One of New Zealand's largest brewers is gearing up to release another no-alcohol beer, along with an RTD, increasing its focus on two emerging markets.
DB Breweries has been working on its second zero-alcohol beer - DB Export Gold 0.0 - for the past 15 months. The product went through 16 brewing iterations to settle on the flavour and is set to hit the market next week. Its ready to drink beverage, launched under the name Odd Company, went on sale on Monday.
The brewing giant would not reveal how much it had invested to create the two new products. However, it said $1 million would be spent on marketing DB Export Gold 0.0 and about $500,000 on Odd Company.
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DB Breweries marketing director Sean O'Donnell said both products were the result of changing consumption habits, with millennials and those aged under 30 years old opting for no or low-alcohol beverages, and the move towards "healthier" alternatives.
These trends, along with a move to higher-end alcoholic drinks, was now the company's focus for product development. O'Donnell said the beverage industry was experiencing "huge growth" in non-alcoholic products - a segment of the market that the company was now spending most of its time focused on.
"DB Export Gold 0.0 is about capitalising on the fact that people are looking for zero per cent alcohol beverages," he said.
"The growth in that category is significant. Low and no, including low-carb products, is the fastest-growing category in the beer category, and it's an exciting place to play for us."
Heineken 0.0 - its first mainstream zero-alcohol beer - has proven wildly popular for DB Breweries. More than 5 million bottles have been sold since its launch at the end of 2017. O'Donnell said sales had exceeded forecasts by over 200 per cent.
The Alcohol Beverages Council said New Zealand's rise in the consumption of no and low-alcohol beer, wine and spirits echoed a global trend and was being driven by millennials.
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Research in the United States shows that 66 per cent of 21-34-year-olds have reduced their level of alcohol consumption.
In New Zealand, there has been a 7 per cent decline in drinking by young people, and alcohol consumption by Kiwis more generally has fallen below the OECD average.
DB Breweries first noticed no and low-alcohol beers picking up in popularity in 2014, with wine and spirits following shortly after.
O'Donnell said no-alcohol beer was the future for brewing companies, and was set to become a greater portion of revenue for companies in the industry in the next decade. DB would work to launch more no alcohol beers under other brands, he said.
"Zero per cent products are definitely going to be a big portion of the future. We know that moderation and health and wellbeing are big trends, we also know that under-30-year-olds are drinking either less or no alcohol.
"It's definitely an area where I think that most beverage companies will be very busy in, but we in particular are very much focused on this year."
Sales of full-strength beers would continue to have a slow decline, while the value of such beers would increase over time, as sales of low and no options would increase, he said.
Low and no-alcohol craft beers would also come to the market in time, he said.
"We're already working on craft-style 0.0 beers. You'll also see innovations in the RTD category as well, and also in cider. We will have multiple over the next couple of years."
Rival brewing giant Lion is also working on new products across beer, wine and spirits in these categories.
Sales of vodka and gin-based ready-to-drink beverages had increased by 36 per cent and 57 per cent respectively last year, making the market, which had been subject to the emerging trend for healthier RTDs, an attractive area of focus, O'Donnell said.
DB spent six to nine months plus developing RTDs for Odd Company, with the goal of producing healthier ready-to-drink beverages in classic styles, but with a twist.
"What we're seeing in New Zealand is a lot of the trends that are coming out of the US, New Zealand picks up very quickly. We've seen that with craft beer, with zero per cent and low-carb products, we're also seeing that in RTD category," O'Donnell said.
"Americans call them hard seltzers, effectively they are a cleaner RTD, with less sugar and more natural ingredients, with a sparkling water base. I think we'll see more of that happening in New Zealand, whether or not we'll call them hard seltzers, I'm not sure.
"We think there's a great opportunity to bring our brewing techniques to this category and bring a number of new, interesting products that fit consumers' lifestyles and occasions much better than what's on the market at the moment."
DB Breweries and Lion, New Zealand's largest brewers, control more than 80 per cent of beer sales by volume in this country.