Creating the Wine Experience w/ NA Wines w/ Duncan Shouler, Giesen 0%

Hey listeners, just want to let you know that we've released the latest compilation of show notes in book form, covering episodes from 2022 to 2023. It's full of insights on sustainability, marketing, and even has a few celebrity sightings. Pick what up on Amazon and support the show. Welcome to X-Shadow. The podcast that navigates the business of wine with unique perspectives and insights with your host Robert Vernick and Peter Young. Hey listeners, quick announcement. We have a stellar interview on the non-alcoholic wine market with Duncan Scholar of Geese and Wines. But there's a bit of static from his mic connection down under New Zealand that we couldn't edit out. So hope you bear with us for all of Duncan's great insights into the non-alcoholic wine market. Welcome to this episode of X-Shadow. Today we're going to be exploring the non-alcoholic wine market and our guest is Duncan Scholar, Director of Innovation at Geese and Wines. Welcome to the show. Hi Robert, it's pleasure to be here. Can you please give me and Peter a brief overview of your background? Absolutely, yeah so I'm a key week based here in New Zealand. I've been in New Zealand for about 25 years. I was actually born in England, grew up in the UK and a little bit in the Mediterranean. I moved to New Zealand about 25 years ago and my background is actually originally in marine biology. That's where I started my career. I was always sort of in science based. And then around about 20 years ago I made a shift over to the wine industry. It's something I'd always been fascinated and loved wine, loved the industry, find it fascinating how this beautiful product is grown and different parts of the world and enjoyed around the world. Got into the wine industry in New Zealand just as it was really sort of starting to get going. And when from now I've been with Geese and Wines for the last eight years. And so for those who aren't familiar with Geese and can you give us an overview of what Geese is? How big is it, where is it, etc. Yeah absolutely. So Geese and is a family owned wine business in New Zealand. And we've been run now for 40 years established just over 40 years ago by three German brothers. Alex, there in Marcel, moved to New Zealand. I wanted to start a new life for you and start making some wine. And their timing was great because they started making wine down in Canterbury in South Ireland. And pretty quickly after that they had sort of seen that some beautiful wines were coming out of the Mulberry region of New Zealand. So they started making some mulberry, Sauvignon Blanc. And of course mulberry, Sauvignon Blanc really took the world by storm. And they were really the forefront of that. So for the last 40 years Geese and Wines have been making a range of really high quality premium New Zealand wines. Sauvignon Blanc, Pinot N' La Chardonnay, with quite a large winery. So we would crush around about 20,000 tonnes per year. And for New Zealand that's quite big. So quite a large winery, but we made a very large range of wines from large scale, grocery driven wines, right, through its tiny production single vineyard wines. And then of course now over the last five years we've started making zero alcohol wines as well. You let the charge in creating Geese and 0% line of alcohol-moveed wines. What led to the creation of those wines? Yeah, we actually did a fitness challenge in 2019. It was sort of a health and well-being challenge. It was one of those ones where all of the staff members who want to sign up and you get yourself a little fit bit. And part of the challenge was counting your steps and watching what you eat, watching your calorie intake. I signed up for it pretty quickly and I said the rest of the wine-making team. And then probably just as quickly we all realised that part of the deal was for a month we couldn't drink alcohol. So we basically held an emergency meeting and said how are we going to do this? We all love our wine, we love beer, we love having a nice drink in an afternoon. And the obvious thing that came to mind was let's try at Gerska and try some non-alcoholic wines. And we did that, we went into the market and tried a few. And first of all there wasn't much choice, there really wasn't very much out there. But we did try, it was fine, it was okay, but it wasn't really what we were looking for. It didn't really give us what we felt was a full wine experience. So from that we just said hey can we do something? The timing was great because the technology for alcohol removal being spinning technology, that's what we used at Gersen. That had just become available in the market here in New Zealand. So we started trying it, made a wine, we loved it, the sales team, the marketing team loved it. And we commercialised it and we went from there. So you touched upon this a little bit, you said how the non-alcoholic wines range, there's a couple different ways, but you said that you used the spinning cone technology? Yeah, exactly, so there is a several different ways of making the alcohol wine. You can make a wine alternative products using water-based flavouring etc etc. But the true way of making a real zero alcohol wine is to make a regular wine to start with, that's very, very important. And then find a way to delicately remove the alcohol, changing the wine as little as possible through the process. And of course flavour and aroma of wine is very delicate. And the process of removing alcohol, you always involves heat and because of that you can have an impact on the flavour in the year-over. So you're trying to find a way to remove alcohol with as little heat as possible. And we find for us that spinning cone technology does that very well. Basically it allows us to distill the alcohol at very low temperatures. And it also allows us to remove the aroma from the wine before we remove the alcohol. And that means we can protect the aroma, then remove the alcohol and then add the aroma back in. So we've still got a really aromatic, so a rock old wine. So I'm curious for some of our listeners want to know how different they taste from regular wines. Obviously alcohol is a major structural component of the wine, both from mouth-yle as well as like a carrier of other flavours and things like that. How different do non-alcoholic wines taste the murder of a regular wine? Yeah, they do inevitably taste slightly different. I mean you find that there's no question that if you remove alcohol from wine it is going to taste different. Alcohol does certainly add body, sweetness and texture to wine and also support the aroma. So when you remove it it definitely does have an impact on the wine itself. But the key with zero alcohol wine is really trying to create something as