Guest
Grant McKenzie, Former CMO, Asahi
Related Podcasts
In this episode, Simon and Laura are joined by marketing professional Grant McKenzie to explore the evolution and innovation in the world of alcohol-free beverages. The conversation covers overcoming market skepticism, strategic rebranding, and positioning non-alcoholic beers as positive lifestyle choices linked to sports and health benefits.
They also delve into future trends, including regional successes, flavour experimentation, and the growth of adult soft drinks like kombucha. Tune in for a comprehensive look at the marketing journeys, resilience, and future potential in the non-alcoholic drinks industry.
Episodes are released fortnightly
Follow us on LinkedIn for updates.
This is an 18Sixty production for The Forge.
The Persuasion Game is available on all your favourite podcast apps: https://link.chtbl.com/PersuasionGame
Transcript
Simon: Hi, I’m Simon Garnett.
Laura: And I’m Laura Halliday.
Simon: And this is the Persuasion Game, the Forge’s podcast all about the art of persuasion.
Laura: Each episode we connect with marketers, business leaders and beyond to learn how they use persuasion to influence their consumers, convince their stakeholders and drive their business forward.
Laura: Hello Simon.
Simon: Hi Laura, how you doing?
Laura: Good thank you. Today we are going to be talking about the emergence of an entirely new subcategory — which is the world of low and no alcohol. Is that something you partake in?
Simon: Yeah, well — ten years ago or something like that, I first started doing Dry January. I think I only completed it once.Completed it — there you go. Interesting language straight away.
Laura: Telling
Simon: Yeah, and I think actually what that does is it really goes to part of what I felt the challenge was — which is it felt like it was a challenge, it felt like a competition. Everyone got a bit virtue-signally and it was like “oh I’ve done this many days and you’ve done that many days,” and it felt like everyone was competing with each other about it. And I actually found that quite alienating because I just thought well if you know it then it just leads people to these very boring kinds of behaviours of just not going out, total abstinence. And actually for me the real gear change was when Heineken Zero came out and I suddenly felt like it was enough of a beer for certain situations. I’m a football fan, I like having a beer when I’m watching a game — during midweek games I didn’t necessarily want a beer, and a zero was just enough. It gave me that ritual without actually having to have the alcohol. How about yourself?
Laura: I think you’re so right. There’s definitely a sense that you should be doing it. I was very aware that my sleep was suffering, or I was feeling a bit worse in the morning even if I just had a second glass of wine. And I think that consciousness of your overall health is something we’ve all been thinking about more over the last few years a bit more. But I sort of just found it quite hard to actually motivate myself to do that.
And I think the big twist for me was listening to a podcast with Lee Mack, who is not only very funny but also a non-drinker now. And what he articulated was, you’re not missing the booze, you’re missing the feeling. You’re missing that feeling of it being 6pm, time to make dinner, time to chat and be social or just enter a different mode and have that release and reward. And what he said was “I’d never tell anyone to stop drinking, but what I would suggest is that that first drink is a non-alcoholic drink and just see how you feel, see if you can get that feeling without turning to booze.” He also recommended Freedam, which is extremely delicious, alongside Asahi Super Dry. And I’ve just been a big fan of that ever since sitting there for Netflix and a non-alcoholic beer.
Simon: Well, the reality is that a lot of the world’s global beer players are betting big on low and no. I call it the future of the beer category — in fact Asahi anticipate 50% of their global sales will soon come from lower and non-alcoholic by 2040. Which is why it’s so interesting to talk to our guest today.
Joining us today to guide us through the world of non-alcoholic drinks is Grant McKenzie, a seasoned marketing professional with a remarkable career at Asahi Breweries. Grant has been a trailblazer in promoting non-alcoholic beverages, championing the category long before it became a widespread trend.
Grant: Thank you very much, it’s great to be here.
Laura: Grant, it’s so great to have you here today. Wanted to talk about initially — what inspired you to focus on non-alcoholic beverages like Asahi Dry Zero within the company?
