Understanding the Costs of Low/No-&-Light: Why Alcohol-Free Drinks Aren't Cheap

If you're new to drinking low/no-&-light, you might be wondering why the heck these drinks cost so much when there's no alcohol in them?!

Adult non-alcoholic drinks have never faced as much scrutiny as they do today. From the ingredients used to the production processes, everything is questioned and compared to full-strength alcohol, no matter how different the final product lends itself to be.

This article will share five of the most significant reasons low/no-&-light drinks aren't cheap, which affect producers across all drink types. Whether you're a fan of beers, wines, aperitifs, spirits, or unique alternatives, they all share some of the same challenges, and these are the topics that come up again and again when I speak to brand founders on the Low No Drinker Podcast about their production. Honestly, it's quite sad hearing how these costs impact the drinks we are all coming to know and love.

So, if you want to know why you should pay so much for your Nogroni or Mockarita when there's no grog in your glass, read on. (Number three is the one that surprises most people).

TLDR: I recorded a bonus episode of the Low No Drinker Podcast to talk you through this topic. If you prefer to watch/listen to your info, you can catch it on the Low No Drinker YouTube channel here or subscribe wherever you listen to your podcasts.

1 - Alcohol is a preservative.

As a compound, alcohol is very good at acting as a preservative. It's a germ-killing machine. All of those bottles of sanitiser you hoarded during the pandemic are (mostly) alcohol-based mixtures that are really good at killing unwanted (and some wanted) nasties.

It does the same thing inside your beer, rum or wine. This is why alcoholic drinks last so long. That bottle of wine that's been aged for years can do so because of the alcohol in it. That random weird bottle of ouzo that you brought back from Greece in 2008 is still perfectly fine for you to drink because the alcohol in the bottle stops any harmful bacteria from growing inside (it probably won't taste very nice though; there's a reason why you've not drunk it for nearly 20 years!).

Alcohol-free drinks obviously do not have that luxury.

Producers in the low/no space often serve a market that wants to take care of themselves and are cautious about what they put in their bodies. Adding synthetic preservatives is, therefore, not often an option. So natural preservatives like salt, acid, sugar, oils, and botanical extracts are all that are left. Those are a) not always appropriate for adding to drinks and b) can be very expensive.

AF drinks simply cannot last as long as alcoholic ones, and particularly once opened, they have a much shorter shelf life (pro tip: keep your AF bottles of spirits in the fridge once opened to help them last longer).

And so mass production for AF has a natural cap, meaning costs run higher (more about that a little later), and as with all businesses, those costs have to be covered somehow.

2 - Alcohol is a flavour carrier.

Another skill of alcohol is that it's a great carrier of flavour. In the production of any alcoholic beverage, the flavours of the ingredients will bind to the molecules in the alcohol, as alcohol is a preservative and lasts for a long time in whatever state it's left in; those flavours remain in the drink for a long time too and, as in the case of aged drinks, like wines and whiskies, the longer you leave the flavour compounds and alcohol compounds to hang out together the greater the symphony of flavours they produce.

With low/no-&-light drinks, this just does not happen. Or at least if it does, in the case of drinks that have been traditionally fermented and then gone through a dealcoholisation process, those flavours are often removed as part of the process.

So, producers must find other ways to deliver the flavour experiences you've come to know, love, and expect from adult drinks.

More ingredients, processes, equipment, new technologies, and a lot of time go into manufacturing liquids that you can enjoy in the same way as your favourite beer or wine. This all costs a lot of money.

Dealcoholisation equipment, vacuum distillation, pasteurisation. All of these techniques can run to 10s of thousands of pounds, meaning very few producers can afford to access them, let alone own solutions outright, so renting the equipment becomes a major cost barrier for so many makers of low/no-&-light.

Writing for Low No Drinker Magazine (issue-5), Adam Malmn?s, co-founder of dealcoholised Cognato Wines*, said,

"One of the primary reasons for the slower growth of dealcoholised wine is the technical challenge involved in its production. Wine's complex flavour profile is intricately linked to its alcohol content, making it difficult to remove the alcohol without sacrificing taste. The traditional methods employed for dealcoholisation, such as distillation or reverse osmosis, can alter the flavour and aroma of the wine, resulting in a less satisfying product. Overcoming this challenge requires meticulous refinement of dealcoholisation techniques to preserve the wine's distinct characteristics."

In another article for the magazine, ZENOWINE founder David Hodgson MBA agrees,

"The major obstacle was that, without alcohol, the aromatic and flavour molecules had nothing to stick to and integrate with.?Hundreds of sample trials, data & technical reviews later, despite making some headway, we were still wondering if AF wines could be made for the wine enthusiast."

Luckily for consumers like you and I, producers like Malmn?s and Hodgson are not easily deterred. Hodgson adds,

"We're continuing our R&D program to increase sophistication and produce more layered products, from sourcing optimum grapes from the vineyard to using specific fermentation & blending techniques."

3 - Alcohol is free!!

Yes, that's right. The ingredient you put the most value on in your drink is actually the ingredient that costs the least. This is the one fact that often shocks people the most as arguments of duty are thrown around. But base alcohol doesn't actually cost very much to buy in, and costs even less to produce.