close as possible to the real thing. So you're trying to get complex flavour and structure. And you still have the acidity and in the case of a red wine, the tanning and the mouth-feel that you have in the wine is much as possible without alcohol. Now one thing you can't have in a zero alcohol wine is that warmth, that heat that you get from alcohol because it's quite simply just not there. So that's where you have to sort of get your head around that that's not going to be that that's going to be missing when you drink a non-alcoholic wine. And red wine is notoriously hard to make non-alcoholic. How do you think about maintaining qualities of non-alcoholic red wine? Yeah, above all it is the quality of the wine that you start with. Now I think there's a great saying in the wine industry that you can't make great wine out of bad grapes and that's very, very true. You've got to start with a really good quality grapes and a good wine. And if you then go to zero alcohol wine, you can't make really good zero alcohol wine without a really good regular wine to start off with. Now that's very important. We use that philosophy with all of our zero alcohol wines. With red it's especially important because you're trying to balance things like acidity, lack of sweetness with that alcohol. But most importantly, you're trying to balance tanning and that's really hard in a red wine without the softness and the generosity that you get from alcohol. So you've got to create a wine that is made with really lovely natural tanning that is ripe and soft and suits the style of zero alcohol wine. Now when you finish the wine, you want the wine to still have tanning. It's not going to be like a red wine if it doesn't have tan. You need that structure on the palate that makes it so good with food. But it's going to be the right sort of tanning, lovely and ripe and soft so that it doesn't feel too drying on the palate. And one of the things with wine or at least fine wine as we call it is that it can age. How long do non-alcoholic wines last and can they age? They can is fascinating. I mean we've only been making it for five years now so it's relatively short amount of time in terms of wine maturation. But what we have noticed is that the wine age very very similarly to regular wine. We make a zero alcohol reason for example and when we first bottled it's got those lovely kind of limey lemon sherbet characters that you associate with reasoning and a bit of floral kind of elderflower characters. If you drink the wines that we bottled first so they're now four years old, they're really developing like a regular reason so they're getting a bit of that toasted buttery toasty sort of characteristics and oily texture that you would expect from a regular reason. So they can actually age very well. I would generally say that people for the most part wouldn't age their zero alcohol wines. They probably wouldn't put it away in a cellar and an agent but they do actually age very very nicely. That's interesting. And then I've seen a lot of non-alcoholic wines in cans as well as bottles. What kind of differences there between the different products if it's in a can versus a bottle? So I mean cans are great. I think they're really important in the market and I think as people sort of get to know their consumer and how people are drinking these products, it evokes of packaging is a really important part of that. One thing with cans is that things weren't necessarily age as well and it can. You generally have a shorter shelf life in a can than you would in a regular glass bottle. But for a young fresh style like the Sauvignon Blanc and certainly for a sparkling style it can fit really nicely. Curious on the customers in terms of obviously you said in order to make a good wine, good not an alcohol wine you have to make a good wine first and then remove the alcohol. Does it cost more to make wines that way and our consumers willing to pay a premium if that is the way that it makes a better quality non-alcoholic wine? Yeah, look, it's a great question and we get asked us a lot. It's really fascinating. In the answer is yes, it does cost more. You've got to make a really good based one in the first place. So you're starting point is essentially a regular wine and then you're going to add more cost to it after that by going through the spin and come process. So there's quite labor intensive. So it does cost more. Does the consumer are they prepared to pay more? Well, yes, they are. But it's like any wine. They're prepared to pay whatever their price expectation is. And they're certainly prepared to pay for quality. So if there's a quality product that they know from renowned producer maybe cost a couple of dollars more they are generally prepared to pay for that. So our gessence or alcohol wines are placed in that premium category. So they do, their price point is slightly higher than a lot of the others. But we're certainly very much pushing quality. So we're very causative focused. And we're trying to give the consumer a really great quality offering. They know if they're going to pay a little bit more for it, they're going to get a really good wine experience out of it. So just some understanding. So given all the wines that Gessence makes, there's an alcoholic version of the relative, the same quality wine that you're making as well. So would you say that if you look at the two wines that are in the same kind of quality level that the non-alcohol wine would be more expensive, both to make in for the consumer? It's pretty similar. So the price point's going to be pretty silo, because although it is a bit more expensive to make, of course, without the alcohol, there are some, there's big reduction in, for example, excise or duty or there might be none. Depending on what market you're selling into, you're basically gained an taxation perspective. So that, that, basically, offsets a lot of the increased costs. So you can generally speaking, sell them for about the same price as your regular wine. And for our wines for Gessence, that's generally the case. I was your aqua wine. So mostly for very slightly more than the full alcohol count, but it's pretty close. That's great. I never put those two together until you answered that alcohol excise tax can compensate for the additional cost of labor to make the product. So if you're going to put a percentage on it in terms of regular wine to make a, a premium non-alcoholic wine, how much more does it cost do you think to make a premium non-alcoholic wine? OK. So I mean, cost over a cost for bottle, you'd be looking at around about 15%, 15 to even 20% more to produce a zero alcohol wine. Perfect. Thanks. And so the non-alcoholic wine market is starting to grow fast, but it's off a really small base. How big do you think