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Sobering thought: Low-alcohol wine set to boom?

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As the number of "low alcohol" wines for sale continues to grow, industry experts are divided over the demand for these products – and whether their taste will ever satisfy the sommelier's palate.

Australian Vintage has become the latest in a long line of global wine companies to launch low-alcohol – or 5.5 percent ABV (alcohol by volume) – products. Its "Miranda Summer Light" range will sit alongside low-alcohol or non-alcoholic brands from producers including JP Chenet, First Cape, Gallo and Banrock Station.

Thomas Jung, Australian Vintage's chief winemaker told CNBC the decision to launch the product was a direct result of a growing demand for low-alcohol wines.

"In the U.K., certainly, and worldwide there is definitely a market for it," he said. "Places such as Scandinavia and Canada also have thriving markets for both low-alcohol and zero-alcohol wines."

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Research by Kantar World Panel revealed that in the U.K. alone, the value of the low-alcohol wine market grew by over 70 percent year-on-year in the 12 months to February. Last year, sales of 12-bottle cases hit 950,000 – although this is still a tiny proportion of the total amount of wine sold over the period.

One reason for lower-alcohol wines' growing popularity could be the obvious health benefits. Not only do they reduce the risk of alcohol-associated health issues, they're lower in calories. A 125ml glass of 5.5 percent ABV wine typically contains between 45 and 60 calories, compared with around 90 calories in a glass of 13 percent ABV wine.

"This makes it a good choice for the health conscious consumer," Jung said. "It is all part of the growing consciousness to have a healthier lifestyle, but at the same time without necessarily giving up on your social enjoyment."

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The British government has certainly been promoting low-alcohol drinks, and last year launched a project that encourages drinks producers to reduce alcohol content, and retailers to improve the availability, marketing and promotion of the products.

All of the "big four" U.K. supermarkets – Tesco, Asda, Sainsbury's and Morrisons – signed up to the Public Health Responsibility Deal, and have reported strong demand for their low-alcohol wines. Sainsbury's, for instance, said sales of what it calls "lighter alcohol wines" were up 14 percent over the last year, and are expected to double by 2020.

Surprising origins

In fact, the very first production of low-alcohol wines was driven by these supermarkets and other big retailers, according to Richard Halstead, chief operating officer of research firm Wine Intelligence.

Beverages with an ABV of 5.5 percent or lower are subject to a tax break in the U.K., and that – along with growing pressure from the government – led supermarkets to ask their wine suppliers for a new product.

"This whole category was created from tax breaks and a social responsibility drive – not calls from consumers," Halstead told CNBC.

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Although demand took off when the products were first launched, he said "most people only bought them because they were cheap and then were severely disappointed when they got home and tasted them."

Despite the hype, he said Wine Intelligence had not detected a significant demand for wine products of 5.5 percent ABV and below, after this initial rush.

Karl Storchmann, an economics professor at New York University, who is the managing editor of the Journal of Wine Economics, agreed that the market for low-alcohol, or dealcoholized wines, was difficult.

"The market is niche. Even so, there might be an upward trend [but] the level of sales is tiny compared to the entire wine market," he told CNBC. "Only a few firms rule almost the entire [low-alcohol wine] market and I don't think there will be a broad movement of wine makers towards this market."

He also argued that low-alcohol wine would "not get close" to the increasingly-popular non-alcoholic beer market.

Bitter taste?

One reason for this could be taste, which is consistently raised as a problem with low-alcohol wine products.

In traditional wine making, the fruit ripeness level at the vineyard determines the final alcohol level of the wine. By contrast, alcohol is removed from low-alcohol wines after production by one of a number of processes including (at its most basic) dilution or (more often) distillation.

Anne McHale, wine education specialist at wine merchant Berry Bros & Rudd, said the process of de-alcoholization would affect taste, because a certain level of alcohol is needed to balance wine.

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"Would a wine with alcohol lower than 8.5 percent actually taste good unless it had some sweetness in it? I've never discovered one which can even remotely match up to a wine at higher alcohol levels," she told CNBC.

McHale said there could be a potential market for good-tasting alcohol-free wines - from pregnant women or drivers – but added: "Again, the fact that you need alcohol for balance makes this very difficult."

Despite supermarkets' insisting that there is a firm market for low-alcohol wine, one supermarket source told CNBC that taste was a significant barrier to demand.

"Is the future of the wine industry low-alcohol? No. The quality just isn't there – and as such, neither is the demand," the source told CNBC. "It's an unpalatable message for suppliers in this area."

Australian Vintage's Jung, however, was unperturbed. He argued that the U.K.'s major supermarket chains were "very buoyant" about the category and were fully behind it.

He agreed that there were perceived quality issues with low-alcohol wines, but insisted that his company's product tastes like mainstream wine. "This is the way in which the category as a whole will grow and cement itself as a permanent part of the wine world," he said.

But Jung did concede low-alcohol wines were not a replacement for their standard-strength counterparts and were "never likely to be."

"We are not trying to change the landscape of wine - just broaden it," he said.

By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop

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