Introduction to Nonalcoholic Beer
Nonalcoholic beer needs a second act. The category boomed in recent years as the likes of Anheuser-Busch InBev, Heineken NV and Diageo Plc poured in money. But after those gains made it one of brewing’s few bright spots, it’s still just 2% of the global beer market’s volume, according to IWSR.
The Struggle of the Brewing Industry
The push into nonalcoholic beer is a reminder of how much the industry is struggling. Craft beer peaked. The hard seltzer boom fizzled. Younger adults are going out less. Legalized cannabis is replacing six packs. Weight-loss drugs are a threat. Global beer volume has declined the past two years. Meanwhile, stocks of the world’s big brewers haven’t returned to their pre-pandemic levels.
The Growth of Nonalcoholic Beer
And now growth rates are slowing. After a surge late last decade and another jump in 2021, recent increases have settled into the single digits. IWSR now projects annual gains of about 8% through 2029. That would only boost its market share to a little less than 3%.
Nonalcoholic craft beer is offered for sale at a big box store on January 06, 2023 in Hillside, Illinois. (Photo by Scott Olson/Getty Images)
Marketing Strategies
Breweries are now trying to broaden nonalcoholic beer’s appeal to win over more habitual beer drinkers. There’s been a shift in marketing. Nonalcoholic beer ads used to lean heavily on responsibility and reducing alcohol consumption. Heineken 0.0 ran a spot featuring Formula 1 superstar Max Verstappen promoting designated driving. Now brands pitch nonalcoholic beer as a casual, anytime drink. Heineken’s newer “0.0 Reasons Needed” campaign encourages people to drink it whenever they want, with no explanation required.
Improving Taste and Quality
Nonalcoholic beer used to be a category dominated by options such as O’Doul’s, owned by AB InBev, and similar legacy brands. These brews often struggled to win fans because the process of getting rid of the alcohol included heating up the beer, which muted flavors. Brewers have been investing in new techniques to improve taste. At AB InBev’s research center in Belgium, scientists have spent more than a decade refining nonalcoholic brewing. The company now removes the alcohol using low-temperature methods, then adds back key aromas to preserve more of the original flavor and smell. Company founder Bill Shufelt shows a can of beer at Athletic Brewing’s nonalcoholic brewery and production plant on March 20, 2019 in Stratford, Connecticut. (Photo by Spencer Platt/Getty Images)
Investment and Growth
AB InBev has also launched alcohol-free versions of Budweiser, Stella Artois and Corona. In May, Chief Executive Officer Michel Doukeris told investors that its nonalcoholic portfolio was growing more than 30%. Corona Cero was the first ever beer sponsor of the Olympics at last year’s games in Paris. Diageo has invested more than 60 million euros (about $70 million) in Guinness 0 production since the product launched globally in 2021. In the US, Guinness 0 made up more than half of the Guinness brand’s growth last year, the company said.
Conclusion
The nonalcoholic beer market is growing, but its future remains uncertain. While brewers are investing heavily in the category and improving the taste and quality of their products, it remains to be seen whether nonalcoholic beer will become a sustainable category or just a fad. With the industry struggling to find growth, nonalcoholic beer is one of the few remaining options for large brewers to adapt to changing consumer habits.
FAQs
Q: What is the current market share of nonalcoholic beer?
A: Nonalcoholic beer is currently around 2% of the global beer market’s volume.
Q: What is the projected growth rate of nonalcoholic beer?
A: IWSR projects annual gains of about 8% through 2029.
Q: Why are brewers investing in nonalcoholic beer?
A: Brewers are investing in nonalcoholic beer as a way to adapt to changing consumer habits and find growth in a struggling industry.
Q: How are brewers improving the taste and quality of nonalcoholic beer?
A: Brewers are investing in new techniques to improve taste, such as using low-temperature methods to remove alcohol and adding back key aromas to preserve the original flavor and smell.