this market becomes? Great question. I wish I knew, I think that based on what we're seeing is the growth is still very much there. And I think it is going to get quite big. Now, I think that what we're going to see is that as people's association with alcohol and the way they integrate alcohol into the lives, changes, I think that we'll see more people embracing non-alcoholic alternatives. And that's not to say that alcohol is going away. It's only hope it doesn't because regular wine is such a great thing and it's such an important lifestyle drink. And I love it. It's just fantastic. But I think the zero alcohol alternatives will start to weave themselves until people's lifestyles more and more. And a lot of that is associated with quality and choice. As the consumer becomes aware that there is quality and as the quality of the products themselves get better, people will embrace them more. And of course, one of the great things with regular wine is the choice. You have so much choice. You've got a wine for every occasion. It's so occasion driven every type of food, whether you're eating out, eating with friends at home. And that will become more and more the case with zero alcohol wines as well. So I think that the categories still got quite a long way to grow. I think I always say to people that I think the consumer has always been there. The people who have wanted to drink zero alcohol wine or maybe they don't even know it, but they have always wanted to drink it. They've always been there and there's always been people in an occasion where they don't want to consume alcohol, but the choice hasn't been there and perhaps the quality hasn't been there. So now that those are both coming in, we're seeing a really great growth in the category. And how does that non-alcoholic wine market look by region? Is it very different? Is it bigger in Europe versus the US or China or I don't know if it's very different in its state of maturity in different markets and regions? It is. It is different. The US is certainly ahead of most markets. The US has really embraced non-alcoholic wines and other non-alcoholic products. And I think we're seeing there that consumers in the US have really embraced their prepared to try something new, something different. And there's a bit of an enumement. Yeah, there's that sort of low or low sort of alcohol movement in the USA. In the UK, for example, it's perhaps a little bit slower. And now I think that's larger because the UK is such a mature wine market, such a traditional wine market. And I think that you're regular wine drink in the UK is just taking a little bit more convincing that non-alcoholic wine is a good option. They're so used to classic French and Italian and Spanish wines that the idea of a non-alcoholic wine is perhaps slightly more foreign to them. So there's a lot of change here in New Zealand. It's also quite slow. We're a little bit behind. So, yeah, blessed as soon as New Zealand, we're country that's quite far away from everyone. And we do find that things happen a little bit slower over here. So we're a little bit behind as well. Having said that in Europe, in mainland Europe, non-alcoholic products and production is booming. And when you look at the market for non-alcoholic wine, is it more a substitute for regular wine or is it, does it also take away from maybe people who might drink non-alcoholic beer or spirits or other drinks like sodas and juices? Yeah, I think the latter. I think for me, when I look at, okay, so if someone's going to drink a non-alcoholic wine, otherwise have drunk, now there's two sides to that answer. Now, generally speaking, someone who's going to drink a non-alcoholic wine is a wine drinker because they are fine themselves in a situation where they don't want to consume alcohol. So there's a lot of choices out there, soft drinks, fruit juices, water, but they're choosing to drink non-alcoholic wine. Now that's because they want wine experience and they want that because they're a wine drinker. They're familiar with that experience. They know they complex these wine and the fact that it goes great with food, etc. So they're a wine drinker, but they're not substituting wine because they wouldn't have drunk wine in the first case because they've already made the decision that they're not going to consume alcohol. So the substitution is against other non-alcoholic drinks, such as fruit juices, water, soft drinks. So for me, if someone is picking up a bottle of non-alcoholic wine, they're picking up, they're consuming that in replacement of something like water or fruit juice. I say to people that a lot of someone goes into restaurants and perhaps here it does ignites a driver for the night. Traditionally, people would drink water or maybe lime and soda or whatever, but the non-alcoholic wine is a great alternative to that. So that's what it's for a place. Interesting. So it's not just like an a week note, I don't want to drink. It's, I don't drink and this is what I still want something to enjoy because those are the two big use cases I've heard as that basically. For people who are abstaining from alcohol, they're from a health reason or just lifestyle choice. And then the other group is just dialing it back by having some non-alcoholic drinks compensated for where I would typically have alcoholic drinks. Yeah, very much so. Look, I think that it is that. You're absolutely right. It's abstainers and substitutes driving the market. What we've seen of late and really in the last 12, 18 months is that I think initially abstainers were probably driving the category. And now substitutes, particularly Gen Z of legal drinking age, substitutes rather than abstainers are driving the category. And certainly abstinence is there. So people who choose not to ever drink alcohol or can't for medical reasons or whatever else, that's still very much the foundations of the market. But substitutes are growing. And that's because people are getting used to the idea of moderation and different ways to moderate. I love the example of, I mean, I love food, I love wine, I love cooking. And so naturally when I get home and I start cooking, I love a glass of wine in one hand, you know, a frying pan and the other or whatever. Now we've got a young daughter, we've got a six-year-old daughter. So in the moment we quite early, I'll start kicking at 5.30. And I feel like I want that wine experience while I'm cooking. But at the moment what I tend to do is I have a zero alcohol wine at that stage because it just means I can have that experience, something that gives me the wine and cooking feeling. But I'm not drinking alcohol. Once I do, it's gone to bed. Then I'll sit down with my wife and then we'll have a really nice glass of flax whole wine. So it's just the way that