Anyone familiar with the consequences of alcoholism or drunk driving can’t help but be pleased by this SO LONG AS this move is chosen, not mandated. Remember, Prohibition didn’t work.
https://www.wsj.com/business/retail/non-alcoholic-beer-sales-alcohol-consumption-habits-aaa2e19c?
Sobriety Is in, and Non-Alcoholic Beer Sales Are Soaring
New, better-tasting zero-alcohol beers are experiencing explosive growth as alcohol consumption by young adults declines
Heineken 0.0 is the top-selling non-alcoholic beer in the U.S. with around 20% market share. LEX VAN LIESHOUT/SHUTTERSTOCK
By Aaron Back, published on Oct. 12, 2023 9:00 pm ET
Sales of non-alcoholic beer are soaring in the U.S., thanks to improved quality and taste, as well as generational shifts in drinking culture. For brewers, it is a welcome source of new growth and a focus area for investment.
Shoppers in the beer aisle are encountering an increasing variety of non-alcoholic beers, some from craft breweries but also from many of the best-known brands in the business: Heineken, Budweiser, Corona and even Guinness. Non-alcoholic versions of wine and even spirits are also gaining in popularity, but are far behind non-alcoholic beer in terms of total sales.
In the U.S., overall sales of beer, hard seltzer and alcoholic cider spiked during the first year of the pandemic but have largely stagnated since then. By contrast, U.S. sales of non-alcoholic beer were up 32% from a year earlier in the 52 weeks through Sept. 9, and averaged 31% growth over four years, according to data from NielsenIQ. Intriguingly, young drinkers in particular are taking to it, which is welcome news to brewers as overall rates of drinking among younger generations have been on the decline. Pandemic HangoverDollar sales growth, U.S.:Source: NielsenIQNote: Data refers to the 52-week periods throughSept. 9, 2023, Sept. 10, 2022, Sept. 11, 2021 and Sept.12, 2020 respectivelyNon-alcoholic beerAlcoholic beer, seltzer, cider andfermented malt beverages2020’23-1001020304050%
Besides an increased focus on health and wellness among consumers, the growth of the category also reflects canny marketing and positioning by beer makers.
“Some suppliers have gotten smart and said hey, somebody wants to feel like they are still part of the drinking occasion with a non-alcohol beer, a non-alcohol wine or even a non-alcohol cocktail. Those products really allow for that,” says Kaleigh Theriault, managing director of beverage alcohol thought leadership at NielsenIQ. Similarly, popping a lime into a non-alcoholic Corona while at the beach provides the relaxing ritual of beer consumption, without the intoxication.
But these new products aren’t just aimed at teetotalers. In fact, NielsenIQ data finds the vast majority of non-alcoholic beer buyers also buy alcohol. Some may be looking to simply moderate their drinking. For others, it opens up new beer-drinking times and occasions, such as at lunch or before driving.
“These products are for beer lovers, beer drinkers,” says Bruno Cosentino, global vice president of marketing at
.
NV, a global brewing giant with hundreds of brands in its portfolio, has chosen to make a major push for non-alcoholic beer under its flagship Heineken brand. When Heineken 0.0 was launched in Europe in 2017 and the U.S. in 2019, one of the company’s major focuses was “making non-alcoholic beer look cool,” says Federico Castillo Martinez, director of investor relations for the Netherlands-based company. In the U.S., the company’s “now you can” ad campaign showed people drinking Heineken 0.0 in cars, while making work presentations, and the like.
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Opening up new occasions to beer drinking is an enticing prospect for brewers because it has the potential to meaningfully expand the beer market. “More than half of the volume that is coming into non-alcoholic beer is coming from outside of beer, such as soft drinks,” says Martinez. Similarly, executives at AB InBev estimate that 60% of non-alcoholic beer sales are incremental, meaning they represent new growth rather than replacing existing sales.
Heineken 0.0 is now the top-selling non-alcoholic beer in the U.S. with around 20% market share, according to the company. The group says it is putting 25% of the global advertising budget globally for the Heineken brand behind Heineken 0.0—a major investment for a product that makes up a much smaller percentage of the brand’s sales. Heineken 0.0 is now in about 110 markets, the latest being China and Japan.
AB InBev, the world’s biggest brewer, says it is the top seller of non-alcoholic beer globally by volume, with zero-alcohol versions of its various local brands everywhere from Brazil to South Korea. In the U.S., it offers zero-alcohol Budweiser, Stella Artois and others. In Europe, it even has a non-alcoholic version of Leffe, the iconic Belgian beer traditionally known for its high alcohol content.
The U.S. is behind Europe in the non-alcohol trend, but that only illustrates the growth potential in the American market. Non-alcoholic beer sales in the U.S. in 2022 were equivalent to 0.9% of total beer sales by volume, according to Euromonitor, compared with 5.8% in Western Europe.
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It helps that the latest generation of non-alcoholic beers taste a lot more like traditional beer, thanks to improvements in brewing technology. Alcohol-free beer can be produced by stopping short the fermentation process before it produces alcohol, or by separating out the alcohol after brewing is complete. The latter extraction process has gotten much more advanced in recent years, allowing greater fidelity to traditional beer. Methods vary between producers, and for some it is a closely guarded secret, but in many cases ingredients are also added into the beer to replace some of the taste that is lost when alcohol is removed. New computer controls also allow much more precise calibration of the entire process.
“When you take the alcohol out, because you had a fully fermented beer, what you have left is still very much a beer. The only issue you have then is you lose some of the aroma components,” says Peter Kraemer, a brewmaster and AB InBev’s chief supply chain officer. The company’s technology allows it to separate the actual ethanol from the aroma components in the extracted alcohol, the latter of which can then be added back.
“There’s a lot of brands that have just really nailed the flavor,” says NielsenIQ’s Theriault. “We see it come through in repeat rates, so not only are people trying the product, they are coming back again for a repeat purchase.”
These improvements in technology come at an opportune time for brewers that face a challenge with the rising generation of drinkers. Several academic studies have documented a pronounced decline in drinking among young people over the last two decades—not just in the U.S., but also across Europe and other high-income countries.
Among 18 to 34 year-olds in the U.S., 62% described themselves as drinkers rather than abstainers between 2021 and 2023, according to Gallup. That was down from 72% two decades prior. Just 38% said they have had a drink in the last seven days, down from 49% 20 years earlier.
Explanations vary for the phenomenon. It could partly be because young people today socialize more online and less in person. Theriault notes that, among Generation Z, defined as those born after 1998, many came of drinking age during the pandemic, so opportunities to go out and experiment with alcohol were vastly curtailed. Increased marijuana use could also be a factor, especially where it is legal. It also could be that young people today are simply better informed of the risks, as the scientific consensus has shifted away from the view, espoused in previous decades, that a couple of drinks a day can be healthy.
Regardless, the decline in youth drinking is a long-term trend that alcohol producers must contend with, especially if it sticks as Generation Z ages. Little wonder that companies are putting so much research and marketing investment into alcohol alternatives. With new and improved alcohol-free beers, big brewers look a little more future-proof.
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