Gulf firms tap thirst for no-alcohol drinks

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On St Patrick’s Day this year Irish drinks brand Guinness seized the opportunity to promote one of its biggest innovations since its launch in 1759.

Four years in the making, Guinness 0.0, a non-alcoholic version of the famous stout brew – first launched in the UK and Ireland in 2020 – has now gone global.

UAE Guinness fans will not have to wait long to try out the new non-alcoholic variety: UAE supermarket chain Spinney’s has confirmed it is looking to source stocks of Guinness 0.0 to add to its shelves soon. 

• How I got to the top: Erika Blazeviciute Doyle, Drink Dry

The Irish drink follows in the footsteps of Heineken 0.0 – the Dutch beer’s non-alcoholic version – which is already available to shoppers.

The arrival of this new segment to the UAE’s food and beverage market is no surprise. 

Once considered just a drop in the global alcohol market, the no- and low-alcohol – dubbed NoLo – grew by six percent to around $10 billion in 2021. It is set to grow by around eight percent per annum until 2025, according to research by IWSR Drinks Market Analysis, the global leader in alcohol data and analysis.

“While January has become a popular month for people to cut back or abstain from alcohol, interest in no- and low-alcohol drinks has increasingly become a year-round trend among consumers across the world,” Emily Neill, chief operations officer at IWSR, said.

“To meet that demand, beverage alcohol companies have invested heavily to introduce a number of innovative new products, and many established mainstream brands have recently crossed over to develop no and low alcohol versions of their popular beer, wines, and spirits.”

Erika Blazeviciute Doyle, managing director at Drink Dry, a Dubai-based online platform selling non-alcoholic drink brands, arrived in the UAE in 2019 and quickly identified a gap in the market for alcohol-free alternatives.

“I keep saying this, but it was like travelling back in time. When we came here, the whole idea of Drink Dry was just born out of a personal frustration as a consumer,” she told AGBI.

In February 2020, Doyle setup Drink Dry and launched the website in January the following year. From a low base, Doyle said she saw nearly 2,000 percent growth between January and November 2021, as she quickly tapped into latent market demand.

This year, as sales even out, Doyle estimates that she will see about 10 to 15 percent growth year-on-year. 

“We started off as a simple e-commerce platform, just as we intended, and, because we had exclusivity on all the products that we were bringing in, retailers came to us too,” she said.

Doyle has been working with UAE supermarket chain Choithrams since March 2021. 

“We could see rising consumer demand for non-alcohol beverages. From an almost non-existent category, we have reached a place where it is growing by almost 15 percent year-on-year,” a Choithrams spokesperson said.

TVM

Drink Dry is also supplying around 180 restaurants and hotels venues across the UAE, but Doyle has set her sights even higher. This month Drink Dry launched in Kuwait and Saudi Arabia is next on its radar.

“Zero alcohol beer has been available in the Dubai market since its introduction several years ago and it has been steadily picking up pace,” Angelo De Guzman, a Dubai-based hospitality marketing consultant, said.

“It’s not just a passing fad but a genuine shift in consumer preferences that has been influenced by an increase in health awareness, social considerations, and a focus on personal safety.

“Restaurants and hotels have been adding more non-alcoholic options and alternatives to their menus. The increase in demand is driven by millennial consumers who have not yet developed a taste for alcohol and people with health conditions that prevent them from drinking alcohol.”

One of the most talked about launches in the UAE hospitality market last year was when The Virgin Mary (TVM) opened in December at The Galleria Al Maryah Island in Abu Dhabi. It was the first non-alcoholic Irish bar in the UAE and the chain’s first franchise outside Ireland.

TVM’s Dublin-based founder, Vaughan Yates, said the reaction to the Abu Dhabi venue has been positive, adding that he believes it offers UAE residents “something progressive and alternative to what is currently available”.

Yates said he has five more TVM bars in development across the Middle East.

Niveen Ibrahim, executive director at MBT Restaurant Management, partnered with Yates to open the Abu Dhabi venue. He said it was “still too early” to say if it has been a success.

“It is challenging, but we have tweaked the concept from a typical bar to a casual café and bar, which enabled us to cater to the whole population. This is the best way to make it work in such an environment,” Ibrahim said.

Analysts IWSR estimated that the NoLo segment currently accounts for just 3.5 percent of the global alcohol drinks market, and Doyle admitted there were some challenges to it becoming mainstream.

She pointed out that because non-alcoholic versions of beers, wines and spirits need to go through an additional process to remove the alcohol content, they are traditionally about a third more expensive than their original alcoholic counterparts.

Tax and excise also make the products even more expensive as they are taxed at the higher 50 percent rate, similar to sugary soft drinks and energy drinks.

Damian-Hugo D. Conway, an advisory board member for the Dubai Restaurant Committee, part of the Dubai Chamber of Commerce, is also not convinced that the non-alcoholic segment works as a long-term business model for venue operators.

“I don’t believe that this is a sector of the market that can become massively profitable and powerful,” Conway said.

“From a business point of view, I can get an alcohol drinker to buy six or eight drinks from me in a session. Non-alcoholic drinkers, they will buy two and they will stop.”

However, some UAE restaurants believe the NoLo segment still has a place as it offers a genuine alternative.

Reif Othman, owner and founder of Hotaru Holdings, said: “At Reif Japanese Kushiyaki, we’ve introduced non-alcoholic drinks such as a zero percent Belgian beer and a range of non-alcoholic wines in response to the growing demand of diners looking to enjoy a refreshing beverage without the buzz. 

“Seeing how the trend is picking up, I forecast that the zero-alcohol market will continue to be a norm in the Dubai market.”