you're keeping that wine experience in your lifestyle, but you're just reducing your alcohol content or intake it a little bit. And I'm curious just one last question on the abstinence versus the substitutes, the moderation. Is that where you see the growth of the market or they both equally growing or do not know? What you've seen is at the moment, so substitutes moderators are driving the growth more now than abstinence. And I think that abstinence probably came into the category quite quickly, quite early on and growth, the people that were shifting over to it, are more substituted. So I think that's where we're seeing most of the growth at the moment. But to be honest, both categories are growing. I just think that substitutes are growing. That category is going slightly faster. And if you were to define a demographic of a consumer profile with some demographic information, how would you break down your typical non-alcohol wine consumer? It's pretty broad. That's been really fascinating for us as a business to learn who that consumer is, who's buying it. And it goes right from boomers, people over the age of 65, maybe they're born in new medication and they're trying to reduce their alcohol intake or they're just trying to generally speaking just moderate a little bit all the way down to, I think I mentioned earlier, legal drinking age, Gen Z that are coming in and saying, "Well, we kind of want this in our lifestyle and we still drink alcohol, but we also want to have fun with some other non-alcoholic products." And everything in between. The biggest section of the cash gory, and this is pretty broad, but the biggest section would be a female between the age of 35 and 60. Okay, pretty broad market. What price points do you view as suitable and maybe you can define lower to upper limits of the non-alcoholic wine market in terms of what price are people willing to pay for it and whatever form out of it? So by bottle, I guess it's probably the easiest. Yeah, this is fascinating. At the moment, I think the obvious answer is that people are prepared for the most part to pay what they would pay for regular wine. Now we do get the question, why am I paying the same amount for this product when it doesn't have alcohol in it and I spend, let's say, I've just spent $12 US dollars for a bottle of regular wine and it cost me the same for non-alcoholic wine that doesn't seem fair, but as we've discussed, the cost of production is more. So for the most part, people are prepared to spend about the same as they are on regular wine. And so that can go from something like probably the lower end, nine US dollars of bottle Now, what's the under-end of that spectrum? That's the really interesting part. At the moment, there's a few products out there. There's sort of $55 US dollars of bottle. You've got French Bloom coming out with a very high-end, quite expensive sparkling, long to long, which is pretty exciting. And we're working in that space now, but as well, we're developing some products where we're saying, "Look, if people are really prepared to have that fantastic, unique one experience, they will be prepared to pay for it if you're giving them something that is truly of high quality, that shows great complexity. How so wonderful things that premium wine has, or high-end wine has, which is a sense of place and association work, where it comes from real complexity and great with food. If we can create that in a zero-out-goal format, people will be prepared to pay for it." And of course, the cost of production of those wines is very, very, very high. So, but we don't know yet. We're working on that, but I think that there's real opportunity there at the high-end, as long as the quality is good enough. And as long as it retains those key components of fine wine, which are quality and sense of place and provenance, and something that just gives you that great wine experience. I was just thinking about the cost just now, and just done on me that you need probably, depending on the level of alcohol, 10 or 15% more grapes to make the same bottle of non-alcoholic wine, because wine is usually somewhere between 10 to 15% alcohol by volume. If you're stripping out 15% of volume, you need 15% more, even more than that, really, because you're stripping out 15% of that too, but 15% plus percent of fermented grape juice that has no alcohol in it to make that bottle. You've hit the nail on the head there, Pidik, because that, of course, is a large part of that increased cost of production, is that if you remove 13.5% of alcohol from a wine, you're removing 13.5% of your volume. In fact, the value is you're probably removing more like 25% of the volume, because the alcohol that you remove isn't 100% alcohol is more like 45/50. So there is a reduction in volume as well, through the process, quite a significant reduction in volume. Now, one of the key things there is, what do you do with the alcohol? Once you've taken it out, how do you add value to that alcohol? And there are several ways of doing that, and we do some pretty cool stuff with the alcohol. We make some pretty cool alcoholic products with those, such as a gin, and but they can also be used for biofuel, et cetera, et cetera. So there's ways, and those are really important, because the sustainability part of the process is very, very key, and we'll become more so as we go forward. So being able to use the alcohol that you're removing wine as a source of fuel, fantastic. So that's where things are heading. Yeah, but I would assume the value of pure alcohol is lower than wine, because the volume of something like vodka is much cheaper to make vodka, or something like that for alcohol than it is to make wine. Yeah, that's right. That's right. Look, it's like anything, though. I mean, it really just depends what you do with it. I mean, there are certainly ways of adding value to it, and if you're prepared to go to the lengths and spend the time on it, then you can take an alcohol. The alcohol that comes out of the wine is very, very high quality alcohol. It's beautiful. So if you're prepared to further process that, and the ten-inch or product, the people who have prepared to spend good money on you, you can actually add a lot of value back to it. But in its raw form, it doesn't have that much value. And I know non-alcoholic wines can have up to half a percent of alcohol by volume legally. Does that make it problematic for children or sober people to drink them? Yeah, so that's really fascinating that subject. Now, the first part of that would be that, for example, most of our zero-accal wines, as you say, they have to be below 0.5%, most of our cider around about 0.4, 0.45. Now, to put that into perspective, if you drink a glass of regular 13.5% alcohol wine, to consume the same