Why are alcohol-free spirits so expensive?

  1. Author: Conor Erb
  2. Date: July 14, 2021

‘Alcohol-free spirits are far too expensive.’

‘There’s no duty charged on low- and no-alcohol drinks, so they should be cheaper.’

‘It’s just posh lemonade, so it should cost the same as a decent bottle of pop.’

Do any of these statements sound familiar to you? They do to us, and producers of low- and no-alcohol spirits have certainly heard them.

So why are alcohol-free spirits so expensive? Well, it comes down to five main factors: research and development costs; the cost of quality ingredients; high production costs; economies of scale not yet fully realised; and that the market hasn’t yet reached maturity.

Let’s take a closer look.

Research and development costs

Creating alcohol-free spirits is a relatively new endeavour and people are still learning and striving to create an authentic-tasting drink. Whether they’re aiming to replicate a familiar flavour, or bring a new flavour to market but with the expected mouth feel and warmth of an alcoholic drink, it all takes time. And it’s expensive, requiring a process of trial and error using quality ingredients, and sometimes having to invent new production processes, too.

It took Seedlip ‘two years of experimentation to develop a bespoke distillation process for each individual ingredient’, and Lyre’s took ‘many years’ to perfect its products. The investment in research and development, and attention to detail is reflected in the price.

The cost of quality ingredients

This is a two-pronged issue. First, many of the ingredients are high-quality, organic botanicals, such as saffron or vanilla, which are expensive. Second, without alcohol to carry the flavours, a greater quantity is needed. Both of these things affect cost.

High production costs

Low- and no-alcohol spirits are made either by extracting the alcohol, or producing them without the introduction of alcohol.

In the first method, the alcohol extraction introduces an extra step into the production process. That step also generally means an amount of the spirits are lost, which adds further to the overall cost.

Some non-alcoholic spirits are created without using alcohol in the process at all. However, while water is cheap as a product base, it doesn’t capture flavours as well as ethanol. That often means that a greater quantity of botanicals is needed, and the method used is different, too, generally involving distillation in a specialist still that operates at lower temperatures to preserve flavours.

Some producers extract each flavour separately, using whichever process – distillation, infusion, maceration – is appropriate, which adds even more to the production time and costs.

Another consideration is hygiene. We’ve all seen action films in which the hero uses his teeth to pull the top off a bottle of spirits, then pours the booze over a wound to clean it. That’s because alcohol is a natural disinfectant. However, spirits produced without alcohol need to compensate for its absence, and that means additional costs for refrigeration. The pH can be lowered using citric acid, which helps, but that can also affect the taste, which may not be desirable.

Economies of scale not yet fully realised

Whenever you buy something that isn’t mass-produced – craft beer, boutique wine, artisanal vodka – you can expect to pay more as it costs more per unit to produce.

Producers might make the product themselves in their own facility, or hire production facilities. However, it can be difficult to get established facilities, more familiar with producing alcoholic spirits, to understand the processes involved in making non-alcoholic varieties. They might also have minimum order quantities, and take time to produce the spirits.

The market hasn’t yet reached maturity

By now we’re well accustomed to NoLo beers – which have improved markedly in quality in recent years – and we’re also pretty familiar with NoLo wines. When it comes to alcohol-free spirits, however, the market is relatively new. Seedlip, the world’s first non-alcoholic spirit, was introduced as recently as 2015.

In the UK in particular, the market tends to be slow to adopt new things. When a tipping point is reached, adoption skyrockets – but we aren’t quite there yet with alcohol-free spirits.

A big factor is education, and an element of that is trying to compete against the massive marketing budgets and existing brand awareness that the major alcohol producers enjoy. Now, a number of these big producers have seen the way the tide is turning and also want a slice of the pie, so positive market awareness may well be driven by their efforts. The issue then will be individual manufacturers getting their products noticed in an increasingly large pool of offerings.

Why focus on the price of NoLo?

Makers of fine wines, single malt whiskies and barrel-aged cognacs aren’t asked to justify the additional cost of their product compared to cheaper brands, and similarly brand-name spirits aren’t expected to account for the higher cost of their products compared to supermarket own labels. Paying more for such products is expected; paying a bit (or a lot) more for a bottle is often considered a signifier of quality. Yet, when it comes to alcohol-free products, the question of why they cost ‘so much’ so often seems to be an issue.

The reality is that some discount supermarkets already sell bottles of alcohol-free spirit for a similar price to inexpensive alcoholic spirits at the lower end of the market. However, you have to balance price against taste, and the additional craft, care and attention to detail that goes into creating a premium drink.

Cultural change is coming

Drinking alcohol is, for better or worse, a significant part of British culture. While overall alcohol consumption is around the average for Europe, the level of binge-drinking is high. As the trend for low- and no-alcohol spirits grows, there’ll likely be pushback from people who fear the change. If getting drunk together – whether that’s at a local pub, a trendy nightclub or an exclusive gin bar – is one of the things that binds a group of friends, then what happens when one or more suddenly don’t want to do that anymore?

According to Alcohol Change UK, the fact is that around 20% of the adult population don’t drink at all – and this figure is increasing among young people in particular. It seems clear that, whatever resistance there may be from both individual consumers and traditional market pressures, the trend towards drinking less or no alcohol – and therefore the demand for good-quality no- and low-alcohol products – is only going to grow. In time, that increase in demand may have an impact on cost, but for now, if we want high-quality alcohol-free spirits, we’ll have to pay the price.

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