Grant: Well I guess it was my experience when I worked in Spain. I moved to be the Marketing Director for the beer business in Spain and there I discovered about 10% of the sales of the business were non-alcohol beer — which was very high. The company average at that time would have been 1, 1.5, 2% maximum. And what I discovered was the reason for that was that non-alcoholic beer was perceived as an adult refreshment, not necessarily as a core alcohol-only product. As a result of that, it was very common and popular to drink non-alcohol beer at lunchtime or with an afternoon snack.
What I also observed, I termed it “zebra striping,” was when people went out they had five beers but two of those in the middle would be non-alcoholic.
Laura: In the middle
Grant: So two alcoholic beers, the third one would be non-alcoholic, then back to alcoholic, and then they’d finish with non-alcoholic. Now this would be typical if you went to watch a football match, because it takes two hours, it’s hot weather, people would drink five beers. But if you think about what that means versus drinking five alcoholic ones — it’s a 40% reduction in alcohol consumption. And it’s an isotonic product so it’s hydrating you.
So I was there for two years and then when I went back to central eastern Europe to work in the bigger units there, I brought this idea — if we could replicate that success we saw in Spain, it wasn’t just our business it was the market in Spain, that would be a big opportunity. So essentially, I saw it apply elsewhere and thought this would be a great idea.
Laura: It’s fantastic. Has that kind of consumption been the same in other markets? Because I often have a non-alcoholic beer as the first drink of the evening, I don’t know if I’m a sample of one there. Are there differences across different markets?
Grant: There are significant differences at the moment. What we were able to do at Asahi in central eastern Europe was get close to replicating that Spanish or German model — if you look today, the German market as well, more than 10% of the German beer market is actually non-alcoholic. Central eastern Europe went that way partly because ourselves and our competitors really launched into this. In the UK market it is still below 2% of the beer market, so it is growing very quickly. But I think there’s been a reappraisal of non-alcohol beer — from something quite terrible, like “why would you do that,” to something very interesting, particularly in the last three to four years in the UK.
Simon: And Grant, that’s really interesting — that language of “something quite terrible” to “something quite positive.” With this category it’s really interesting — what is the balance between people running away from alcohol, choosing to moderate, versus running to non-alcoholic because of the benefits and the things that people are actually desiring?
Grant: I guess you’ve summarised my marketing challenge in a nutshell! So the opportunity was to turn non-alcohol beer from a negative choice — a “control” product, “I have to do this because I want to moderate my consumption, or I’m driving a car, or I’m going back to work” — to a positive choice: “I’m choosing this because it tastes great and it’s better for me than the soft drink alternatives.”
I would say to answer your question it’s a mixture. Some people are indeed moderating alcohol and trying to control it. I think you’ll find as I mentioned about zebra striping, most people are not giving up alcohol — they’re trying to reduce. And as the example I gave you, if you think about five beers watching football and two of them are non-alcoholic, it’s a 40% reduction. That’s a very substantial reduction, as opposed to zero — which some people are going to, and I get that, but they’re probably the minority. Most people are trying to just reduce or balance.
But I think the big idea is to replace other things. The big idea, the big opportunity, the big sales volume growth for non-alcohol beer in central eastern Europe, has been replacing classic soft drinks in key soft drink occasions — because there’s a big move away from highly sugary drinks and their non-sugar artificial alternatives, to a naturally brewed, low sugar, low calorie, isotonic product, which is what non-alcohol beer is.
Simon: This frame of reference thing I think is absolutely fascinating — what is it we are trying to convince people to think about? I used to work at Diageo, I used to work for Guinness, back in the early-to-mid-to-late 2000s. The first iteration of Guinness Zero was launched under a campaign of “100% Guinness, 0% alcohol” — and it was very much this sense of “we need to prove that we are still Guinness enough – that this is still a Guinness” And it felt quite a defensive strategy, and frankly I don’t think they were alone — that was very much the mindset at the time. What do you feel now about how the category is positioning itself and where the most success is being felt and the way that is being positioned?
Grant: Look, if you talk about the UK specifically — when you are looking at behaviour change and persuasion to behave differently, you first have to understand what the current beliefs and current issues are. There were two barriers to change. One — the taste of these products is bad, they don’t taste good. And two — the social aspect: it doesn’t look good when I drink this. People ask “what’s wrong with you, are you ill?” or if you’re a woman, “are you pregnant?” Those are the things people ask you.
