Explainer: Zero-alcohol drinks

Senior Consultant Andy Horwood looks at the rapid rise of zero-alcohol drinking and explains the laws and industry policies that govern retail displays and promotions and minimum buying ages.

You can get some pretty weird drinks these days. Food & Wine compiled a list of the 13 Strangest Beers on Earth in 2017, which includes:

· a beer made from yeast swabbed from Roald Dahl’s writing chair

· a beer containing crushed meteorite

· a beer containing 67.5% alcohol.

It’s no surprise then that brewers and winemakers have also mastered the other end of the spectrum — namely, zero-alcohol beers, wines, and other drinks that have typically been alcoholic.

First, let’s clarify our terms

In this article I’ll use the terms “zero-alcohol drinks” and “alcohol-free drinks” to mean drinks that would conventionally contain alcohol, such as zero-alcohol beer and zero-alcohol wine.

I’ll use the term “non-alcoholic drinks” to mean drinks typically considered to be soft drinks, like colas and juices.

Zero-alcohol drinks are growing more popular, for good reason

Kiwis are showing increasing interest in low- and zero-alcohol products. According to NZIER research commissioned by the Brewers Association, sales of low-alcohol beer increased by more than 1,100% in the five years from 2016. This trend isn’t limited to beer: in September 2022, Newshub reported that zero-alcohol wine sales had doubled over the past year.

True, zero-alcohol beer and wine sales still pale in comparison against their conventional counterparts. But it’s no longer just the pregnant, the religious, the unwell, or the highly productive who want good alcohol-free options — since 2012, 54,000 Kiwis have participated in “Dry July”, and many more also do a “dry January” to recover from the holiday season.

In September 2021, Lion Breweries reported on research showing that 80% of New Zealanders now take a “flexible” or “part-time” approach to drinking, and are embracing low-alcohol and alcohol-free alternatives. This is particularly true for younger New Zealanders, with 84% of the 18 to 25-year-olds surveyed saying they often alternate between alcoholic and alcohol-free beverages on a big night out.

That Lion press release used the title “No pressure, mate”. Their research does indicate that old-school attitudes and norms are changing, with 65% of those surveyed saying they feel fully comfortable not drinking on a night out, even when others are, and 91% of the men saying they “wouldn’t care” if their mate didn’t drink alcohol on a night out.

So clearly Kiwis are enjoying having a larger range of alcohol-free options, and also better-quality options, to support socialising (as well as to avoid a bit of excise tax).

We love looking at new trends

At MartinJenkins we love looking at how well existing laws and regulations accommodate new, disruptive trends like the big increase in zero-alcohol drinking.

On the face of it, zero-alcohol drinks raise some interesting questions. For example:

· Why do most retailers sell these products only to those 18 and older?

· Why are zero-alcohol drinks displayed next to conventional beer and wine, unlike traditional soft drinks?

Let’s look at each question in turn.

Why do supermarkets sell zero-alcohol products only to those 18 and over?

The Sale and Supply of Alcohol Act 2012 sets a “purchase age” of 18 — you must be at least 18 to buy alcohol on licensed premises. Anyone looking under 25 is likely to need to prove their age by showing acceptable ID like a passport or driver’s licence.

Zero-alcohol drinks are clearly not captured by that legal restriction — the Act defines “alcohol” as a substance containing 1.15% or more ethanol by volume at 20 degrees Celsius. So there’s no legal minimum age for buying these products — retailers who won’t sell to under-18s are following their own policies, not legal requirements.

A cautious approach keeps retailers well clear of some stiff penalties

But retailers’ cautious approach here is understandable, given the penalties for selling to minors. Licensees who sell alcohol, or allow it to be sold, to anyone under 18 can be fined up to $10,000 or have their licence suspended for a week, or both. You can imagine a busy check-out operator mistaking an alcoholic product for a zero-alcohol product, potentially getting their boss into a whole lot of trouble.

Retailers’ current blanket approach to requiring ID potentially also avoids some administrative complexity. A blanket policy that buyers of both alcoholic and zero-alcohol products have to be 18 makes life simpler and easier for the business. (On the other hand, it’s easy to imagine a beleaguered cashier struggling to explain this policy to a belligerent customer asking why they need to show ID to buy a beer with less than 0.5% alcohol.)

At a bar, a blanket approach requiring zero-alcohol drinkers to be 18 also prevents mischief. For example, it would be difficult for bar staff to prevent a 17-year-old from buying a zero-alcohol beer and then swapping it with the alcoholic beer bought by their 18-year-old friend.

