Australia: Zero- and low-alcohol segment up more than fivefold in the past year

The zero-alcohol and low-alcohol segment has grown more than fivefold in Australia in the past year, says the managing director of Endeavour Group, which operates 251 Dan Murphy’s liquor superstores and 1392 stores under the BWS banner, The Financial Review reported on October 12.

Endeavour Group is Australia’s largest liquor retailer and was de-merged from supermarket giant Woolworths, listing in its own right on the ASX in late June.

Steve Donohue runs the company, which also operates the ALH hotel division with more than 290 hotels and 12,000 poker machines.

The move to low-alcohol consumption comes as Endeavour faces a tougher time from fund managers barred from investing in the stock because of environmental, social and governance concerns.

Mr Donohue said there had been a big shift in customer preferences in the past year to moderation in alcohol consumption. Zero-alcohol and low-alcohol beer, wine and spirits were on the rise.

“We have seen a really rapid increase in the past 12 months,” Mr Donohue said.

Endeavour is in the early stages of a reconfiguration trial of a small number of its stores to put the displays of zero alcohol, low alcohol and mid-strength products more prominently in stores to catch the eye of customers when they walk in.

It is part of a pilot program with the DrinkWise organisation. DrinkWise chief executive Simon Strahan said research shows around 60 per cent of alcohol drinkers in the 18 to 24 age group are aiming to reduce their alcohol consumption.

Mr Strahan said a survey of 3000 people in the 18 to 44 age group showed that 35 per cent of them would try to hide the fact they are not drinking alcohol or drinking lower strength products in a group of people in a social situation.

Mr Donohue said the beer segment had been the pioneer in zero alcohol and low alcohol, but wine was catching up fast.

“Winemakers have learned to make wine which still has the same flavour profile and characteristics,” he said.

Craig Garvin, the chief executive of ASX-listed wine company Australian Vintage, said last month that McGuigan Zero, a no-alcohol wine brand, has become the No.1 seller in a fast-growing category in both the United Kingdom and Australia.

Mr Garvin said the company had invested in a second “spinning cone”, which strips out alcohol from wine while maintaining taste, for its Buronga winery near Mildura.

Mr Donohue said there were about 200 different product lines across beer, wine and spirits which were now zero alcohol or low alcohol.

The trial of the new formats has begun in 16 Dan Murphy’s and BWS stores and will progress to 29 in the first phase. He said early signs were that it would likely be rolled out to many more. “I expect it will,” he said.

Mr Donohue on Monday visited several of the group’s hotels in Sydney as that city lifted restrictions for the double-vaccinated and said there had been unbridled optimism among customers and publicans.

“There’s a sense of joy among people that they are back,” Mr Donohue said.

Prior to the de-merger, Woolworths suffered a big backlash over an extended period when it still owned the Dan Murphy’s chain over plans to build a Dan Murphy’s mega-store close to dry Aboriginal communities in Darwin in the face of overwhelming opposition from Indigenous groups and health bodies. But it eventually abandoned the plan.

The 360,000 Woolworths shareholders all received one Endeavour share for every Woolworths share they owned.

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