UK sales of low-alcohol and non-alcoholic beers have nearly doubled in five years as weaker versions of global brands such as Heineken and Budweiser have helped convert soft drink drinkers.
According to research group IWSR, drinkers in the UK bought $454 million worth of alcohol-free and low-alcohol beers in 2021, up from $240 million in 2016, as they took advantage of falling prices. consumption rates among younger generations and new marketing campaigns from global brewers.
This included $184 million of “alcohol-free” beers, which have 0.5% alcohol by volume or less, a figure more than triple the $52 million of such products sold five years earlier, even though the market overall beer has declined.
Bernstein analyst Trevor Stirling said the country had become “one of the hotspots” for the growth of low- and no-alcohol brewing.
“It’s an adult soft drink rather than a substitute for alcohol…the acceptance of the products is probably higher than I expected,” Stirling said.
UK innovations such as Brewdog’s Nanny State, launched in 2011, and Adams’ Ghost Ship, launched in 2012, have helped the UK market get a head start, he said.
Fernando Tennenbaum, chief financial officer of Anheuser-Busch InBev, said the world’s largest brewer is seeing double-digit annual growth in low-alcohol and alcohol-free beers, with milder versions of brands such as Budweiser, Corona, Becks and Leffe on sale in Great Britain.
“Until five years ago, no one was seriously investing in it. [low and no alcohol],” he said. “We’ve learned that it’s better to have extensions of mainstream brands than to develop new brands.”
Technology is changing, he said, with brewers now extracting the alcohol from the finished beer rather than stopping the process halfway. Low-alcohol and alcohol-free beers account for 3.1% of the UK beer market, the IWSR said, compared to 2.7% globally.
Heineken’s launch of the 0.0 version of its flagship brand in 2017 was a pivotal moment, analysts said, along with its decision to use the non-alcoholic version as a sponsor of the UEFA Europa League and Formula 1.
Emily Neill, head of research at IWSR, said promoting low-alcohol drinks was partly a business decision.
“What you’ve seen in markets like the UK and the US is that consumers are becoming much more health conscious. . . there is a higher proportion of young consumers who do not drink at all or who would like to moderate their consumption,” she said.
“The other point is . . . it’s a push by companies to address their ESG [environmental, social and governance] objectives, to really do something about the issues related to responsible drinking.
Non-alcoholic beers are often more profitable because they are not subject to excise duties, Stirling said, although Neill said higher production and storage costs could reduce this advantage.
AB InBev said six years ago it was aiming for low-alcohol and alcohol-free beers to account for a fifth of sales by 2025, a target it admits is unlikely. it is reaching, with approximately 6% of sales currently coming from products. . But Tennenbaum said the target served to “send a signal inside the company.”
Neill said the IWSR expected low-alcohol beverages to remain an “interesting niche” similar to specialty beers, rather than a large part of the market.
Additional reporting by Alice Hancock