It can sometimes be difficult convincing consumers to pay premium prices for low & no alcohol. Functional drinks might be the answer to this. Lizzy O’Riordan investigates…
As the functional drinks space continues to expand, experts say it may be a way to premiumise the existing low & no alcohol category.
At BCB London yesterday, a panel of alcohol-free drinks experts discussed the price of functional drinks, concluding that a higher price point is easier to justify to consumers compared to traditional low & no products.
The reason for this, according to Laura Willoughby, founder of Club Soda, is that customers already understand the concept of paying extra to achieve a feeling. “That’s the reason we like alcohol. It has a functional effect,” she said.
Though low & no functional drinks don’t have the same inebriating impact as alcohol, they do tap into this existing mindset: that by imbibing, you are changing your state – whether through nootropic ingredients, which aim to enhance focus and clarity, or adaptogens, designed to target stress and increase balance.
This extra perceived value, Willoughby said, is confirmed by the findings in the Club Soda and KAM report launched last year, which found that 64% of respondents were more willing to pay for functional drinks in comparison to standard non-alcoholic options.
The understanding of drink and mood is also the reason many functional drinks brands are pivoting their messaging away from health benefits and towards sensation.
Luke McFayden, head of sales at functional brand Three Spirits, explained that this is a focus for the brand. Here, all the products are first and foremost categorised by the experience they create, with product names such as Livener, Social and Nightcap.
“From my perspective, I don’t think ‘functional’ needs to be a consumer facing word. It doesn’t really connect, when what we need to capture is a feeling,” he said at BCB.
According to McFayden, this messaging should run through off-trade retail settings and bartending environments too, where different functional cocktails can be marketed depending on the desired atmosphere.
Talking to Drinks Retailing after the panel, Hamilton Lowe, co-founder of functional spirits brand Smiling Wolf, echoed the same emphasis on mood over health, and in particular mood over abstinence messaging.
“I knew that if I designed a non-alcoholic spirit, it couldn’t just be less than alcohol, it also needed to have a feel-good effect. Because even the word ‘non’, by comparison, implies something lesser,” he said. The functional element fills the gap of this imagined lack.
The concept of a drink having something instead of alcohol, as opposed to simply lacking alcohol, therefore goes a long way in both intriguing the customer and encouraging a higher level of spending.
Panellist Noah Villeneuve, national portfolio ambassador at Kore Drinks, shared his view. “It’s an exciting thing to talk about, but it’s also an extra little reason for explaining why it might cost more,” he said.
Perhaps the next big development in low & no alcohol drinking then, functional elements could make a real impact in helping drinkers understand the cost of their drink – something that is currently an ongoing issue in the world of 0% alcohol. Plus, the drinks are a powerful way of giving consumers a feeling that, without alcohol, they might risk missing out on.
