https://www.economist.com/business/2021/07/07/alcohol-free-beer-is-fizzing

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BusinessJul 10th 2021 edition

Buzzkill
Alcohol-free beer is fizzing

It is no longer the preserve of the pregnant or religious

[20210710_WBP002]
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Jul 7th 2021

PARIS

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FOR THE 10,000 years or so it has been around, beer has been relied
upon both to refresh and intoxicate. Today's brewers think it could
thrive by focusing exclusively on the refreshing. Alcohol-free beer
is the booze industry's latest great hope as sales of the
full-strength stuff have stagnated. If Heineken and other brewing
giants have their way, tipplers will be knocking back pints from
breakfast on.

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Beers with no (or little) alcohol have been sold for decades. But
even their pedlars admitted they tasted flat. They were aimed at
those who craved a proper beer but couldn't indulge: the pregnant,
religious or designated drivers. Multinational brewers saw them as
"distressed purchases" and sold them under separate brands far
removed from flagship marques.

No longer. Even before the pandemic shut the world's bars,
beer-drinking was on the slide, in part owing to health-conscious
millennials bingeing less often. Booze barons concerned about losing
sales to soft drinks invested in ways of making alcohol-free beer
taste better. This has started to pay off. Though nobody sober would
confuse an alcohol-free brew with the real thing, it is now a
credible draught. The product is good enough for mega-brands, from
Japan's Asahi to America's Budweiser (part of AB InBev, the world's
biggest brewer), to offer a "0.0" variant.

Part of the brewers' interest stems from boozeless beer's frothy
margins. Making the stuff is actually more expensive than making a
straight-up Stella. The process usually involves taking a finished
alcoholic beer and stripping away the booze (brands guard their
methods closely). The expense is, however, more than compensated for
by the savings on alcohol excise duties that are no longer owed. It
helps that consumers appear to be willing to pay roughly the same
price whether a beer contains alcohol or not.

Beer that is entirely alcohol-free continues to be niche. "At the
moment, alcohol-free beer is still something you drink when you can't
drink," says Trevor Stirling of Bernstein, a broker. Only 2.4% of
beer sold globally this year will be non-alcoholic, according to
Euromonitor, a research firm. Still, that is up from 1.5% a decade
ago, in part because traditional beer has slipped. Much of the growth
in 0.0 sales has come from places that consume lots of beer already,
notably Europe.

The aim for brewers is therefore to reposition their virtuous
offerings not as beer at all, but as a premium soft drink for
grown-ups. That would give them a toe-hold in a business that is, by
volume, nearly four times as large as beer.

Indeed, many brewers believe that their booze-free products can
refresh the parts of the market regular beers cannot. Bram
Westenbrink of Heineken says only a fifth of its 0.0 drinkers would
otherwise have plumped for a normal beer. The Dutch giant has pitched
its alcohol-free brand as a suitable tipple for the office, gym and
car. (It is also targeting more traditional beer-drinkers by
sponsoring the European football championship now under way.)

The beer giants also think their investments in deboozing give them
an edge over upstart rivals. Craft brewers, which have thrived in
recent years, work in small batches for which stripping away alcohol
is uneconomical. Their hoppy flavours rely on plentiful alcohol
content to satisfy drinkers, unlike the blander lagers that dominate
supermarket shelves. AB InBev is aiming for at least 20% of its sales
to come from no- and low-alcohol beers (typically below 3.5% alcohol
by volume) by 2025, triple the current share. Heineken already has
130 0.0 products in its range.

Governments and socially minded investors like to see beermakers
offer alternatives to alcohol. Far from damaging a brand, having a
0.0 product is now a signal of a mature marque. Brewers have long
tried to shift perceptions of beer as a laddish 1980s drink, fit only
for football fans looking to get bladdered. Craft beers were one way
to do that, but often turbocharged hangovers because of their high
alcohol content. Now the industry is going the other way. How
refreshing. #

A version of this article was published online on July 7th 2021

This article appeared in the Business section of the print edition
under the headline "Buzzkill"

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