Brewers tap the potential of non-alcoholic offerings

Amid a decline in overall consumption, beer giants are fueling growth with alternatives that speak to health and wellness trends.

Non-alcoholic beer

When it comes to regular beer sales, the outlook is a bit cloudy.

The Conference Board of Canada’s 2018 “Brewing up Benefits” report shows a decline in suds consumption in the country – at a rate of 10% over the past decade. But where some see the pint as half empty others see opportunities for growth in a subset of the category that’s moving north at a relatively good clip of late: non-alcoholic beer.

While non-alcoholic beer products accounted for only 1.2% of total beer sales in 2018, the category boomed in volume by more than 50% between 2013 and 2018, according to research by Beer Canada, the industry group whose members account for roughly 90% of the beer brewed in Canada.

Whereas there used to only be one or two alcohol-free brews on grocery store shelves, says Michael Mulvey, assistant professor of marketing at the University of Ottawa’s Telfer School of Management, large brewery conglomerates are now getting in on the action.

Within the last few years, Molson Coors added the Heineken 0.0 and Coors Edge labels, part of a move that could see it eventually offer a range of about half-a-dozen non-alcoholic and low-alcoholic products in the near future, according to CMO Martin Coyle. Then there’s Anheuser-Busch InBev, which in addition to having non-alcoholic versions of its Becks and Bavaria labels, launched Budweiser Prohibition Brew in 2016.

Not only is selection growing, but the way the products are being sold is changing, too.

The decision by Molson Coors to launch the sale of Coors Edge on Amazon in July 2018 – which the company claims is a first – could be an indication of the beverage’s broader appeal. And large brewers have been investing in expensive TV advertising, evidence that they are starting to put their money behind non-alcoholic beer, according to Mulvey. Coors Edge’s latest campaign, which launched in February, humorously featured a juror shocking a courtroom by cracking open a cold one and then announcing “it’s non-alcoholic.”

The category’s growth is rooted in trends occurring across CPG, namely health and wellness, according to brands who operate in the space.

Todd Allen, Labatt’s VP of Marketing, says the category “had a lot of historical baggage” when Budweiser Prohibition first launched: it was perceived as appealing only to people with substance abuse problems, or to pregnant women. Part of the idea behind the new brew was to address the stigma about the category and encourage “smart drinking” on a global scale. It was a first step in a transformation that could see AB InBev achieve 20% of its sales volume from no-alcohol or lower alcohol (between 0.51% and 3.5% ABV) beverages by 2025, VP of marketing Kyle Norrington, now president, said at the time.

Since then, not only has the alcoholic alternative “been doing very well” for Labatt, Allen says, but the majority of the volume is coming from the 19 to 35 segment, because it has played well with young and increasingly health-conscious beer drinkers.

The company has since partnered with American events promoter LiveNation to offer Prohibition sampling during the Calgary Stampede, as well as events at popular destinations and venues – Toronto’s Budweiser Stage, Montreal’s Mont Tremblant ski resort, and Wasaga Beach along Ontario’s Georgian Bay – to help bring the beverage to those audiences.

Declines in the traditional beer category have led brands to expand their portfolios, often with new non-alcoholic or ready-to-drink offerings. As brands place their bets on fueling growth through beer-drinking occasions, such as meals, and new consumer segments, such as women, the same can be said about the quickly expanding alcohol-free category, says Mulvey. For consumers, it could be a matter of playing the good host, and for brands, about telling a story about providing a healthier option to a guest.