“One of our core tenets is to try to run it like it’s a Silicon Valley-style tech company rather than a traditional consumer products business,” he says. “In technology, if you are the first scaler rather than the first mover, history shows you tend to end up winning the market.”
Pre-Lyre’s, Livings and his team at the Australian marketing and advertising agency Kinetic won a host of awards and recognition on tech industry best-of lists for their work for clients including Proctor & Gamble, Unilever, Nestlé and Diageo, before he decided to become a brand owner in his own right in 2016. It took three years perfecting recipes before the Lyre’s brand hit the market in 2019.
Since then, despite the pandemic, it has launched 22 types of non-alcoholic spirit, five RTDs and is just making its first move into sparkling wine. Lyre’s products have entered 63 markets through traditional distribution routes and are in another 30 through direct-to-consumer ecommerce.
“Ecommerce is the great leveller to allow small and medium businesses to compete with the global giants,” says Livings. “You no longer need a relationship with a major retailer to get your products moving quickly.
“Smaller businesses have an advantage in launching a business through D2C. If you’re a business like Diageo or Pernod Ricard and do that, you have all the retailers you already have a relationship with tapping their pens on their desk saying: ‘When did we stop being your partners?’”
Lyre’s has distribution hubs in Rotterdam for Europe, Shanghai for Asia, and on each coast of the US.
It eschews the conventional alcohol-free production approach of making a full-strength spirit and de-alcoholising it, instead making a “combination of essences, extracts and distillates and a little bit of beverage technology magic” at sites in Germany, Shanghai and Atlanta. This concentrated “serum” is then transported to seven manufacturing points around the world to be bulked up into the final products.
“It gives us a small carbon footprint and a robust supply chain,” says Livings. “It’s allowed us to continue to scale up almost uninhibited, and open up new markets during the pandemic.”
Lyre’s has avoided regulatory pitfalls in some markets by avoiding terms such as ‘non-alcoholic gin’ or ‘non-alcoholic whiskey’, instead opting for descriptors that convey their equivalence: London Dry Spirit for gin, American Malt for bourbon, Italia Spritz for that country’s numerous aperitifs, and so on.
“We don’t launch all of the SKUs in every market,” says Livings. “We optimise it around what we know the consumers are looking for in different places.
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“People want to drink [non-alcoholic versions of] what they know and have become accustomed to. In the UK, gin is around 30% of traditional spirits but it’s less than 5% in the US. Products like our take on bourbon and recently-launched homages to tequila are incredibly popular in the US.
“We have a broad spread, so the brand has mass appeal regardless of where it is in the world. It also provides a toolkit for the hospitality sector. Using Lyre’s, you can now make every one of the world’s 50 bestselling cocktails.”
BLITZ STRATEGY
The “blitz strategy” borrowed from the tech industry means “sacrificing some profits on the altar of agility”. Livings adds: “The objective early on is to win market share to get the brand to become synonymous with the category as it emerges.
“A good example is Google, which is now part of the common vernacular for searching for something on the internet. Before Google there was Alta Vista, Ask Jeeves and Yahoo, but Google exploited the first scaler advantage. We’re looking to do the same thing with Lyre’s.
“We are not a pro table business – just like a lot of start-ups in the tech world aren’t – but we have a very clear path to profitability over the next couple of years as the category approaches maturity.”
Reaching that goal involves “recruiting amazing people to run the business and empowering them”.
It also means, Livings adds: “You raise cash and you burn it. You prioritise the acquisition of market share with the conviction that if you control a good chunk of it in the early part it’s very difficult to take it off you.
“If you’ve done it right you’ve built a brand people have fallen in love with and don’t want to move away from.” Livings’s home market of Australia was the launchpad for Lyre’s.
“The big drinks companies like Australia and New Zealand to test products because they have small populations and, if they fail, they fail relatively inexpensively. We’ve actually got about 80% of the category in Australia.
“The UK is home to non-alcoholic spirits and category penetration is sitting at around 3% of the total spirits market now. In the US, penetration is only around 0.2% or 0.3%. We’re overindexing our spend in the US because that market will catch up with the UK in penetration and will be a significant quantum larger than the UK when it does.
“We’re also pushing into areas where we’re the only show in town – China, Asia, the Middle East.
“China is littered with the corpses of well-intentioned multinational consumer product brands that thought they could use the same methods as elsewhere in the world to capture the market.
“We’ve got a joint venture with a number of Chinese ex-bar professionals and we’re focusing on five key cites and provinces with a combined population of 200 million people, so we’re not trying to sell it to 1 billion-plus people.
“The strategy is to work with the most effective wholesalers, city-by-city, who will get our products to market.”
Livings was originally drawn to alcohol-free spirits after seeing a chart of total alcohol consumption in Australia that “looked like a reverse hockey stick – not only was it decreasing but the rate was getting faster”.
It’s a trend that’s being replicated worldwide, he contends. “It’s a moderation trend, not an abstinence trend,” Livings adds. “The vast majority of people coming to the category also consume alcohol; they use our products to moderate that consumption, not to replace it.
“It’s our conviction that this market transcends international borders, cultural groups and income stratas. The world is looking to drink more mindfully.”
