On- and off-premise retailers are rapidly expanding their offerings of what has emerged as the hottest beer segment of 2023. “We’ve doubled the amount of space we allocate to non-alcohol beers (NABs) in the last year,” says Richard Williams, beer, wine, and spirits buyer at the four-unit Oliver’s Market grocery chain in northern California. “We now stock close to 30 SKUs, but that number is changing weekly.” At Cheers Liquor Mart in Colorado Springs, Colorado, nearly 60 different NABs are already available, but general manager Kyle Thruston notes offerings are expected to increase substantially this year as new brands enter the market. And in Chicago, at Beard & Belly bar and restaurant, NAB selection has also grown. “We used to carry only two, but now we have upwards of five in a variety of flavors,” says co-owner Kyle Schrage.
While still accounting for only a small share of category sales (in the low single digits, industry members say), non-alcohol beers are booming. According to market research firm IRI, multi-outlet sales of NABs increased 9% to 8.8 million cases for the 52 weeks ending on January 29, 2023, and dollar sales surged 19% to $285 million. With total beer struggling to add volume, non-alcohol brews are gaining share. Moreover, de-alcoholized wine and spirits are also expanding, according to Impact Databank, although at much lower volume levels, indicating a broad movement toward moderation.
Convergence Of Factors
Marketers of NABs and retailers point to a convergence of factors for the recent surge in sales of the products, some of which have been available for decades. Kelly Bivens, senior brand manager for Samuel Adams at Boston Beer Co.—which launched Sam Adams Just the Haze NAB two years ago—points to “younger drinkers looking to reduce overall alcohol consumption,” as well as a general consumer base seeking an overall healthier lifestyle. “Health and wellness are a megatrend,” adds Bill Shufelt, co-founder of Athletic Brewing Co., the Connecticut-based marketer of a wide assortment of non-alcoholic brews. He notes that instant access to information that assists consumers in making healthy choices—including smartphones, podcasts, and fitness wearables—is enhancing the movement.
The Covid-19 pandemic has also contributed to the NAB boom. “The larger non-alcohol trend started to pick up right before the pandemic and has continued to grow ever since,” says Daniel Blake, group vice president of mainstream brands at Anheuser-Busch InBev, which produces Budweiser Zero. “Thanks in part to this growing sober-curious trend, we’re seeing a steady increase of consumers taking interest in no- and low-alcohol products, which affords them a way to maintain a more balanced lifestyle.” Schrage from the Beard & Belly, which offers craft NABs for $5 a 12-ounce can, says the recent surge in sales of the products could be due to increased drinking by many consumers during lockdown, and now “they’re either trying to quit altogether or cut back.”
Non-alcohol beers provide a good option for consumers who want to socialize at a bar or party but who don’t care to indulge or overindulge in alcohol. In many cases, the products are rotated into rounds of drinks, allowing consumers to pace themselves. At Sèchey, a Charleston, South Carolina bottle shop that sells only functional, alternative, and non-alcoholic spirits, wine, and beer, owner Emily Heintz points to consumers who are “alcohol-flexible” among those who purchase NABs. “They may start out the evening with a full-strength beer and then switch over to a NAB,” she says. Similarly, Brittney Freed, bar manager at Valley Tavern in San Francisco, which offers Heineken 0.0 ($6 a 12-ounce bottle) and Athletic’s Run Wild non-alcoholic IPA ($6 a 12-ounce can), says that while the products perform well early in the year as many consumers practice “dry January,” they provide a good option year-round for those times when customers “don’t want to drink but they still want to go out and mingle.”
Consumer demographics for today’s NABs are wide ranging, marketers and retailers say, unlike decades ago when appeal was very targeted. “In the past, it was a preconceived consumer—someone who was sober or pregnant,” notes Levi Funk, co-founder of Wisconsin’s Untitled Art Brewing, which markets a variety of NABs. “But today, it’s craft beer consumers who are enjoying these products.” Eric Franco, vice president of U.S. sales for BrewDog, marketer of a range of NABs, adds that the products are pulling from the rest of the non-alcoholic beverage space, including soft drinks, kombucha, and even water. Heintz from Sèchey, which stocks as many as 15 NABs, priced at $15-$20 a 4-pack of 12- or 16-ounce cans, counts baby boomers, Gen X, and Gen Z consumers as purchasers of non-alcoholic brews.
The wide breadth of non-alcohol beers now available is also helping to drive the segment’s growth. Styles range from lagers to stouts to IPAs to sours. Indeed, Untitled Art plans to introduce a non-alcoholic Oktoberfest this year, Funk reveals. Chad Holloway, director of beer for Florida’s ABC Fine Wine & Spirits, applauds the innovation. “These aren’t our parents non-alcs,” he says. “And they’re pretty darn tasty.” That quality is aiding the brews, Holloway adds, in premium marketing imagery as well as product. “Getting NABs away from below premiums, which is where they were relegated in the past, is key,” Holloway says. “It’s a segment that should be celebrated, not hidden.”
