Mark Livings: Manic. We’re now available in 30 countries globally, we’ve built a direct-to-consumer business that services 17 countries globally. We have now got a team of close to 50 people and the pandemic really hasn’t slowed us down at all. If anything, it’s accelerated us and we’ve delivered some interesting new products and innovation throughout the year as well.
IR: I want to hear about product innovation. What are the cool things that you’ve done?
ML: It took us three years to perfect the core range. We wanted to deliver people the flavours of spirits that they were already familiar with but could access in a non-alcoholic format. Other products in the markets offer novel flavours, but we wanted to get as close as possible to the original [flavour]. We thought that would be the least point of friction for the consumer choosing to be more mindful in their drinking, if they could order a drink they already love as a non-alcoholic drink, we thought there would be space in the market.
Getting those right was an enormous challenge and we had to throw out the rule book in regards to making the spirits. We rebuilt it at a molecular level and we isolated the perfumes and the flavours and rebuilt them within a water base, using only natural ingredients. That was a huge challenge. We’ve launched those and we did something crazy that we were often mocked for by our industry peers — we launched 13 variants at the beginning because we thought of going global from day one. The top selling spirits in the US are vastly different compared to Asia, Europe and Australia. With the breadth of our portfolio, we have something for everyone and that explains our success globally to date.
What we quickly realised this year was the pandemic accelerated a couple of trends. Convenience serves were really important. With the shut-down of the on-trade in all markets in the world for a good chunk of the year, people wanted to recreate the on-premise experience in their homes — we referred to it as the in-premise experience! We found people moved to the on-premise, looking for ingredients and precursors to fancy drinks that could allow them to have a more sophisticated moment in their home. We saw a point of friction there in the people who don’t have mixology skills, so we launched ready-to-drink range and we’ve recently brought them to market — a gin and tonic, an Amalfi Spritz and we’ve managed to recreate a prosecco using the same methodology that we built our spirits with.
IR: Lyre’s also received some investment recently. Tell me about your plans for that.
ML: To date, it’s the most material investment in the liquor category. We received $16 million in the seed round, so that gives our business a fantastic valuation. What that gives us is the runway … so we can take off and move our business to profitability over time. It allows us to burn that capital in order to get the product available all around the world, in as many off-trade retailers and supermarkets as possible. It’s a race and the category is having explosive growth and for us, there’s a distinct and demonstrable first mover advantage that we’re taking seriously and we’re doing everything we can in order to move. We’ve claimed the captaincy position this year globally. We’re the most distributed and awarded brand in the world, we’ve received 70 international wine and spirits competitions and medals for our products.
It’s difficult to get sales information from competitors, but we believe we’re the volume leader globally as well.
So moving our brand to category captaincy is a key objective for us and using the funds is important in terms of doing that. Now that we’ve achieved that, we need to take the category growth in strides. We as a category still have slow saliency versus things like non-alcoholic beer. There’s a high awareness of non-alcoholic beer — it’s over 70 per cent of the market — whereas non-alcohol spirits is in the mid-teens in most markets. There’s only one in seven people who realise they exist and they might like to consider purchasing. We have a huge job to do around education and awareness and asking people to consider non-alcoholic spirits as part of their daily drinking.
IR: I think the changes in how people drink is really interesting, particularly in Australia, where drinking is a significant part of our culture and how we socialise.
ML: It’s most recognised in places like Australia, South Africa, UK, where the ability to consume large amounts of alcohol is conflated with masculinity and conviviality. If you’re drinking, you’re part of the tribe, you’re a part of the fun and if you’re not, you’re putting cold water on the occasion. There’s a weird dichotomy, because if you drink too much and vomit all over your shoes and everyone, you’re mocked. You’re damned if you do, damned if you don’t.
We’re quickly losing that quite idiotic assumption that it requires alcohol in order to be a human worthy spending time with. It’s evidenced as well by declining rates of alcohol consumption across all stratas, but most importantly among millennials and generation Z. They’re not coming into the category with as much velocity as the generations before. When they do, they’re consuming less and many aren’t coming into the category before. It’s all part of this increasing awareness and acceptance that you don’t need to be completely inebriated to be recognised as worthy spending time with.
In Asia, this category has had incredible resonance in markets. The infamous red glow is something that a lot of Asian communities are conscious of and there’s a high level of anxiety around that, particularly females. People still want the sophistication and style where they have a beautiful complex adult beverage for that hot date or Insta moment and they can enjoy it and it’s something they can’t make at home, so it’s a special experience. But they don’t have to worry about losing control or changing their appearance.