amount of alcohol from one of our zero-accal wines, you'd need to drink five bottles. So five bottles of our zero-accal wine would give you about the same amount of alcohol as one regular glass. So it's a huge volume that you've got to get through. The other thing that puts it into perspective, that a 0.45% alcohol, you're in a similar realm to a ripe banana, or a lot of fruit juices, natural organic grape juice, or even orange juice, organic orange juice can have that amount of alcohol, even bread can often have half a percent alcohol. In terms of, with children, it shouldn't ever really come into the equation, because it should always be kept separate. Now, even though, in terms of accessibility, very much separate. Now, even though this is a nearly non-alcoholic product, or they might have the same alcohol as a banana, it should in no way really be accessible to kids, at the point of sale, because it is still a wine experience. So it's associated with an alcoholic product, and we don't want that association with kids. So that's a really important one. So in terms of where you sell it, it shouldn't really be available to kids, because it'd be a bit like selling a child, a nix-teen-free cigarette. You know, you really don't want to do that. So it's a fascinating conversation, though. So in terms of non-alcoholic wine, it seems like there's a lot of competitors. In terms of why someone would drink a non-alcoholine over other drinks or juices or teas. In San Francisco, we see a lot of mocktails on menus now, and almost every cocktail menu has multiple mocktails in the city. And I'm just curious, then, the competition seems to be very diverse, and so you have to have a very clear rationale for why someone wants to buy this. And where do you see, what are those main reasons why people are buying wine over something else? Yeah, I think the simplest way to answer that is, they'd buy it for the same reasons that they would buy a regular wine. And so, okay, so let's look at that. Why do people buy wine? They buy it because it's a really tasty drink. It's got complex flavour. That's very, very important, complex flavour. By a complex flavour, I mean, people talk of, let's say, you're drinking your glass of pin and wine. It might have red cherry, it might have cranberry. And, you know, you can buy red cherry juice and cranberry juice and mix it all together, but you're never going to emulate the flavour of pin and wine. And that's because pin and wine has complex flavour, and those complex flavours are created through fermentation. And so you have layers of fruit, you have layers of spice, layers of perhaps oak, maybe something earthy and mushyry. And this is just in the case of pin and wine. Now, with good ziracol wine, you have all of that. So, the person, why are they drinking it? They're drinking it because they want that complex to have flavour. They also want something with structure, and so I mean, it's good with food. So, let's go to a white wine now. Let's talk about ziracol, say, your own block. It doesn't have the alcohol, but it does have the acidity and the minerality and the mouth feel, or at least some of the mouth feel that you get in a regular wine. And the acidity is fantastic with foods, because it, you know, cut through fatty things. And it's also dry. Now, it's very, very important as well. It's not a high sugar product. And people are looking for something that is hopefully healthy in terms of sugar content, and that's why they're buying it. So, they're really buying it because of the same reasons that they're buying regular wine. Other alternatives, teas, motels, I would sort of say the same for them. I think that if you look at it, he is an alcoholic substitute, if you like. People would buy that because it actually does have relatively complex flavour. Perhaps a lot of it's complex as wine, because it hasn't always been through a fermentation process. But it does have tanning and structure, and so people are going for that. And all of those things, tanning, structure, acidity, complex flavour, they're generally speaking adult flavours. And that's very, very important for me with non-acolic wine, and certainly for any non-acolic substitute product, is it has to taste like an adult product, because that's what you're trying to get. You're trying to get an adult experience out of it without alcohol. The moment it tastes like a fruit juice, or a kid's soft drink, you failed. And you haven't produced the product that the consumer's probably looking for. Interesting. I have a quick follow up on that in terms of venue of where people are purchasing, because some of those options, for example, tea, you know, I might be able to buy, have it home, or things like that. But a mocktail, I'm almost exclusively going to buy at a restaurant because it's presented to me at the same time as those other options. Where are you seeing consumers in purchase a non-alcohol wine? Is it on-premise? Is it off-premise? Where are you seeing the growth happen for the market as well? At the moment, it's mostly off-premise. That's mostly where suddenly where our growth is, and where that most of our sales. And I'd say that's the case for the majority of the non-alcohol at wine market. Now, a couple of reasons for that. It's relatively new. Price point is still moderate. Like I said, you're talking nine. Most of them sit between nine and say, $18 USD bottle. Most sales are through off-premise. The other part of it as well is that the on-premise is still embracing the category. And that is happening. But nothing like that happens instantly. So, you know, a sommelier at a restaurant has got to be comfortable that non-alcohol at wine is something that they're comfortable with. And that is going to go with their chefs' food and that they want to serve it to their diners. And that is happening, but it's not instant. What will be interesting for us is that the new range that we're going to be bringing out is we start to go into super premium. The realm of super premiums are our whole wine. That we very much focused on premise. And we're going to be really interested to see how that performs. So, in that off-premise heart, the non-alcohol wine market is having some maybe growing pains. I'll call it with the major retailer, Blosson, closing all its physical stores. What do you think is driving the growing pains and do you think non-alcoholic wine is better and through a specialty non-alcoholic retailer or maybe just the same retailers as regular wine? Yeah, I think the growing pains are inevitable for a category like this. It's still very much in its youth. We've gone through that kind of, you know, that sort of honey-man period, that early stage where everything's new, it's great. We're very, very small base, growing from a small base. Now, one