According to IRI, Budweiser Zero was the top-selling NAB for the 52 weeks ended January 29, 2023, with volume of 1.74 million cases, a 20% increase from the year prior. “Our goal is to destigmatize zero-alcohol products,” says Blake, adding that Budweiser Zero, which counts former NBA star Dwyane Wade as a founding partner, “brings familiarity and credibility into the category.” In the first half of the year, the brand was supported with a mail-in rebate promotion. Athletic Brewing’s volume, meanwhile, is also surging. Shufelt says total shipments reached 2.3 million cases (including e-commerce sales) in 2022, and the company’s products are now available in all states. Last year, Keurig Dr. Pepper took a $50 million minority stake in Athletic, a move which Shufelt calls a “building and learning partnership.” The natural foods and grocery channels are key outlets for the company, while its brands are also found in some 10,000 bars and restaurants around the country, including chain accounts like Buffalo Wild Wings, Top Golf, and the Four Seasons hotels and resorts. Earlier this year, Athletic launched draft beer sales in a few markets, and the company sees big opportunity. “Draft beer provides a point of entry,” Shufelt explains, as bar operators can easily offer samples to consumers. Beyond sampling, the Athletic portfolio of non-alcoholic brews is supported with grassroots marketing, with TV and out-of-home support layered in, he notes.
While Athletic has emerged as the leading craft brewer of non-alcoholic beers, the floodgates have opened for the segment. “This year alone, we’ve already seen several brands release non-alcoholic beer options and imagine this trend will continue,” says Boston Beer’s Bivens. “As this category continues to gain traction and momentum, we foresee other craft brewers jumping on the train.” She adds that investment behind Just the Haze has doubled since last year and that it remains a “pivotal pillar for 2023” for the brewery. Indeed, earlier this year, Sam Adams added Gold Rush non-alcoholic golden lager to its portfolio, and Bivens indicates that may not be the last addition.
BrewDog, meanwhile, first began offering non-alcoholic brews in Europe in 2009, Franco says, and ten years later they were expanded to the U.S. Thanks to the ability to sell the drinks online, BrewDog’s NABs can be shipped to 44 states. Similarly, Untitled Art offers its NABs—which include a variety of styles—online, along with distribution in more than 20 states, Funk says. Craft brewers and retailers see big opportunity for craft NABs going forward. “Craft brewers have brought the same skills that they employ for full-strength beers to NABs,” Franco says. Thruston from Cheers Liquor Mart adds that while older consumers are more attracted to NABs from major domestic and imported brands, “the younger crowd is experimenting with the more specialty craft options. The creative styles from craft brewers are exciting these consumers.”
Established imported brews have also gotten into the NAB space in recent years. According to IRI, dollar sales of Heineken 0.0 surpassed those of Budweiser Zero at $71.3 million for the 52 weeks ended January 29, while case volume landed just slightly below. Launched in the U.S. in 2019, Heineken 0.0 received major attention earlier this year when it was supported with a 30-second ad during the Super Bowl. Molson Coors Beverage Co. launched Peroni Nastro Azzurro 0.0% earlier this year in 20 markets. The Italian brand “aims to be the most premium non-alcoholic lager yet,” says Cara Lauritzen, senior marketing manager of above-premium imports, and to piggyback off of the full-strength Peroni brand’s double-digit revenue gain in 2022.
Guinness 0, meanwhile, was introduced by Diageo Beer Co. in 2022. “Consumer response has been overwhelmingly positive,” says Guinness brand director Mark Phillips. “Guinness 0 aims to delight consumers who are looking to enjoy everyday drinking occasions with a bold, full-flavored non-alcoholic option inspired by Guinness draft.” Indeed, the brand received a bit of the Hollywood spotlight recently as it was used in the filming of the Academy Award-nominated film, “The Banshees of Inisherin.” Other NAB offshoots of established imports include Stella Liberté and the recently launched Corona non-alcoholic brew.
While retailers cite strong trends for NABs, they note that promotional and merchandising support drives sales even farther. Oliver’s Markets and Cheers Liquor Mart, for example, both feature the products in weekly ads. Thruston notes that the Colorado store—where NABs are priced from $11 a 6-pack of cans or bottles to $30 a 12-pack—has also put up a few displays. “Customers are always surprised to see the number of choices they have now,” he adds. Similarly, at Florida’s ABC—where non-alcohol brews range from $7 a 6-pack to $21 a 12-pack, and selection can include up to 40 SKUs—the products have been featured in cross-category displays with non-alcoholic wines and spirits, Holloway says.
Retailers and marketers of NABs don’t see segment growth abating anytime soon. Lauritzen points to an expected global average annual growth rate of 8% for the next five years. Shufelt, Funk, and Franco all say that a 20% share of the beer category is also possible. “This trend won’t go away,” Franco says. “It’s more than just a trend. It’s a lifestyle.”