We’re a very image-conscious society, I’m not surprised we discovered this as part of our research. We’re probably the only brand really active in mainland China at the moment. There are a couple there but only doing very small amounts of work. We’re finding that the acceptance of our brand and the category is extraordinary in that market and that’s building on our success in Hong Kong and Singapore in 2019.
We’ve just launched DTC in Asia so we fulfil Southeast Asian countries. We’re also available through distributors in Singapore and HK and they’ve achieved listings with major retailers, like Dairy Farm Group in Singapore and Hong Kong. In Singapore, we’re in three of the world’s top 50 bars there. The brand has been extraordinarily well accepted in that region.
IR: Last year, there was some criticism around liquor brands and whether or not they had encouraged responsible drinking during the pandemic. What are your thoughts on that?
ML: What’s interesting is some of the biggest players in our category are owned by some of the biggest liquor players in the world. You could sit there and go, “You’re delivering the poison with one hand and the panacea in the other.” How do you maximise sales of both? It’s not for me to comment on liquor companies and their behaviour, there’s enough consumer groups that hold the candle up to that.
As someone who has represented alcohol brands from an advertising perspective, I know for a fact that everyone within those organisations from leadership tries to operate within the community’s expectations of responsible advertising. Do they have a bigger role to play in encouraging responsible drinking during a pandemic? Probably, but I don’t think anyone knows what they’re doing in the past year. Businesses, the community and government have been lurching from one strangeness to the next, so I don’t think anyone could step back and craft a compelling strategy or narrative to deal with a pandemic.
What we found is consumers were looking for ways to drink more mindfully initially. We put them into three groups. There were those who hit the bottle really hard and spiralled. There were the people who spiralled initially, then snapped out of it and began looking for alternatives and that’s when they found brands like us. Then the third group were the people who decided to get prison-fit at the start of lockdown and started exercising and giving up alcohol. Our brand was there for them. People had more time on their hands, they were responsible for the food on their plates and what they were drinking, rather than outsourcing it to restaurants and bars. We think a lot of people found their way to us as a result of the pandemic.
People wanted sophisticated beverages to accompany their meals and demarcate the end of their working day and start their ‘home’ day and that’s when our brand was discovered.
IR: What are your plans for Lyre’s this year?
ML: We’re most hopeful for the return to on-premise will begin in earnest in global locations. Australia’s unique and NZ in that they’ve managed to return the community to some semblance of normality, whereas in a lot of other markets, it’s been a vacillation between opening for takeaway or completely shutting the hospitality sector down. For us to have a hospitality sector returning is super exciting because that’s where brands are built, so we’re gearing up and we’ll be ready for when that does re-awaken and hoping it’s not too damaged and it’s come through the pandemic without its ability to service the population.
We’re rapidly entering the mainstream now. Those heartland consumers have found us, the people who are looking to eliminate alcohol permanently from their lives or good chunks of time. But the people now finding their way to our brand want to integrate [our products] into their normal pattern of drinking. They might go out and have one or two drinks, then our brand represents a third or fourth drink option, or they might give up drinking during the week and our brand is an option for them.
It’s moving to mainstream acceptance, much like meat-free Monday. We think our category is going to follow a similar paradigm where people actively look to eliminate alcohol from their consumption a day a week, or a few days a week, or months of the year.
IR: I know that over in the UK and US, there have been some alcohol-free bars or activations that have opened. Is that a trend that you’re seeing too?
ML: Yes, everywhere. We’re working with Japan’s first alcohol-free bar and there’s one in Ireland called the Virgin Mary, which has been hugely supportive of our brand.
There are multiple alcohol-free bars in the US, the most visible is Getaway in New York, but they’re starting to appear everywhere from Ohio to California. We’re even working with the first alcohol-free bar in Japan and we’ll see some in mainland China too. It’s a trend. it’s growing incredibly quickly but off a small base. We’ll start to see the emergence of those types of venues, but more broadly, the opportunity will be in existing venues adapting their mix of serves to be more inclusive of the non-alcohol category as well.
IR: It’s not really picked up in Australia just yet though. Why is that?
ML: I’m unsure. It could be the lack of critical mass of the population, maybe no-one’s seen the opportunity yet in Sydney, Melbourne, the Gold Coast or Brisbane. I do think it would go incredibly well. If you look at global brands like Brewdog, which is building a brewery in Brisbane, they have eight completely non-alcoholic bars in London. They’re pushing their non-alcoholic beer range because they see the opportunity for growth, but they’re selling our spirits as well as beers and wines. It’s a matter of time and it will take an entrepreneur to put their hand up and we’ll see a similar trend emerge here too. The consumer is exactly the same in Australia as it is in the other parts of the world.