So I think the marketing task first of all was obviously to make the products taste better. When we relaunched Peroni Nastro Azzurro 0.0%, we completely changed the technology in the brewery to make that product. So, it transformed itself completely to make sure it tasted brilliant. Before that there was another product, it just wasn’t good enough.
And then the second point is to position the product — the way you talk about it, the way you demonstrate it — not just in control-oriented areas. “100% taste, 0% alcohol” is still quite negative — it still feels like there’s a zero in there. So the big thing we did was we positioned it with Formula 1 — we went with the Aston Martin team with Peroni, and now with Ferrari. And that started to market itself with exciting sports. In central eastern Europe and Germany they led with participation sports — running, triathlons, cycling events — because it’s a perfect after-sport product. And of course that’s perceived as being for healthy, active and successful people. It’s a much more positive way of talking about the product than saying it’s in a pub and it tastes like Guinness but without the alcohol. By the way, their new product is excellent, I think they’ve got the recipe right.
Simon: And I mean I saw the ad the other day with Corona Zero sponsoring the Olympics — exactly that going on, their non-alcohol brand as their lead. And I think you’re right — if you want to persuade someone to do something, emphasise what it is, not what it isn’t. How far can you ever get on the basis of “well it doesn’t have this or it doesn’t have that”? Actually emphasising the real positive and creating some aspiration feels absolutely integral to that.
Grant: Yeah. Because at that point it was still being positioned within the beer category — so relative to beer, this is what we are. But if you position it in the soft drinks category and say relative to soft drinks, what are we — then you get a much more interesting conversation. You say to people “let’s take the numbers — these soft drinks have 12g of sugar, we have 4. They have 110 calories, we have 13. We are isotonic and we have a sweet but bitter profile, they’re very sweet. Does any of that sound interesting?” And they’re like “oh yeah, that sounds interesting.” Because you’re positioning against soft drinks as opposed to “well, it doesn’t quite taste like the other beer.”
Laura: That definitely chimes with me. I was in the pub last night, actually zebra striping as you call it. And often the comment people will say to me is “wouldn’t you just rather have you a beer?” And actually that’s never my frame of reference — my frame of reference is I don’t want a soft drink.
Grant: I think more soft drinks — not all of them, but a lot of them — when they develop their products they test them with teenagers and younger people because that’s where the market is, whereas with non-alcohol beers it’s always of course adult.
Laura: Did you have any key moments in the marketing journey where you thought “I think we’re shifting the needle here”? Were there any “aha” moments, or was it much more incremental than that?
Grant: Well I think the first year or so was pretty tough because when I started the journey in the company, absolutely nobody believed me. They could see that the market today was not there — “what are you doing?” The first year the innovations and the products did okay but not great, didn’t meet business case, didn’t look good. And most people in these businesses have been employed as great operators, not great strategists. So the first eighteen months to two years it was a constant battle to keep the support alive.
Year two got better, but year three — if I recall — the volume started to treble, quadruple. So you’re talking about 200% growth rate. And then it started to really move. When we did the analysis of who was buying it, we started to see things like — at lunchtime, we first went to the retailers and said “can we do a meal deal at lunchtime?” And they said “are you nuts?” And by year three it was regularly on promotion at meal deals and selling better than any of the soft drinks. People get this now it
Laura: because it’s new occasions, new consumers. You’re broadening the category. That’s really interesting. How did you manage to get people engaged with the idea when the numbers weren’t stacking up for you in those first eighteen months?
Grant: I think there’s a degree of rational persuasion. The rational persuasion is: we know the alcoholic beer category is declining in all our markets — everybody knows that — and therefore we have to find new sources of growth. And everyone agrees with that. The new generation, the 18 to 25 year olds, are drinking far less alcohol than any previous generation — depending on the market, by up to 30 or 40% — significant numbers. And they’re choosing soft drinks. Therefore there’s an opportunity in that market. And everybody agrees with that. When we do it right, non-alcohol beer can be positioned at a premium price, and there’s no excise or alcohol tax because it hasn’t got alcohol — therefore financially it’s quite profitable. So you use the logic to say if we can make this work, it’s a new source of growth into incremental space in the market and it’s highly profitable.
