more choices to consumers across drinking occasions, which is key in cementing its market leadership. APB is looking to cultivate NoLo consumption patterns at restaurants and cafes. To do so, Yeo says the company plans to use the influence of social media celebrities to reach out to young consumers to cut down on drinking and switch to non-alcoholic options instead. Adapted from Business Times article titled: The Buzz in Booze Free Everages dated 29 January 2022 written by Claudia Tan. ANSWER ALL QUESTIONS 2. Describe how the following environmental forces have affected the market for NoLo beverages and determine their impact on the success of Garage Project in Singapore. (i) Sociocultural environment; (8 marks) (ii) Regulatory environment; (8 marks) (iii) Competitive environment.