Mindful Drinking & Moderation in Midlife: Low No Drinker Podcast

108: Costs of Drinking AF Pt1: What You’re Really Paying For

• Denise Hamilton-Mace • Episode 108

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Time to tackle the question that comes up again and again: why do alcohol-free drinks cost so much when there’s no alcohol in them?

This is part one of a two-part mini-series on the true cost of drinking alcohol-free.

Today I’m breaking down the industry economics behind your favourite low and no drinks — from the surprising truth that alcohol is often the cheapest ingredient, to the eye-watering costs of research, development, small batch production, and simply getting bottles onto supermarket shelves.

Next time, I’ll flip the script and look at what it costs you personally to drink alcohol-free, and the impact that choice has on your life.

0:00 Why Alcohol-Free Costs the Same
2:19 Alcohol is cheap
3:26 Tradition, research & development
6:20 The technicalities of taste
9:12 Preservation and Shelf-Life Issues
11:20 Small batch production
13:20 Costs of dealcoholisation
17:42 Marketing & promotion
20:19 Distribution: supermarkets & online
25:13 Recouping the costs
26:36 Speculate to accumulate great drinks

Also mentioned:
Days*
Lucky Saint*

Best episode to listen to next:
#102. "No one wanted to work with me" Athletic Brewing's Bill Shufelt
#98. Lyre’s: The Honest Truth
#80. From Seedlip to Seasn to Sylva to Shandy with Ben Branson

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Speaker 1:

As Brits, we are well known for our stiff upper lip and always knowing how to behave in polite society. There are two things that we don't usually talk about. One is sex, the other is money. I want to bust both of those myths on this podcast. Today, though, we are talking about money and the costs to alcohol-free drinks and why they cost so much when they don't contain any alcohol. Why? Well, because it is a question that comes up again and again and again, and, even though I have covered this in the past, it's still something that people need support with and need to understand so that we can appreciate the industry that is making it possible for us to enjoy our time out drinking non-alcoholic, alcohol-free or light alcohol drinks, but understand that it does come at a cost. This is part of a two-part mini -series that I'm going to do for you. Today, we're talking about the industry costs, but next time we're going to have a look at the cost to you as a drinker, when you choose to drink alcohol-free or non-alcoholic drinks or not, and the impact of those costs on your life.

Speaker 1:

Hello, hello, and welcome to the Mindful Drinking and Moderation in Midlife podcast from Low no Drinker, the leading global magazine for mindful and sober curious drinkers. My name, as you'll know by now, is Denise Hamilton-Mace, and I'm the founder, editor and host of all things Low no Drinker, and I'm here to help you find, understand and enjoy the world of low no and light alcohol drinks so that you can live a life less intoxicated on your own terms. So there are several reasons why an alcohol-free drink will cost the same, and sometimes, if not more, than an alcohol-free drink will cost the same, and sometimes, if not more than an alcohol-full drink. And today I'm going to dive into a few of those for you. I'm sure you won't be surprised to know that I have a list and we're going to go through them one at a time. I'm going to do my best to explain to you why these drinks cost so much, but why. That's's okay, and I hope that by the end of this episode you're going to come away with a greater appreciation for the efforts that producers put into creating these drinks for you and a greater understanding of why they bring value to your life.

Speaker 1:

So first on my list is the fact that alcohol, even though it is the thing that people put the most value on when it comes to their drinks, is actually the cheapest ingredient in most beverages, apart from, obviously, water. Alcohol is a byproduct of fermentation. So whether a brand is making, for example, a beer brand is making an alcohol full or an-free beer, they still need to ferment their yeast, they still need to go through those same processes and then after that there are other processes that they will go through to either stop the fermentation, to slow it down, to use special yeast or to reverse it completely. So the alcohol in itself isn't the most expensive ingredient in your drink. It's everything else that goes into it that adds to those costs. And whether that drink is alcohol-free or alcohol-full, you still want to make sure that you're having something from a producer who's put time, effort, quality ingredients, research and development and, of course, a little bit of love to make sure that these drinks are the best that they can be.