But you still need that bit of “trust me, believe me, it will work.” And that was the hard part. Because the group I worked for at corporate level didn’t believe in any of this. So it was quite tough. But — and this is where you need luck — you need luck that your boss or your management team gives you the benefit of the doubt. And that’s very subjective, not everybody has that in every job. But they let it run. And by the middle of year two they could say “okay, this is definitely not terrible — we’re not sure it’s brilliant, but it’s definitely not terrible.” And by year three — yeah, this is a good idea. And by year four everyone said “I told you it would work, I knew all along.”
Laura: Did you have to use storytelling — like, “imagine a world where…”?
Grant: No of course. So the vision was we set a number which people thought was pie-in-the-sky — about triple the volume that we were selling at that point — and we said “by 2020” — because this was back in 2013 — “we’re going to triple the volume, quadruple the revenue and bring in all these new consumers.” In fact we overachieved that by 2020. But as I said, the first two years were behind that plan substantially, year three got a bit better — it was only by year six that we were starting to track on or above that plan, which is not uncommon.
I guess I got a bit lucky, but there was constant reappraisal of the business case. And I guess the other thing that happened — I think it was year four — is we put one of the products on draft. In a bar, in a pub. The UK is very similar to many of these countries — the difference between having a product in a bottle and having it on draft, the sales can be three times higher, because people see it and they try it. We trialled in about 100 outlets on draft and it flew in the summer — it really was a hit, surprised everyone. And I think that became the second turning point — “this is not just a lunchtime can of soft drink, this is a serious business here.”
Simon: It’s great to hear you tell that story and talk a little bit about luck. Some of those time frames you’re talking about are pretty extraordinary in lots of big manufacturing companies. And that level of patience and determination to see something through is pretty extraordinary. So whilst I love your self-effacing nature about getting a little bit lucky, I’d be very interested to hear a little more about what led to that personal resilience and belief — and secondly, was there anything else that you did, maybe consciously, maybe unconsciously, that helped drive that resilience and patience within the organisation?
Grant: Yeah. I mean the first thing I’d say is you have to deliver the numbers. If you’re going to spend on this, you need to find efficiencies — in polite words, you need to cut budgets elsewhere. There’s absolutely no way they’re just going to throw money at this. So your marketing budget is 100 and if you’re lucky each year it grows 1% — so after five years it’s 106, but it’s not going to be more. So my role with the team was to say “we’re going to spend 20% on this, therefore we need to find that money elsewhere.” And you have to do that — it shows to the board and your colleagues that you’re responsible, that you’re not just throwing stuff around.
Did I doubt we’d reach all the business cases? Yeah, of course. But I thought if we under-hit it by 10% it’s still a remarkable success.
And then the second stage of the journey for me was — because that was all done in one country, in Czech Slovakia — when I moved into the regional and global role, I had to persuade again. Other countries were telling me the same things my colleagues did six years earlier: “it won’t work here, this is a different market, our consumers are different.” Exactly — I could write down what you’re going to say. I said “I’m going to write down what you’re going to say and I’ll put it on a piece of paper in an envelope and we’ll open it after ten minutes.” Ten minutes later — almost word for word. Not because I’m a genius, because it’s understandable — you’re going to tell me that. But it’s just not right guys. And we went through that journey with them.
Laura: I love it!
Grant: The UK market was one of the toughest. I think at this stage the biggest growth opportunity is still category growth — if the category is at 2% and it should be at 10%, there’s 500% category growth. Even if your market share is flat, you’ve got that growth. Will that take 7, 10, 12 years? I’m not sure, but something like that.
And then the second point is brand — people buy brands. So you need to ensure that in our case Peroni or Asahi in the UK are strong brands. And then innovation — we innovated to make the product better, down the line, the range needs to expand to accommodate the opportunity in the market, because at least half of that opportunity is probably going to be outside core, bitter non-alcohol beer.
Laura: Will that be flavours and other styles?
Grant: Yes. How and when that’s done is a debate, but it will come. It’s a classic brand story — you need to innovate at the right moment and ensure your brand is available and top of people’s minds.
