Analysis: Top Brewers Toast To Relaxing Pandemic Restrictions With Alcohol-Free Beer

  • The pandemic hits sales of alcohol-free beers
  • The best brewers are betting on zero alcohol to regain market share
  • Heineken and AB InBev say they have broken the taste barrier

BRUSSELS / NEW YORK, July 20 (Reuters) – While many drinkers may celebrate the easing of pandemic restrictions with a beer or a glass of wine, the world’s biggest brewers will be urging them to try new alcohol-free lagers.

After losing market share to craft beers and hard seltzer waters – or alcoholic sparkling water – top brewers like AB InBev and Heineken are betting on a new generation of non-alcoholic beers to help regain ground by harnessing trends in healthy living.

But the pandemic has canceled business lunches, gutted sports facilities, and left no one back from parties or bars – all prime territories for selling non-alcoholic drinks.

Global sales of alcohol-free beer fell 4.6% in 2020 in value to $ 11.6 billion after an average annual growth of 9% over the previous four years, according to market research provider Euromonitor International .

The end of restrictions in the United States and Europe now allow brewers to entice drinkers to try new alcohol-free versions of their top-selling brands – which they say will be crucial to increasing sales.

“The biggest hurdle for consumers is expectations because they don’t expect it to taste good,” said Borja Manso-Salinas, vice president of marketing for the Heineken brand in the United States. .

During a sampling session at Pier 17, a concert and dining venue in lower Manhattan this month, Heineken (HEIN.AS) broke that barrier for some passers-by, including Cary Heinz who brought a Heineken regular from a neighboring booth to compare.

“I can’t tell the difference. And I’m a real drinker,” he said, a can in each hand.

Previously, many zero beers were cooked efficiently to evaporate the alcohol, spoiling the taste. Brewers now often use a vacuum chamber to let the alcohol evaporate at a lower temperature and sometimes seek to blend the escaped esters that are at the heart of the flavor.

The world’s second-largest brewer launched Heineken 0.0 in the United States in 2019 and planned to give out 10 million free cans last year, but managed less than half due to the pandemic.

The Dutch brewer believes he will be back in 2021, with around four million free samples destined for offices alone. Other samples are intended for music festivals, apartment buildings and shopping malls.

Anheuser-Busch InBev (AB InBev) (ABI.BR), the largest brewer in the world and in the United States, also launched a zero version of its flagship Budweiser lager in the United States a year ago.

“Historically, one of the hurdles to overcome is taste,” said Todd Allen, vice president of global marketing for the Budweiser brand.

“It’s really important that people try the product.”


Cans of Heineken alcohol-free beer are on display during a sampling event at Pier 17 in the Seaport District of New York, New York, United States, July 15, 2021. REUTERS / Joyce Philippe

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Europe accounts for nearly three-quarters of alcohol-free beer drunk, according to market research firm InsightSLICE. In Spain, non-alcoholic beers represent 13% of all beer sales.

In Japan, where nearly 5% of beer sales are alcohol-free, brewers are launching new brands and predicting strong growth. Read more

However, the United States is almost virgin territory, with zero alcohol market share of just 0.5%, according to Euromonitor.

IWSR’s beverage market analysis indicates that 2019 was a turning point, with growth after three years of decline.

For the five years to 2025, non-alcoholic beer volumes in the United States have nearly tripled, far exceeding global expansion by around 60%, aided by new launches and health trends. Beer sales in the United States as a whole are down 18% over the same period.

Such growth could be vital for major brewers who have faced battles on two fronts in recent years – craft beers, which today make up some 12% of American beer, and hard seltzer waters, which have doubled their sales in the United States every year since the market took off in 2016.

Zero alcohol is different. Major brewers are trailblazers rather than late arrivals and their new products may take a slice of soft drinks rather than the core beer market.

Soft drinks also generally offer higher margins, with a higher cost of production offset by a lower excise tax.

Allen said the category performed proportionately better among the new generation of drinkers, a net positive.

Brewers point out that beer contains “natural” ingredients, unlike many carbonated drinks. Budweiser Zero campaigns also point out that it is sugar-free and has a calorie count of one-third that of regular Bud.

Consumers are no longer just drivers, teetotalers or pregnant women, say the brewers, most of whom also drink alcohol, but simply choose to abstain depending on the occasion.

Brewers see great potential in American sporting events, many of which ban the sale of alcohol towards the end of a game, but also see non-alcoholic beer entering new territory.

Trevor Stirling, senior beverage analyst at Bernstein Autonomous, said the key was for brewers to make non-alcoholic beer a lifestyle choice, such as replacing a morning soda at work, rather than just a beer substitute.

“It’s a huge opportunity, but difficult to do. They need to change the benchmark so that, for example, consumers see it less as a non-alcoholic beer but as a non-alcoholic drink that tastes like beer, a soft drink for adults. ,” he said.

Heineken CEO Dolf van den Brink estimates that alcohol-free beer could account for around 5% of the global beer market over time. It was around 2% in value in 2020, according to Euromonitor.

“The biggest mistake we could make would be to let go of the accelerator. We are only at the beginning of this journey,” he said.

Reporting by Philip Blenkinsop in Brussels and Joyce Philippe in New York Editing by Mark Potter

Our standards: Thomson Reuters Trust Principles.

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