Speaker 1:

Alcohol is a very well established tradition. It is an industry that has been going for countless centuries. So every time you have an alcohol full drink, you are tasting centuries of research, of development, of trial and error, of production techniques. Every time a new alcohol full brand comes into the market, they are starting from a head start position when it comes to alcohol-free drinks. This industry, this category as we know it, free drinks. This industry, this category as we know it, isn't even old enough to drink alcohol itself yet. Yes, there have been alcohol free drinks around for a very long time. I think the oldest brand is Credino, which is an Italian aperitif which is 60 years old, or this year, in 2025. But the industry as we know it today is only about 10 years old or so.

Speaker 1:

Now imagine, as a producer, you're coming into an industry and you want to make something the best that it can be and you look around at the people who've gone before you so that you can learn from them and you realize that most of them have been in this game for just as long as you have. There isn't the years and years of research and development and production behind alcohol-free, in the same way that there is an alcohol fall. So what's that got to do with cost? Well, it means that alcohol-free brands have to spend an inordinate amount of money on research and development, on new product development, on reaching out to consumers, on giving out lots of free samples so they can get lots of feedback. It's a really expensive way to build a category and to build a business when there isn't anyone who's gone before you for you to lean on.

Speaker 1:

There are pioneers in this industry, most notably Ben Branson, who I did obviously have on the podcast a few episodes ago and I'll link to this before. He's considered to be the godfather of the alcohol-free industry when he launched his distilled spirits Seedlips 10, maybe 11 years ago, but that was the first of its kind, and in the last five or so years the industry's really, really exploded. But how far can you really expect an industry to get in five years when it's sort of reinventing the wheel every time something new comes out? There is specialist kit, there is trial and error, there is huge failure rates, because obviously these drinks need to be made to serve a purpose, but they also need to taste really, really nice, and if they don't, then there's a lot of batches that get thrown out and go to waste. So there's a huge amount of cost in just trying to figure out how to make the drinks, let alone actually getting them to go to market. Next we've got the taste and the technical costs.

Speaker 1:

So alcohol does a lot more in a drink than just get you sozzled. I said it many times before you know it. Uh, it's? It's a preservative, which we'll talk about in a moment. It adds flavor, it adds texture, it adds depth. With no alcohol in a drink, a producer has to work twice as hard to then go and figure out how to replace those things that are missing in the drink.

Speaker 1:

Now, there are brands out there that don't try to do this replica. They don't try to replace and replicate full strength alcohol, but there are brands out there who do want to do that and to get a drink as close to its original as it can be, because there are drinkers out there that want things that taste the way they remember them. So there is a lot, therefore, that needs to be placed into product development in terms of ingredients and we only want good ingredients, right? We don't want lots of synthetic, man-made e-numbers and all sorts of scientific mumbo-jumbo that when we look on the label, we don't understand anything that's in there. We want fresh, quality, natural ingredients that maybe offer some functionality, maybe give us some extra brain boost or give us some energy or help with, you know, restorative inner peace and calm.

Speaker 1:

But all of these ingredients cost a lot of money for brands to try to recreate the flavor profiles, to get depth, to get texture, to get mouth feel, even when they're not trying to replicate full strength alcohol. These are all things that when you taste a drink and you feed back to the brand, you say to them it tastes thin or it tastes watery, or it hasn't got enough flavor, it hasn't got enough body. For them to create these things and to fix these things for you, they have to put more things in the drink and because there is no alcohol to help carry those flavors, they then have to figure out other ways to help those flavors bind and finesse and to come together and to do a wonderful dance on your tongue and give you a flavor sensation. So custom ingredients, flavor houses, taste testers, tasting panels again, these all cost lots and lots of money and when you are a small brand, as many of the low-no-light brands are, quite often they are bootstrapping. There is not a lot of venture capital investment in these spaces until a brand has already established that it's worth investing in. It takes time and it takes money and it takes a hell of a lot of of effort.

Speaker 1:

Next on the list is another thing that alcohol does for a drink that isn't present when it gets removed is the preservation. Alcohol is a very, very, very good preservative. It's why that bottle of ouzo that you got from your Greek holiday 15 years ago in the back of the cupboard is still safe to drink. I mean, it might not taste very nice, but the alcohol in the bottle keeps it safe. It kills off any bacteria that try to grow in it and would cause you illness Without alcohol in a drink.