Simon: Grant, I’d love to talk a little bit more about the future of this category. Because I think one of the things that’s really fascinating is that in many ways the challenge has been one of replication — as you say, have we got a good product? Going back to the Guinness Zero example, when it first launched it just wasn’t a terribly good Guinness. I’m always struck by the analogy with plant-based food — when Beyond Burger came in and created a burger that was probably 80-90-95% as good as a burger, people went “that’s a really good replication exercise.” But what we’ve seen in that category is that the desire just to replicate has plateaued a little bit. Where there does seem to be a lot of excitement is plant-based as a canvas to explore, to create, to do new things. I’m interested in your view on that next horizon of growth for non-alcoholic — whether there’s space to redefine it from one of replication to one of experimentation and creativity.
Grant: I think there are two parts to the question. One is — what is it supposed to taste like? If you go to the UK market, a very high percentage of soft drinks sales are actually the light or zero sugar versions, and a much smaller percentage is the full-sugar one. So people’s taste becomes accustomed to that — that’s what’s normal taste. And when they drink the full-sugar one they’re like “wow, what the hell is that?”
And over time beer is becoming lighter as well. In the 90s when I was a student it was 5% or nothing — quite strong. Over time that’s coming down. Most people look for drinkability.
Having flavour is great, but it has to be less intense. And I think craft non-alcohol — or let’s call it non-lager non-alcohol, so the wheat style, the IPA style, the ales — you can actually make great-tasting anything, because you’ve got so much more flavour complexity than you do with a lager. And I think there will be more and more innovation in this space — it’s not a secret that this is the growing category.
Laura: So what are the top three things you would say to someone who was thinking about switching, but there’s always those resistors in the pub who go “oh no, it’s not the same”?
Grant: I think first of all I would say — choose an occasion where you would typically have a soft drink. Whether that’s lunch, mid-afternoon, watching TV on a Monday night — just take a non-alcohol beer instead.
Second thing I’d recommend — try a couple of different styles or types. Try a Peroni, try a Guinness, try an ale, and realise there’s no such thing as a single non-alcohol beer — there’s a lot of variety.
I think when people do that they realise there’s a place in their life for this. It may not be Friday night down the pub with your mates — maybe that’s not the occasion for it — but there are plenty of other cold refreshing drink occasions where it fits very well.
And on the “it doesn’t look good” thing — at the end of the day, when it’s poured into a glass or if it’s on draft — which I think is the next big step in the UK — it looks exactly the same. When it’s poured from the Peroni bottle into a Peroni glass and given to someone, it is undistinguishable from the 5% alcohol version. So nobody says anything. Whereas if you stand there with a fruit juice or a cola, that’s pretty distinguishing. So if that’s important to you, there’s an easy solution.
Simon: Grant, I want to ask a question about the wine and spirits category and no-alcohol within those. Obviously there’s been quite a lot of excitement and noise within spirits — all sorts of different brands, Seedlip I guess doing it, and a lot of the big gin players having their zero version. Wine far less so — from my very amateur position – I believe the technical challenge in wine is incredibly difficult. But I’m just interested — how do you look at beer and then other alcohol categories? Where do you think there are similarities, where do you think there are differences? If we transfer ten years into the future, what do you expect those categories will look like?
Grant: So I always thought beer is a refreshment, whereas wine and spirits are not refreshment. In classic beer markets — historically, and by the way the UK is one of them — beer was consumed as a refreshment. The history in the UK and other markets is that beer was about 3 to 3.5% alcohol. It wasn’t strong, and you’d have one at lunchtime. And if you go back even further to Victorian times, 1.5 to 2% beer was served to children because the water could kill you but the beer was safe. So I always thought beer therefore had a natural relationship with refreshment.
Wine is a different thing used for a different purpose — I’m not being negative, I’m saying it has a different purpose. I’m not a big wine expert. People definitely choose wine for the taste, the complexity. And if you lose that it loses its appeal in core occasions like food occasions.
And spirits — quite a lot of them are used in cocktails. I think it’s easier to replace the alcohol in that context because it’s got such complexity of taste anyway when you’re mixing different things. But a standalone neat non-alcohol whisky. Again, I don’t think that’s a big idea, because I think it’s just a different reason you’re consuming that than a refreshment. People have refreshment drinks every day, but they don’t necessarily have cocktails or neat spirits every day.