Consumer NZ supports a blanket approach to the purchasing age

This approach is also supported by Consumer NZ, an independent non-profit organisation dedicated to getting New Zealanders a fairer deal. CEO Jon Duffy told us in an email that his organisation would not support under-18s being able to access these products:

“We would be concerned that displaying them next to soft drinks for example, or making it legal for under 18s to purchase, could normalise the purchase of the identical alcohol products and create brand loyalty amongst consumers at a younger age.”

Perhaps there’s a case for regulating the purchase age for zero-alcohol drinks, as the law does for where zero-alcohol drinks can be displayed.

Why are zero-alcohol drinks displayed next to conventional beer and wine, unlike traditional soft drinks?

OK, so retailers currently choose to sell zero-alcohol drinks only to those 18 and older, and to require ID when necessary. This is partly because zero-alcohol alternatives resemble conventional alcoholic drinks so closely. As Jon Duffy from Consumer NZ commented to us, “These products are identical to the alcoholic versions in all but their alcohol content.”

But this close similarity in both content and branding also affects where different types of alcohol-free drinks are displayed within a store. Retailers are legally required to display traditional soft drinks like lemonades, colas, and juices away from displays of alcoholic drinks. However, they can legally display zero-alcohol beer, wine, and mead next to their conventional alcoholic counterparts, and in fact the government encourages them to do this.

Why and how the law was changed to get to here

The law was changed in December 2016 to enable this. Since 2013 the Sale and Supply of Alcohol Act had required all alcohol displays and promotions in supermarkets and grocery stores to be in a “single area” of the store. But retailers also couldn’t legally place low-alcohol and zero-alcohol beverages in the same area as regular-strength alcohol — these were treated like traditional soft drinks.

As the Ministry of Justice’s website comments in its explanation of the law change:

“It was … a lost opportunity to promote responsible drinking by displaying low-strength alternatives alongside regular strength options.”

Consequently, the law was changed in 2016 to allow retailers to place, promote, and advertise low- and zero-alcohol (that is, under 1.15%) beer, wine, and mead either inside or outside the single alcohol area in a store. (The Act uses the term “non-alcoholic” rather than “zero-alcohol”, with the 1.15% threshold marking off “alcohol” from “non-alcoholic”).

The Ministry of Justice’s information on this lets retailers know they have the option here, but it encourages them to:

“… place such beverages and related in-store marketing in the single alcohol area, because they’re promoted — and recognised by shoppers — as low-strength options”.

Current laws and practices are driven by the perception that zero-alcohol drinks are substitutes for the alcoholic versions

So any drink containing less than 1.15% ethanol by volume that isn’t beer, wine, or mead — that is, traditional soft drinks — can’t be displayed, advertised, or promoted in the single alcohol area. The reason for this separate rule for soft drinks is that these aren’t marketed as alternatives to conventional alcoholic drinks in the same way as low- and zero-alcohol beer, wine, and mead.

Placing cola and juice next to alcoholic drinks would be likely to expose a range of consumers to alcoholic options they wouldn’t have otherwise considered. Conversely, it’s hoped that displaying low- and zero-alcohol drinks next to conventional alcoholic products will encourage those buying the alcoholic products to consider a low- or zero-alcohol alternative.

Consumer NZ agrees with the current law on this. CEO Jon Duffy told us, as quoted earlier, that his organisation would be “concerned” if the legal display requirements were reversed so that low- and zero-alcohol drinks were treated the same as, and displayed alongside, traditional soft drinks.

Some products like ginger beer and sparkling grape juice may appear to trouble the separation between zero-alcohol drinks and other non-alcoholic drinks. You might assume that these come within the category of zero-alcohol beer, wine, and mead, but in fact they don’t, and so must be placed outside the single area for alcohol. There’s a long history of consumers seeing these drinks as soft drinks, suitable for children and distinctly separate from alcohol.

For completeness, I should mention that other products that contain alcohol but that aren’t subject to the Sale and Supply of Alcohol Act can’t be displayed in the single alcohol area — for example, rice wine for cooking, flavour essences, perfumes, and pharmacy products.

Something to talk about: It’s not all about the alcohol content

Retailers’ approach to displaying and selling zero-alcohol drinks may seem counter-intuitive in some respects, if you just focus on the alcohol content of the different drinks. If a 14-year-old can buy a can of lemonade, why can’t they buy some zero-alcohol beer? And why display these things in different places in the supermarket?

As we’ve seen, the approach to in-store displays is based on legislation (and backed by significant penalties), while the minimum buying age that retailers have adopted is entirely self-imposed. But both the legislative policy and retailers’ policy on buying age are driven by a coherent view that zero-alcohol beer, wine, and mead are intended to be reasonable substitutes for the conventional versions, whereas other soft drinks are not.

Maybe this’ll give you something to make conversation about when you’re sipping a refreshing beer and musing on the hints of meteorite and notes of yeast swabbed from Roald Dahl’s writing chair.