Speaker 1:

Alcohol-free drinks don't have the same shelf life. I am working on an article and an episode for you about preservation and about shelf life alcohol-free drinks. It is getting better. There's a couple of brands that I've spoken to that have managed to increase their shelf life to 18 months to a couple of years for their alcohol-free spirits. I believe Liars is one of them. When I spoke to Anita Osborne and I can link to that show in the show notes for you as well. But in general, alcohol-free drinks just don't last as long. I get sent a lot of products to try. I'm very, very grateful. I can't get through all of them as soon as I get them, and I was going through some of my stock the other day and I realized that a lot of the drinks I received a while ago have gone off because they only had a six month to a one year shelf life.

Speaker 1:

Now imagine that as a producer, you have to figure out how to make your drinks last as long as possible. You then have to get them out to consumers and make sure that the consumer understands that they're not going to last as long as they might be used to, because we are used to beers and wines and spirits being able to last a long time. Used to, because we are used to beers and wines and spirits being able to last a long time. Heck, we're used to wines being able to sit in a cellar for decades and get better and better each year. You then can't produce in as big a batch as full strength alcohol, because if you produce too much and it doesn't get sold enough, then it's going to go to waste. So there is so much to consider in terms of how you make your alcohol-free drink last long enough that it can be enjoyed and then not have to suffer the costs of small batch production, which is another cost area to consider. Most of the cost breaks for producing alcohol beverages come because brands are producing their drinks in such high numbers.

Speaker 1:

Alcohol-free beverages, because this is a nascent category, because it is still growing, it's emerging. Yes, the numbers look wonderful, but still we're talking about, you know, 1% to 2% of total alcohol beverage sales. Is alcohol free. When the numbers are that low, producers aren't getting the discounts and the order breaks that they would be getting if they're producing alcohol full, small batch production is a lot more expensive, just like when you go shopping and you go to the supermarket versus when you go to a wholesaler's. When you buy in bulk it's cheaper than when you buy individually. For low, low and light alcohol producers they're not getting the discounts that you get for buying in bulk yet because not enough people are drinking it.

Speaker 1:

It's not lasting as long, so they can't produce as much, and so they are paying more money to produce a single unit of alcohol-free beer or a single unit of alcohol-free wine or spirits bottle than an alcohol-full producer, particularly when you compare it to big brand producers. You know your high street names, the ones that you see advertised on TV. They're receiving huge, huge bulk order discounts that your small, independent producers a lot of the brands that you'll see on the shelves behind me if you're watching this on YouTube just are years away from getting that kind of discount. That leads to the costs of scaling. So we've already talked about the unit costs. We've talked about the mass production that is impacted by minimum order quantities, smaller volumes equaling higher per unit costs, and let's not forget the specialist equipment that is required to make alcohol-free drinks.

Speaker 1:

Now I touched on before the fact that alcohol being the cheapest ingredient in the drink because it is a byproduct of fermentation, once that drink has been fermented, once it has been turned into an alcohol-full beer, for example, as you would recognize, the drink then needs to go through another process, and that process is called de-alcoholization. Now, not every alcohol-free drink is de-alcoholized I'll come back to that but those that are are then spending money on a second process to take the alcohol away from the drink that they've just made for you. So that requires specialist equipment. I will do an episode for you on the different types of de-alcoholization. There's too much to go into here, but just know that there are a lot of different methods that brands can choose. Some are more effective than others in producing quality liquids. But what happens once alcohol has been removed from a drink? If a brand is going through a dealkalization route while that alcohol is being taken away, it also takes away a lot of the things that we enjoy about an alcoholic beverage, so it also takes away a lot of the things that we enjoy about an alcoholic beverage. So it will take away some of the flavor notes, some of the texture notes, some of the aroma notes, and so the brand then goes through another process of finding ways to put those things back in. So that's two extra processes just to make a de-alcoholized beer or wine, for example.

Speaker 1:

Now there are some brands that don't de-alcoholize. They brew or macerate or produce up to that low ABV mark, whether it's 0.5, 1.2, 0.0, whatever it is. But again, they'll have extra costs involved in terms of finding ways to either stop fermentation so some brands might use yeasts that are specially produced that don't produce as much sugar, so therefore not as much alcohol is made. These yeasts are extremely expensive because, as you can imagine, they're new and, uh, not necessarily novel, but they're not as widely used, and so brands are still learning how to use them best or they're having to find different techniques. They're having to macerate, they're having to, uh, leave drinks to to blend and to combine and to create these flavors. Again, there's costs involved in preservation whilst that is happening, figuring out the amounts and the quantities and the ratios, to make sure that everything comes together in a way that produces something that can be comparable to other adult drinking moments and products. There are just so many costs involved in producing the drink. But it doesn't stop there For alcohol-free brands. Their next challenge is actually getting the drink to you, is getting you to be able to try the drink after you've understood the drink. So there's marketing costs involved.

