The Morning Gametime Libation Switcheroo

Often on a Sunday evening I head down to a country-style Irish bar off the Bowery called The Scratcher that features a couple of acoustic music acts performing in what’s supposed to temporarily be an attentive “listening room” setting. Many weeks I’ve never heard of either act but, given the talent pool in New York, I’m almost never disappointed. And you can’t beat the price: no cover, just a tip bucket for the musicians.

But here’s the catch: the owner, who’s offering such a nice amenity, makes no money unless we keep drinking. True, they pour an excellent pint of the very sessionable Guinness Stout. But even we imbibers sometimes approach our limits. Enter Athletic Beer, which these days seems to be on every table in the joint.

That may, or may not, have been a consumption occasion that the earlier developers of alcohol-alternatives envisioned when they threw their hat into the ring. But we’re all learning that the occasions where these beverages fill a need are vast. Certainly, it’s not just alcohol abstainers: all indications are that the vast majority of alc-alternative drinkers continue to consume alcohol – “zebra striping” between alcohol and NAs, as the Brits say these days. That proliferation of occasions encourages me to believe that this alc-alternative segment isn’t just a fad but something that may have legs. (Another unlock in my own un-stylish lifestyle: going to Flannery’s to watch Tottenham Hotspur soccer games from England at 9 in the morning. Now there are options beyond alcohol in the morning or bad coffee.)

Of course, there are probably too many entrants already. Hundreds of them, and more materializing every week. Ya gotta love capitalism! But the experimentation is fascinating. The NA beers just keep getting better and better. As my wife often points out at the Scratcher, after toggling between Founders All Day IPA and Athletic through a couple of cycles, you kind of forget that the beer in your hand might be non-alcoholic. It tastes great and keeps the party going. What more do you need? Even more fascinating is what’s going on outside of fake beer. You have beverage geniuses trying to replicate such challenging segments as red wine and Scotch whisky (so far with so-so results, to my palate) and others trying to create entirely new recipes that are nurse-able (is that a word?), complex and maybe offer some kind of sensation to replace the one we get from alcohol. I have my money on some of those, like Kin, because they’re putting themselves into an apples-and-oranges comparison rather than being judged on how closely they replicate some established alcohol category.

You may have heard all this before, from more convincing voices than mine. But there are a couple of aspects of these brands that I want to highlight here. For one, they are intriguing but most don’t make overt, and potentially overstated, functional claims, which I feel has been a slippery slope for many other categories of non-alcoholic beverages. As I’ve pointed out before in this column, some segments may start with the promise of a true functional benefit but seem inevitably, in the course of going broader, to start dumbing down the very attributes that make them more unique, migrating from a specific functional positioning to a more “lifestyle-y” vibe. We’ve seen that with brands like Bai and Essentia Water, and some of the gut pops may now be making that migration. So they develop decent-sized businesses but it’s disheartening to recognize that they’re no longer moving the ball forward on health and wellness in a very meaningful way.

By contrast, alcohol-alternatives for the most part avoid that trap, targeting sheer flavor and enjoyment, and offering a way to balance or omit consumption of an ingredient, alcohol, that should be consumed in moderate amounts. (And no, I don’t buy the Surgeon General’s report that alcohol should never be consumed at all.)

The other point I want to make relates to distribution. Readers of this column will know that I view the beer distribution networks as crucial for the incubation of new non-alcoholic beverages and am constantly wishing they would give this segment the focus and resources it deserves, to their own financial benefit. Too often, though, they only pay lip service to this part of their portfolio, in part because of the flight risk of these brands but also because of misaligned incentives as well as sheer institutional inertia.

Yet you could not come up with a more close-in category adjacency to alcohol than this segment. It serves the same sets of occasions, in the same on- and off-premise settings, often closely mimicking beer, wine, whiskey or canned cocktails. (Even more so than those Delta-9 THC drinks I covered in a recent column, and without the regulatory risk.) Might this finally be the NA category that fully gets their attention?

Of course, their core suppliers are assuring them, as usual, ‘don’t worry, we’ve got this covered.’ On the beer side, non-alc extensions from Guinness and Heineken are doing well. But as often happens in newer categories, the independents have a fair amount of momentum, most of all Athletic. On the wine and spirits side, it’s more up for grabs, though major players like Diageo and Pernod Ricard are wheeling and dealing to get promising brands into their orbit.

For the entrepreneurs involved, the potential exits are a model of clarity: those same alcoholic beverage giants to whose products they’re offering an alternative. (“Disrupting,” if you must.) Because these are so close an adjacency, I like to think there’s less post-acquisition execution risk, as these drinks slot right into the muscle memory of sales and marketing people who flog Bud Light or Tito’s or Jameson.

Looking through the lens of consumption occasions had me flashing back to an episode some years back when bicycle advocates like me were invited to participate in the initial planning sessions (called “charrettes”) for New York’s bike share program, Citi Bike. They sat us at big round tables with large city maps on which we were to suggest where the bicycle docks should be located. But before we got started, the Department of Transportation people asked us to take a moment to think of occasions when folks would actually want to take a series of short bike rides, for a master list they were compiling. My hand shot up. “Beer-biking!” I said. I was referring to brewery outings by my neighborhood homebrew club where, if the beers were particularly delicious, it would be nice not to have to ride our own bikes home over the 59 Street Bridge, which always seemed steeper on the way back. “Brilliant!” the DOT guy at my table exclaimed. Then he thought about it a moment and said, “I can’t write that down. The city can’t be encouraging alcohol consumption on our bikes.” Well, Citi Bikes duly arrived in 2013 and have been a great boon to our city. And now there’s another answer to that quandary. Switch to some delicious NAs to keep the party going! Back then, who knew?

Longtime beverage-watcher Gerry Khermouch is executive editor of Beverage Business Insights, a twice-weekly e-newsletter covering the nonalcoholic beverage sector.