The Financial Value of Non-Drinkers to the Hospitality Industry

There has recently been debate on the non-alcoholic drinks hype, questioning if it brings incremental sales, and whether the revenue will ever become that significant. At Propel, the website for the Hospitality Industry operators, Glynn Davis writes about this in an article titled Low and non-alcoholic drinks may not turn out to be money-spinners (Fri 21st Oct 2022 - Friday Opinion)

Sessionabilty is a key characteristic of alcoholic drinks - especially beer – due to the properties of alcohol. Non-alcoholic alternatives will never compare favourably on a rate of sale measure. I agree with Glyn’s comment: I can’t help feeling that much of the research and marketing has arguably painted prospects for the category that are much greater than will ultimately be the reality. On the evidence today, I reckon they look unlikely to make much of a dent into the full alcohol market.” There are a lot of non-alcohol products, but most are “me-too” versions of something that already exists. The world certainly doesn’t need any more alcohol-free beer brands especially as Mintel points out that “52% of drinkers think alcohol-free beer doesn’t taste as good as standard beer”. 

Although the sector may have been over-hyped, non-alcoholic alternatives still have an important contribution to the financial performance of hospitality venues.

A number of years ago I owned a specialist rotisserie chicken restaurant in London. In the early days we had to decide whether our restaurant, with a specific focus on meat, should offer customers a vegetarian alternative. The answer, of course, was that we should. The killer argument was that a group of diners is likely to include one or more vegetarians (this was before the trend towards veganism). Even if the majority of the group are meat eaters the minority of vegetarians are likely to determine the venue for the group and will reject restaurants without a suitable menu for them (this is an example of the Minority Rule concept Nassim Taleb describes his book Skin In The Game - the intolerant minority tend to dominate the tolerant majority.) It was equally important for the restaurant to take its vegetarian customers seriously, even if the primary focus was chicken. One vegetarian summed it up concisely for me: “We won’t be fobbed off with just egg sandwiches. The vegetarian menu needs to be interesting - if it looks like we are treated as an after-thought we’ll go somewhere else.”

The decision on how to treat non-drinkers - a lower revenue minority - and drinkers is analogous to the vegetarian offer in a meat focused restaurant. Those avoiding alcohol in a mixed social group may determine the venue for the whole group, because drinkers are well catered for in all hospitality venues, non-drinkers are not. 

I disagree with Glynn’s conclusion that, “the adoption of non-alcoholic and low-alcoholic drinks is not going to help attract customers”. The non-drinker may not represent as much revenue per head as the drinker, but they will increase footfall by influencing mixed groups to visit venues that offer a varied and interesting non-alcohol menu. The bare minimum of Heineken Zero and Coke is no longer enough. Alcohol-free beer, alcohol-free spirits, mocktails, premium soft drinks and innovative new products that don’t fit into traditional categories, such as ZAG (sitting in-between alcohol-free beer and conventional soft drinks in a new category labelled “Social Softs) represent a stimulating range of options for the non-drinker. It also shows the venue cares about them. The drinkers, and their session fuelled higher spending, will follow.
Written by Jerry Goldbery, Founder ZAG Drinks.

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