Speaker 1:

Now you'll notice I don't know about in the US, but here in the UK you'll start to. You'd have started seeing brands that are advertising on television the alcohol free versions of their alcohol free drinks, and it's amazing to see huge brands like Guinness, like Gordon's, advertising their 0% versions. If you're a sporting fan, you'll see Heineken's and Peroni's sponsoring things like the Formula Ones or Ascot in the US. Is it, I believe, bud Zero that sponsors the NBA? You've got the American brand, athletic Brewing, who've partnered with Arsenal Football Club over here in the UK, which is a lovely international alcohol-free sponsorship partnership. I spoke to the founder of Athletic Brewing and again I'll link to that episode in the show notes for you. They are the single biggest alcohol-free beer producer in the US and his story is absolutely fascinating.

Speaker 1:

But apart from those brands, it becomes very difficult for an independent brand to get marketing out there. Some of the independent brands are doing really well. You'll notice brands like Days Brewing and Lucky Saint, who have managed to scale their businesses to the point where they're able to advertise on the London Underground, for example, but that costs a lot of money and that's a very rare occurrence. Tv advertising, therefore, is out the window for most people. Radio advertising doesn't particularly work when it comes to drinks and unknown alcohol-free drinks, as people need to be able to see them rather than just hearing them. You have newspapers and magazines, so traditional marketing, which does work but requires long-term campaigns. And then you've got social media, which is obviously where everybody goes, and so the brands are therefore surrounded by the noise of all the other brands who are all trying to get influencers and social media marketers to shout about their products. It costs a lot of money to reach you.

Speaker 1:

It's really difficult for these brands to get their drinks on to your radar, so they have to spend a lot of money on marketing. Then, once you are aware of those drinks, you then need to know where to go and buy them, so they need to spend money again on distribution. Now, when you go into stores like Tesco's and Sainsbury's, you will see now that they have all, have pretty much all of them have dedicated blue zones, which I'm not sure why we have. Why they're blue? It does always make me think of like an old lady's blue rinse. Why they're blue? It does always make me think of like an old lady's blue rinse, but they have dedicated blue zones which are now recognized as the low and no drink zones. When you're going down the spirits aisle or the booze aisle which is fantastic what you will notice no matter which store you go into, no matter which chain you go into, you'll generally see the same drinks again and again and again, and they will be derivatives of big brand drinks. So the big alcohol brands who have their 0% versions or alcohol-free brands who've already made it onto, like I said, things like tube advertising and sporting sponsorships. The reason for this is that it costs a lot of money to get your product on the shelves on the supermarket A lot of money and the systems by which supermarkets put drinks on their shelves heavily favors the supermarket.

Speaker 1:

Understandably, they have a business to run and supermarkets make very, very small margins. I think it's something like 1% 2% margins are made in a supermarket, so they charge a lot of money for brands to go onto their shelves. But once they're on the shelves you then have to pay for placement and where you want to be on that shelves. If you want to be on an end cap so that you're standing out you know the ends of the aisles as you walk down, then that costs more. If you want to be placed by a till point, then that costs more. If you want to be placed by a till point, then that costs more.

Speaker 1:

There is so much cost that goes into getting your drink placed in a supermarket that for most alcohol-free brands it is a completely unachievable dream. Most of the low-no brands that you will ever come across you will not be able to find in the supermarkets because until they can scale to a ridiculous size it's just financially not viable. And then the supermarkets in return aren't giving them the support that they need. So there's very little data that goes back from the supermarkets to the brands so that they know which of their SKUs are selling well, which placements are working better for them, which times of year are better for them to be doing promotions. So it costs a heck of a lot of money to get a brand into a place where you, as a consumer, will see it regularly and trust in it, because if it's in your Sainsbury's or if it's in your Waitrose or in your Tesco's, you're going to likely trust it more because you trust those stores to only serve you the best of the best. So then where do they go? They go to independent retailers. They go to e-commerce sites.