thing that is important to remember is I go through this. Is that the category is very much still growing in the last 12 months. In the USA, it grew 18% by volume and 27% by value. So, there's still significant growth. However, it is changing. And that's because I think there is such a new category. It's still so. settling into its clothing. It's still, people are still trying to understand both in terms of customers and in terms of trade. They're still figuring out how exactly people are going to consume it, where they want to buy it, how they want to buy it, and how it all fits in. And so there's a bit of evolution happening and Basan had this great series of stores, a fantastic source. And it might be a sign that things have changed a bit and perhaps the consumer they want to be purchasing there's a alcohol alternatives from somewhere they would usually buy their regular alcohol. So especially moderators, because it's intertwined with their regular lifestyle that still includes alcohol. And perhaps they're looking to be able to buy it concurrently with where they buy their alcohol. So that would honestly your second question. I think that we're going to see more of that. Having said that, I think also as the category evolves and settles down, you will start to see non-alcoholic products pop up in more other places outside of regular liquor stores or grocery. I think a lot of it, a lot of what's driven possibly, not uncertainty, but perhaps some of those growing pains you refer to, I think a lot of that is just driven by the category settling. And it's still in a process of settling, growing but settling at the same time. And what do you think are the keys to success for driving the growth in the category? Qualities, quality is absolutely key. You've got to have quality and innovation. You've got to innovate with the category. I think that you've got to four or five years for us at Geeson, it feels like a relatively long time. And it is a relatively long time for the Ziraqo wine market. But it's nothing really. It's a tiny amount of time. What we're very conscious of, we've got to keep evolving wine range, what we offer, the consumer. We've got to get innovative with the styles that we make, try and push some boundaries. And through all of that, you've absolutely got to deliver quality. As soon as you don't, you're going to lose your repeat customers. As we get into the higher end, as we get into more super premium wines, things like provenance and sense of place are going to be very important. People want that experience that takes them to where the wine was produced. But quality above all is the driver. And we haven't yet seen any big success stories. Like we have in Tequila or RTDs or other things where some non-octolic wine company gets bought by Constellation or someone for hundreds of millions of dollars. Why do you think that is? It's a great question. I think it probably goes back to Mars, if the question before last, which is down to that, the category settling in. I think that wine is such a traditional product. And Ziraqo wine really has shaken things up. Now there is clear growth. I don't think anyone knows exactly how far that growth is going to go. And I think, like we've just mentioned, the way people are buying it, the way people look and assuming it, where and when, is still being established. And so there's a degree of uncertainty there about what's right. And that uncertainty inevitably would have an impact on investors. Everything suggests that the cashier is always going to continue to grow. So I think we will see that. We will see those successes coming through. But it's still in a settling position in the moment. And just for our contacts, our listeners' contacts, is the market today mostly people like Eason that have a winery on its own? Or there are a lot of startups that are trying to focus on non-alcoholic wine? Yeah, it's really both. You certainly-- there are-- why companies out there that are 100% Ziraqo. A lot of them-- well, all of them, in some shape, will form with having an association with regular wine production. Because you've got to have a winery for a start. You've got to be able to turn grapes into juice and ferment it so you get the complex flavors. And then you've got to access to the equipment to remove the alcohol. But I think you are seeing companies like Constellation bringing out Ziraqo wines, treasury wine estates as well. So it's a real mix, I think, that most of the large players in the wine industry are certainly the very least looking very closely at it. And most of them are producing low and no alcohol wines now as well. And they see it as an important part of their portfolio. They need to be able to offer that to their already existing consumers who know their brand, who respect their brand, understand that they make quality products. And they might want to moderate. And part of that will be buying their non-acquolic version of a wine that they already know and love. The Giesen 0% line markets them as low calorie. How important is that to the customers that are buying non-acquolic wines? We found it really important, actually, with Phantis. It's been a really key driver for us. Ziraqo wines are quite low in sugar. So they're a lot lower in sugar than most of the others. And it is sugar that drives most of the calorific content of non-acquolic wine, rather than alcohol, which drives the calorific content of alcohol at wine. And so, well, that means because I was a drier, they have less sugar than they generally have less calories than most of the competition as well. And that's certainly been a really key driver for us. I think if you look at some of those consumer categories, millennials, like I said, Ligel Drinking Age, Gen Z, they are health and wellbeing focused and part of their moderation drive is very much driven around health and wellbeing. And of course, calorific intake is associated with that. So I think it's actually been really key for us. I'm curious because a lot of people who fall into that wanting to know the calories also want to know like nutritional label and information. When you think about non-acquolic wine, you think about, well, what is added to it after they remove something to compensate? So what are your thoughts on nutritional labeling and saying what is actually put back into the wine? Obviously, it's clear you're removing alcohol, but you have to add some stuff back and how do you explain that to the consumers or a transparent way you can do that? - I actually think it's really good. It's quite interesting because in Europe, for example, now on regular wine, relatively recently within the last 12 months, you now have to put in nutritional label and elicit ingredients on your regular wine label, where at the very least you have