I think they will develop — I’m not saying there won’t be things — I just don’t see it as nearly as attractive a marketplace as non-alcohol beer.
Simon: If it’s not wine, if it’s not spirits — do you look at a category and think “there’s a category where I could see the same kind of model applying, a redefinition, a reframing that changes how that looks in five, ten, fifteen years’ time”?
Grant: There are a few things that come to mind. When I looked at what were the threats for non-alcohol — because once the company got all excited about it, you then have to ironically change your position and say “well don’t get too excited guys” — I think the threat is that every single drinks company understands that the growth is in adult soft drinks. How do you define adult? You define it as more complex taste, less sugar or nasties. And brewing and fermenting — which I’ve been around for years — are the basis of products like kombuchas, which today are super niche but could become quite mainstream in the future. Other types of soft drinks where it’s not about water and sugar and colour, but more sophisticated stuff. That is unquestionably a big opportunity. Nobody yet has been able to take it mass because they’re too expensive, but when someone gets into it properly — with the branding and the expertise — I think there’s a big opportunity there.
Laura: And then it’s interesting how other categories follow on from thqat, we werer talking to someone who was an ice cream specialist, and ice cream is following confectionary. Its all going to be really concentrated, but small little portions instead of triple scoops that I remember from my childhood.
Simon: Grant, that was superb — incredibly helpful. Thank you so much for joining us today, really lovely to chat to you.
Grant: Yeah, thanks, it was great fun. Thanks a lot guys.
Laura: Thank you so much Grant.
Laura: So Simon, what did you think?
Simon : I loved that conversation, found it hugely interesting. In particular what I loved was about picking the frame of reference. I think a lot of the time low and no alcohol beer has gone wrong because it has tried to almost say “it’s almost as good as beer.” I remember a very early launch back in the mid-2000s of Guinness Zero with the tagline “100% Guinness, 0% beer” — and it was absolutely trying to go “well, this is good.” Whereas actually what Grant was talking to us about was anchoring against a different occasion. If I go into a pub and order a soft drink — well, that’s what my kids have, that doesn’t feel adult, it doesn’t feel sophisticated, it doesn’t do what you were saying Lee Mack was talking about in terms of demarcating that day and going “this is your moment.” So by picking an occasion that isn’t a classic beer heartland but instead more of a soft drink occasion, you’re able to identify a more receptive audience and proper incremental growth. And I think thinking about persuasion — can we choose a different frame of reference than the one we’re currently working to, to create perhaps a bit of an enemy or a comparison, a tension point,
Laura: a new value reframe?
Simon: Exactly, absolutely. How about yourself?
Laura: I completely took that as one of the key points about persuasion. The other thing I took out was his personal persuasion journey. I think what was very interesting is — sometimes we talk about leaders pushing through a new way of thinking, and there’s almost a heroism of being very evangelical and not receptive to people’s points of view and just hammering your point home. What was really clear with Grant was that this was a really patient journey. He had his conviction about it, he had the data to back it up, he had those conversations consistently — taking people on the journey, giving them examples, giving them analogous markets, looking at the trends. And he was just saying “look, that’s inarguable.” It’s not about me as this sort of meta-personality controlling everything, it’s about something that we can all see and I just need to help people see that. And I just thought that was a really lovely way to think about leadership and persuasion — in a more nuanced way.
Simon: I love that. It shows that persuasion comes in multiple forms and there is no single archetype that we have to fit. On which note — note to self — less jazz hands.
Laura: No! Never!
Simon: No, I know. Anyway, lovely to see you again Laura.
Laura: You too Simon,
Simon: Until next time.
Laura: Thanks for listening. If you’d love to hear more from marketers, entrepreneurs and business leaders about how to use the art of persuasion to drive your business forward, make sure you’re following the podcast in your favourite podcast app.
Simon: And just one last ask from us — this is a new podcast and we’d love it if you could be persuaded to help us spread the word by telling somebody else about it, leaving us a review, or even better sharing an episode on socials. Search for The Forge on LinkedIn.