Speaker 1:

Companies like Wise Bartender are a great resource and I always say if you're looking for alcohol-free drinks, try places like Wise Bartender, and there is an affiliate discount code in the show notes for you. You can get 10% off if you use the code LONODRINKERMAGAZINE and there's a link in the show notes and that does help the platform to keep going. So thank you for that if you do. But these are great places to find new and unique and unusual and really interesting drinks from producers who are working really hard to create something that you can enjoy. But then stores like that, like the Wise Bartenders, like the Alcohol Free Drinks Co, they themselves have their own cost to consider when they have to try to market their stores so that you can find the drinks. And then, of course we have the competition. So I've mentioned the big brands.

Speaker 1:

You know, if you are drinking low, note and light, it is likely that your entry into the category came via a well-known brand. Perhaps it's an alcohol-free version of your favorite alcohol-full drink. So it's really difficult to convince consumers, convince your drinkers, to try something new. If you found something that you like, you are most likely to continue to buy that thing over and over and over again. It's just, we are creatures of habit, it's natural, it's what we do. I have my favorites, you have your favorites in many categories of things.

Speaker 1:

So brands have got to get you to try their drink rather than trying somebody else's drink. So what can they do to do that? They can do tastings. There's often a phrase in the industry that says we need to get liquid on lips. So getting you to try the drinks, either by giving out free samples, by inviting you to tastings, by offering discounts and that sort of thing, and this is all well and good, but that will cost a lot of money and at some point the brand has got to recoup those costs. Because, ultimately, if our brands, if our low, no and light alcohol brands, cannot recoup all these costs, if they cannot find ways to bring money into what they're doing, they cannot then reinvest in research and development. They cannot make the drinks better, which is what you tell them, you want them to do and they will, like many sadly, have gone before go out of business. There are some great brands that we've already lost in this space simply because they couldn't afford to keep producing their liquid in such quantities such small quantities, to be able to grow it, to be able to get more people to taste it, to get them to make more orders, so that they could then scale the business further that they've had to shut down, and it's really, really sad.

Speaker 1:

Now don't get me wrong. I've said before on this show and I will always say, because I'll always tell you the truth there are some drinks out there that probably shouldn't still be in production. There are some awful alcohol-free drinks out there, but pick a category any category of drinks, of food, of clothing, of cars, of anything and there will be some awful versions of it. That's the nature of business. That's absolutely fine. I always like to think that, in time, quality will win out, because you, as the drinker, will only spend your money on the things that are worth it, but what I will say is that you do have to spend your money.

Speaker 1:

You can't keep asking for free samples, you can't keep asking for tasters and you can't keep just complaining that these drinks aren't good enough without feeding back to the brands on what it is that they need to do to make it better. Go and buy the drink. Go and tell them what they need to do to make it better. When they tell you they've tried, go and buy another drink. Give them more feedback and the category will continue to grow. You'll get more people to come and join you for an alcohol-free pint in the pub one day or picnic in the park, and these brands will be able to grow their consumer base. They'll be able to reach more people and, as they grow, as they scale, they'll be able to take advantage of things like minimum order discounts. They'll be able to produce their drinks for less. Therefore, the cost will come down. Yes, they cost a bit more at the moment, but quality costs money.

Speaker 1:

I, for one, am quite happy to pay the same for an alcohol-free drink as I pay for an alcohol-full drink, if it tastes amazing, if the brands are really trying to make things better and if it's serving a purpose, which is me being able to have a great time with my friends and my family without having a hangover the next day.

Speaker 1:

You might have different goals, you might have different reasons for being here. We're all on our own journey. That's absolutely fine, but remember that this is a growing category and I know that there are some who don't like us saying that. It's growing, you know, but it is. You know, it's still nascent, it's still new, it's still emerging and that's going to take time and it's going to take money and it's going to take support. I hope that this has shed a little bit of light for you into some of the reasons not all, there are more reasons, but some of the reasons why alcohol-free drinks cost the same amount as alcohol-full drinks when there's no alcohol in them. If this has been enlightening for you in any way, I would love if you could do me a solid and simply share this episode with someone else who you know, who might find it valuable and useful. Until next time, cheers to a life less intoxicated.

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Denise Hamilton-Mace

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