a QR code that gives you a link to that information. And that came about because if you think of all food products, most of them will probably nearly all of them have some shape of form of nutritional panel and ingredients list. And people sort of say, well, why doesn't alcohol have that? You know, if I have to have it on a kind of code, why is it not on alcohol? And to be honest, it's a fair point. So if it is happening now in alcohol at one, it's wrong, I think we will see that happen in other markets such as the USA over time. With your alcohol, I think it is really important and I think it's a food product in the USA, so it has to have it, but I think it's really good. I think that people, they want to know what they're consuming, they want to know what the calories are, how much sodium they're having, is there a protein it is or not? But certainly, ingredients are very, very important. For us, the way we make arzure, arco, wine, and geese and we don't really add anything. I mean, we don't add things like glycerol or flavoring or any of those things. We literally take a regular wine, we remove the alcohol. We add a bit of grape juice back, just to add a little bit more sweetness than we have in our regular wine. Apart from that, we don't add anything we wouldn't add to a regular wine. And yeah, the consumer has the opportunity to see that on the ingredients on the back label, which is good. And I noticed that on your back label, some of the wines have very similar numbers. Are they specific to each wine or is it grouped in some cases? Yeah, so it's specific to each wine. They're all sent for analysis. So once we've got a new product, we'll send it away for analysis and get it tested for all of the nutritional factors that need to be listed on the label at the back. So, protein, sodium, et cetera, et cetera, calories, of course. A lot of them are similar because they are literally very, very similar. The main thing that drives the nutritional panel on the back is the sugar content. The base of the waifetate sugar out everything else across the wines is very much nearly the same. So the alcohol of course is around about 0.4.45, the level of sodium, the level of protein, which is next to zero, the level of fibre, which is generally zero, they're all the same. So a lot of those labels will be the same if they have a similar amount of residual sugar in them. But they're all specific to the wines. I'm a big proponent of nutritional labeling on regular wine, as you mentioned, and non-alcoholic wine, because there are interesting things in wine that don't exist in other products, especially alcoholic products like potassium. And that's a big element of why maybe people, some people like LeBron James prefer to drink wine versus other types of alcohol after games, right? It's sort of like something that helps rebuild that speculation, of course, and I don't know him and don't know exactly why he does it. But I think that's a big part of it and could be a real positive for wine versus other categories of alcohol or non-alcohol. - Yeah, Peter, I really agree with you there. And I think that you've got to remember that wine, regular wine, does actually, yeah, alcoholic wine, does actually have a lot of really healthy things in it. Wine has a scuba acid, which is vitamin C. For example, what you mentioned, potassium, polyphenols, resveratrol, the tannins and the antioxidants that are really, really good for you, now they all exist in zero alcohol wine as well. So there's some really healthy things in there and I think it's good for people to know that. - One of the things that I thought was interesting looking at your back labels was that the serving size seemed quite large. It basically showed half a bottle or a whole bottle versus a normal glass of wine. Was there a reason for that? - Yeah, yeah, it's actually, that was driven by the FDA. So in the USA, of course, the zero alcohol wines are governed by the FDA rather than the TTCB. And the FDA recommended that we are serving size B 12 ounces, which I guess is in line with a soft drink or fruit juice. So we did that. The reality is that the 12 ounce glass of wine is probably unrealistic. And we are looking at changing that back to a more realistic size, like a five ounce pour, which is what generally people would pour in a wine glass when they have a glass of wine. So it was driven by the FDA that so we have that on there. - But it was recommended. or is that mandated? - Well, I mean, it was very strongly recommended. And yeah, if I say we had, that was what we needed on the label for it to comply with FDA regulations. And so, yeah, we weren't gonna take any risks with that. - So in terms of marketing, obviously, essentially one of the people for reading this market, what have you found has been the most effective method to promote key sense zero percent line? - Yeah, definitely social media, so combination of social media and influencers. Now, of course, like to say anything, a lot of it is just sort of how do you reach a large number of people? And who are the people that really need to be reached for this particular product? Now, for us, that growth category in the millennial and the older GenZ population are really key growth category and inevitably one of the best ways to reach them is through social media. And social media is a great way to both reach people, but also educate education with this particular product is key because it's new. People don't really know too much about it. We need to help them understand the what, what it is, why would you drink it, how would you drink it and when. And so that's a great way of doing it. And also, with influencers, that's a really nice way to be able to do that as well. And if you can have someone that people trust them, listen to pouring a glass and drinking it with their friends over a meal, then it's almost a form of education as well as marketing at the same time, which is really powerful. For some of the other categories, if you look at sort of the older consumers, people then they're sort of 50s and 60s. That's where Deeson would have an advantage being an already established wine brand because they've probably already got an experience with our brand through drinking regular wine. And that works already been done. And then when they make that decision to start to moderate or abstain with whatever they're doing, they already recognise the brand. They see that it's your alcohol. They already have a trust in our brands and our quality of products. So that's probably the easier part. But yes, only for the largest growth category and their young who can share their social media and influencers has been really important for us. - So have you found any confusion between your consumers because you have both alcoholic and