Nonalcohol Beer Gains Momentum

Analyst says new brewing techniques, health consciousness driving the trend
Heineken nonalcohol beer case
Photograph: Shutterstock

NEW YORK — No- or low-alcohol beer (NoLo) has been around for decades, but it may finally be gaining momentum.

A report from Goldman Sachs’ analysis, including Managing Director Bonnie Herzog, said strengthening health and wellness trends are fueling the NoLo beer segment, which is “shaping up to be one of the most contested emerging beverage segments in the U.S.”

“We see the NoLo beer market developing into a significant and potentially highly incremental growth opportunity for brewers looking to further premiumize their portfolios, drive category-expanding innovation and capitalize on growing health and wellness trends,” she said.

Category leaders in alcohol like Heineken and Anheuser-Busch InBev are investing for several reasons, including new brewing techniques that solve the challenge of taking alcohol out of beer without sacrificing taste, stronger consumer interest in better-for-you products and low cannibalization risk as nonalcohol beer primarily is taking share from soft drink and water occasions, Herzog said.

COVID-19 has also accelerated consumer’s interest in healthy beverages.

The nonalcohol beer segment remains small in the United States, with about $580 million in retail sales a year compared to about $80 billion for regular beer, Herzog said. New York-based Goldman Sachs, however, estimates it could grow by a 25% compound annual growth rate and reach about $3 billion in retail sales by 2025. That would be about 3% of the total beer category, assuming nonalcohol beer quadruples its share of total U.S. beer over the next five years.

“We believe NoLo beer, in addition to hard seltzers could help return the total beer category volume to growth in the U.S.,” Herzog said. “While it’s difficult to gauge the early growth trajectory of the NoLo beer category, we think the strong success of the category in Western Europe (where it is already at about 5.7% of beer category volume versus about 4.4% five years ago) is a compelling sign.”

Heineken 0.0 and Bud Zero are brands doing well, especially among light beer drinkers, she said. The Boston Beer Co. is also launching a nonalcohol Just the Haze IPA in early 2021.

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