Retail’s the right way for alcohol-free: AF drives growth with Sprouts, Target, Walmart listings
Headquartered in Auckland, AF's lineup includes five ready-to-serve classic cocktails and a sparkling rosé.
It’s USP comes from Afterglow, its own unique botanical heat extract from New Zealand, which replicates the warming sensation of alcohol without the effects.
Its drinks are made from 100% natural ingredients, and are designed to be low in sugar and calories.
The brand has found that - while most drinks categories are carved out in the on-trade - that’s not the case for alcohol-free.
Secret NZ ingredients
AF Drinks was founded in 2020 by Lisa King, who is best-known in New Zealand as the founder of social enterprise Eat My Lunch.
When she cut back on alcohol, she became more aware of the sober curious movement and lack of options.
The brand now has a 40% market share of the non-alcoholic spirits and RTD category in New Zealand. King says there’s not one sole secret to success, but success has been about getting it right in several key areas.
“Firstly, we have great-tasting products that truly deliver on the flavors and complexity of classic cocktails,” she told us.
“All of our products contain Afterglow, our trademarked ingredient which gives you the warming sensation of alcohol.
“Our success can also be attributed to our branding and proposition, which is sophisticated, beautifully packaged, yet fun and irreverent.
"Innovation is another key factor. In the last three years, we have developed 11 SKUs, giving consumers choice across a range of different drinks.
Afterglow
Afterglow is a 100% natural botanical extract that mimics the warmth of drinking alcohol. That’s a crucial component for adult drinks, says King – although she is keeping the exact formula secret and exclusive to her brand.
“Afterglow gives you that kick/slight burn at the back of your throat, as a spirit would. Then the more AF you drink, the warmth builds up, giving you the sensation of drinking alcohol.
“Afterglow also provides mouthfeel and a lingering aftertaste (we find most alcohol-free drinks deliver the taste upfront and then washes away very quickly). So Afterglow is able to extend the backend notes and flavor.”
“And finally, timing has been huge for AF. We were one of the first AF products in NZ to establish the category and lead the conversation around not drinking.”
Expanding in the US
In 2023 the brand received investment from Pernod Ricard’s venture arm, Convivialité Ventures. That was used to drive its launch in the US: funding production, growing a team and investing in the brand.
AF launched in the US in April 2023, in around 400 retail stores. In now anticipates being in more than 2,100 retail doors by the end of the year, making it one of the fastest growing brands in its category in the US.
It now claims some impressive milestones in the US: the top selling non-alcoholic cocktail and the fifth best-selling RTD cocktail in both alcohol and non-alcoholic (IRI Scan Data Oct 2023).
AF debuted in the US with listings in Sprouts and Amazon, and is now celebrating a big win with its roll out in Target and Walmart over the last few weeks.
“NZ was a couple of years ahead in terms of retailers making space for alcohol-free products,” said King. “When we entered the US in April 2023, this category outside of 0% beer, was severely underdeveloped.
“However in the last 12-15 months, it has exploded and products like ours are available in mass retailers such as Target and Walmart.”
These kind of partnerships with major retail play a ‘critical role’ in taking AF – in indeed the non-alcoholic category - from niche to mainstream.
“In both NZ and the US, we’ve seen the grocery channel as the main distribution channel for alcohol-free products, with on-trade following behind (which for traditional alcohol tends to be the other way around),” said King.
Growing in the US has not been without its challenges.
“There is still a lack of genuinely good options beyond 0% beer, so taste (or perception of bad taste) is a key challenge,” said King, although this is something the brand has already encountered in New Zealand.
“The US is a massive market, so it’s definitely more challenging for any new brand, whereas in NZ, you can establish brand awareness and leadership fairly quickly.”
Many of the brand’s key challenges have been practical – finding the right partners to deal with – although King says brand’s scale and demonstrable growth potential is easing those problems.
“We chose to manufacture in the US for the US market. Operationally, it has been challenging finding the right co-packer, logistics and supply chain partner. We also entered the market as an unknown brand with one retailer behind us, so finding a manufacturer that would deal with our initial small volumes was challenging.
“As we have grown, we now have access to bigger, better manufacturing options and have been able to find efficiencies with both production and logistics.”
What's next in alcohol-free?
BeverageDaily's 'Beverage Innovation' webinar is here! We'll be asking our panel - who bring with them decades of experience with companies such as Coca-Cola, Sparkling Ice, Vita-Coco and more - what's trending in alcohol-free.
Register for FREE here! for the event on Wednesday 13 November (but don't worry if you can't make it - just register via the same link to watch on-demand)