non-alcohol wines between understanding what they're buying or what they're getting or why they should go with Geeson? - Yeah, not really. I mean, the label's got a nice really clear zero on the front. So it is, and it says, "Diacolized wine." So we haven't had any confusion there for people picking up the wrong bottle inevitably. I'm sure it has happened, but I think that that's where appropriate segregation in retail as well as is important. Where, let's say you're selling it in a liquor store, that it is in a section of the liquor store that is dedicated towards zero alcohol products. And I think that in terms of the association with Geeson, it's gone really well for us. Like I said, I think we're well trusted wine brands. People know our brand well in New Zealand and around the world. And they associate us with quality. They associate us with New Zealand. They associate us with a certain style of wine. And I think those things all resonate through our zero alcohol range as well. So for us, it's worked out really nicely. - And how big is Geeson's not alcoholic business? And how does that compare to its other regular wine? - At the moment, we'd be around about 17% of what we do is be zero alcohol. So that's quite a large percentage. And that percentage is growing and will continue to grow. And you'll see that across the whole category outside of Geeson as well. I mean, zero alcohol wine is certainly growing at a faster rate than Philuck or wine. But yes, it's quite a large part. In terms of the impact, it's probably greater than that. So 17% of our total production, but in terms of reach and impact on the market, it's more than that because it is an innovative product. And I think that we've now become, and it's real leaders in the category and farewell recognized for the work we've done in our zero alcohol range. - So what are you most excited about next for the Geeson zero percent range? - I'm personally really excited about pushing the boundaries and policy. We've started working on these super premium products, these luxuries here at the wines. And I'm really excited about the quality of you getting out of there. The Philuck fantastic. So I just can't wait to see how far we can take it. I'm excited to see how good the products are that we can produce. I'm also good at sizing the feedback. And if they give them to they like them, I think they will, they look great, but are they prepared to integrate that into their luxury wine lifestyle that if you're going to a really great fine dining restaurant and you're driving or you're abstaining from alcohol for whatever reason, will that, can she, all that diner, will they be prepared to drink a high end zero alcohol wine? So I'm really excited about that. And I'm just excited about where the cashier grade goes over the next few years. It's been a bit of a whirlwind four or five years. And I think there's still a long way to go. Like I said, the cashier is still settling. The consumer is still understanding the cashier and we're still understanding the consumer. So it's going to be pretty exciting to see where it goes. - Is there like a nut that needs to crack in the non-alcohol wine space that once you get this, you'll be like, okay, this is going to then kind of like exponentially grow like one thing I'm thinking is like, if you can nail a premium dry nut alcohol, PNWR that actually, people want to pay $50 for it. Is there a price point or a profile that you just haven't been able to nail? You're not quite as happy with it. Once you feel like you get this, it'll be exponential for the growth. - Yeah, that's a really good question. I think in terms of the products, I think our philosophy would be that although we are always happy with what we put in bottle, we wouldn't put it in bottle if we weren't happy with it, we're never 100% satisfied. And that's important for us because we've got to continue to get better and every time we make one of our existing range, we try and make it better each time. And obviously like I said at the moment, we're trying to create a new range of really high end wines. But yeah, look, I think that I actually think that, for example, like you said, a high end PNWR, a dry PNWR that looks like PNW that has a sense of place, as structure. If we can do that and we get really good buy-in from the trade, especially some Elias and real stakeholders in fine wine, that would be a great achievement for us because that is a hard nut to crack. Wine is a sacred product, an experienced sommelier who's well trained and has been drinking great wines their whole life, trying to get them to be behind Ziracol wine. It's very, very difficult. And understandably so too, I totally get it because it is so different. It's foreign, it's almost breaking the rules. But if we can do that, I think that goes a long way. I think the more we get buy-in from the trade, that will of course feedbacks down to the consumers and as that happens, we'll see more growth of the category. - Great. Well, thank you for sharing so much information about the non-uplock wine market. As we wrap up every episode, we'd like to end on a personal note. And Duncan, we're curious, and what is the most cherished wine you have in your cellar and when do you plan on drinking it? (laughs) - Yeah, I love that question. I'm lucky I've got a really good diverse cellar at home. I'm actually currently studying Master of Wine, so I have to try and drink as many different wines as possible, which is wonderful. But probably the most cherished one is a bottle of 2005 Chateau Angeloos. The reason I would choose that one is that it's a great wine. It's a really fantastic wine. But I worked at Chateau Angeloos in 2007 and 2009. And that was the first half of my wine making career. And I've got such great memories of being in Santa Milion and drinking the amazing local wines with the local food and meeting some fantastic people. And we made some fantastic wines in 2007, especially in 2009 at Chateau Angeloos. So that wine has obviously great quality, but it's also got a wonderful association with great times for me, which is such an important thing. And a place I love Santa Milion as a place. So it has all those wonderful things that good wine should. And I'm probably going to open that in five years from now. In 2029, it'll be a bit of a landmark birthday for me. And I think that wine at 24 years old will be right in the drinking window. So I think I'll open it then. Awesome. Well, thank you for sharing and thank you for sharing all the information on today's episode. No worries. Thank you both so much. It's absolutely pleasure. Thanks for joining us. If you loved this episode of X Chateau, we'd love for you to subscribe, rate, and give a review on iTunes. Or wherever you get your podcast, until next time, cheers.