How?

Alcohol is a byproduct of fermentation.

When yeast and sugars combine, they do a little dance, which results in the production of alcohol. This means that whether your beer has booze in it or not, it costs exactly the same amount of money to produce it.

It's the yeast's reaction to the sugars in grains, fruits and vegetables that cause this chain reaction and turns into alcohol (do you remember those beer adverts – "all sugars turn to alcohol"?).

So, to produce non-alcoholic drinks that have the same tastes and flavour profiles, you still need to use the same base ingredients but somehow stop them from doing what they naturally want to do (make alcohol) or reverse what they do after they've done it (vacuum distillation, dealcoholisation etc.)

At this stage, you've got the exact same costs of producing full-strength drinks, but then add in the process we spoke about earlier, and you can see why costs soon mount up.

Malmn?s explains,

"The process of creating dealcoholised wine can be costlier than producing its alcoholic counterpart. The specialised equipment and technologies required for dealcoholisation, coupled with the need for rigorous quality control measures, contribute to higher production costs. These elevated expenses are often reflected in the price of dealcoholised wine, making it less accessible to a broader consumer base."

4 - Economies of scale.

If you've ever bulk ordered anything from the internet (I'm a mum of two with no car, I bulk-buy toilet roll like it's still 2020), then you know it's always much cheaper to buy in large quantities than in small. Well, the same is true of beverage production.

The factories that produce everything from glass bottles, tin cans and branded wraps to the actual canning & bottling procedure are all sold at an economy of scale. The more you make, the cheaper it is.

That's great.

But to take advantage of this, you need to produce drinks at such a sizeable rate that most smaller independent brands can't even begin to compete. And so, for those brands to sell their drinks at a price that allows them to make enough profit to keep afloat, they have to price them at the same level as their alcoholic cousins.

It costs Budweiser*, Peroni*, or Corona*, for example, a lot less to produce a bottle of alcohol-free beer than it does brands like Mash Gang*, Unltd*, or Brulo*.

Writing for Low No Drinker Magazine (issue 5), Sheep in Wolf's Clothing founder Matty Dixon said,

"Thing is… it has been far more difficult and challenging than we could have imagined. We believe in what we are doing, we believe our product is pretty decent, and we aren't ones to give up, but bloody hell… we are tempted. Right now, we are in the final roll of the dice. We have purchased a brew kit, which is small but relatively high-end, so we can brew small batch alcohol-free experiments and other test beers for sale. […] if this doesn't work to make the company sustainable, then we, like so many others, will be done."

Also facing challenges, Roger Warner , co-founder of Only With Love Brewery , writes,

"Now that we've hit a run rate of good trade, the biggest challenge we face is variable costs - wheat, cardboard, aluminium, electricity, you name it, prices have been rising fast and with no particular rhythm."

5 - Marketing is bloody expensive.

There's a reason why the low/no-&-light drinks you see most often in the supermarket are from the big brand producers. Companies like AB InBev (Stella Artois 0.0%*, Corona Cero*), Diageo (Guinness 0.0*, Tanqueray Alcohol-Free*), Heineken (Heineken 0.0*, Old Mout Alcohol-Free*), and Pernod Ricard (Beefeater 0.0, Jacobs Creek Unvined) have eye-wateringly large marketing budgets—imagine how much it costs to sponsor Formula One, for example, or the Rugby World Cup or the upcoming Paris Olympics!

Heineken USA, for example, spent $50 million on advertising in 2020 and gave away a whopping 10 million samples in the U.S alone, and its Formula One sponsorship is said to be worth a staggering $300M!

Shelf space goes to those who can afford to pay for the listing fees, the placements, the end caps, the TV adverts, and to give away gallons of liquid in free samples to people who already recognise their brand.

It's a crapshoot for small independent brands to even try to enter the same arena as these beverage behemoths, let alone stand ringside and catch a few fleeting flecks of exposure.

All in all, there are myriad reasons why low/no-&light costs are the same as full strength. These five are by no means a complete list.

I hope you take away from this that if you want quality low/no-&light beverages, you have to be prepared to pay for them, or sadly, the brands that make them for us will go away. Brands with passionate and dedicated founders like Fungtn Brewing, who closed earlier this year despite rising demand as the cost of production was too prohibitive alongside the costs of marketing to new drinkers.

In her last post on LinkedIn, Fungtn founder Zoey Henderson said,

"We tapped into the growing trends of alcohol-free, vegan, gluten-free and the booming functional mushroom market, which shows no sign of stopping.

This, however, was not enough to scale the brand, as the key to the growth of any CPG product is capital. The brand was self-funded to MVP stage and then brought on board some incredible support through angels and a successful small crowdfund via Seedrs. This, as any founder knows, is just the tip of the funding iceberg needed to scale a brand.

Sadly, after over 18 months of?unsuccessful attempts to raise further capital to grow the brand in the US and UK, it is time to announce that Fungtn has ceased trading."

For me, if I can pay the same price for an AF beverage as I do for a full-strength one and have the same great time with the people whose company I enjoy and wake up the next morning not feeling like crap, well, that's a price that's well worth paying.

What next?

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