Non-alcoholic beer is booming as Gen Zers stay sober, and brewers like AB InBev look to the Paris Olympics to cash in

Beer bottles adorned with the five Olympic rings are already rolling off the production line at Anheuser-Busch InBev NV’s brewery in Belgium, in preparation for the Paris games this summer.

It’s been 100 years since the French capital last hosted the Summer Olympics, and the city wants to make a mark after Covid meant the Tokyo Games were held in virtually empty stadiums. And now, for the first time there will be a beer sponsor for an event that showcases the pinnacle of human sporting achievement.

But in this case, the drink, Corona Cero, does not contain alcohol.

The largest brewer in the world has decided to announce to billions of sports fans a non-alcoholic product launched in Europe just two years ago. AB InBev hopes to use the Paris Games – expected to be one of the biggest marketing bonanzas the Olympics have ever seen – to improve its position in the only part of the global beer industry that is actually growing.

Valued at $13 billion and counting, brands from Heineken to Guinness, and now Corona Zero, see a cohort of health-conscious consumers (many young, some older, and wanting to get out of alcohol culture) whose wallets they can take advantage of.

Brewmasters have been working on formulas to try to replicate the taste and texture of the real product. Heineken, Guinness and Budweiser are now available non-alcoholic, while hundreds of craft breweries and newer labels are emerging to target the market.

For Michel Doukeris, CEO of AB InBev, it’s pretty simple: “The consumer has changed.”

Non-alcoholic beer, or beer with an alcohol content of less than 0.5%, is a small corner of the market: its 31.4 million hectoliters a year dwarf the 1.93 billion hectoliters of alcoholic beer, according to GlobalData Plc. But it has had a compound annual growth rate of 3.6% since 2018, compared to 0.3% for alcoholic beer. In the United States, the number of adults ages 18 to 34 who say they drink has fallen from 72% in the early 2000s to 62%, according to Gallup.

Those are numbers companies can’t ignore, especially AB InBev. It is already behind and says it will miss the target of 20% of sales coming from low- and no-alcohol beer by 2025.

“There are a lot of sporting events like the Olympics where the flagship brands tend to be the 0% variant,” said Susie Goldspink, head of low and no alcohol analysis at market research firm IWSR. “That’s partly because it’s a growing area, but it also helps with their moderation and responsible consumption agenda.”

There is also a broader benefit for brewing companies. Because their non-alcoholic versions often share the same name and labeling as the original beer, promotions help brand awareness and allow companies to circumvent increasingly strict restrictions around alcohol advertising.

The Olympics are part of a trend of promoting non-alcoholic beers through sport, including Heineken 0.0 with Formula 1 and Diageo Plc’s Guinness 0.0 in the Six Nations rugby tournament. Carlsberg A/S handed out 400,000 cans of non-alcoholic French beer Tourtel Twist at the Tour de France cycling race last year.

And in a sign of competition between brands, Carlsberg is positioning Tourtel Twist as the non-alcoholic beer of choice at the Paris Games.

“We are the official beer of Paris and France,” said Jacob Aarup-Andersen, CEO of Carlsberg. “They are the official beer of the Olympic movement. At events they will serve you Tourtel.”

Athletic Brewing Co., based in the United States and selling only non-alcoholic beverages, says Olympic sponsorship benefits the entire category.

“Sometimes to move the needle you need bigger players who can help raise awareness,” said John Walker, the company’s co-founder.

For beverage companies, there is a pressing need to keep up with the changing trends that have already proven to be the death knell for many businesses. More than 7,000 pubs in the UK have closed in the last decade, according to the British Beer and Pub Association. While alcohol taxes, rents, costs and regulations played a role, so did changes in drinking habits.

As consumers, particularly the social media-driven demographics of Generation Z and millennials, look to moderate their alcohol consumption, it is better to have a viable and attractive offering rather than have them turn to a rival brand, a soft drink or water.

Heineken 0.0 is the global non-alcoholic beer market leader, according to GlobalData. Other big sellers are Japan’s Suntory All-Free and Brahma 0.0%, owned by AB InBev.

The world’s oldest operating German brewery has been producing non-alcoholic beers since the early 1990s. But in 2020, thanks to increased demand, Bavarian-owned Weihenstephan more than doubled its non-alcoholic beer capacity, betting for future growth. Today, its non-alcoholic wheat beer represents almost 10% of sales and its third best-selling product.

But all the promotion in the world can only go so far if non-alcoholic beer is no good.

Until relatively recently, non-alcoholic beer compared poorly to the original, leaving drinkers dissatisfied. For brewers, there was a technical conundrum: how to achieve depth of flavor without alcohol. Do you prevent the beer from forming alcohol during the fermentation process or do you remove it after brewing an undiluted version?

According to Jim Koch, president of Boston Beer Company, which brews Samuel Adams, advances in flavor have only been possible in recent years when brewers discovered a low-temperature distillation process. The brewer introduced its own non-alcoholic product, Just The Haze, in 2021.

Launched in 2017, Heineken 0.0 is made with water, barley malt, hop extracts and yeast, the same ingredients used for Heineken. The alcohol is then removed by vacuum distillation, after which the natural flavors and aromas are remixed to make the flavor more like the original.

“For a couple of years I refused to start developing Heineken 0.0,” said Willem van Waesberghe, global brewmaster at Heineken. “Because I’ve never had a good one.”

The Olympic Games will begin in two months and the opening ceremony will take place on July 26. AB InBev will soon release details of its campaign, which it hopes to “accelerate the growth of non-alcoholic beer.”

Beyond that, having non-alcoholic beer on tap is expected to be the next leap in terms of volumes, increasing bar sales by making the drinks more socially acceptable. It’s yet another technical challenge, but one that the brewers are working on.

“It’s like rosé in the south of France is always better than at home,” Waesberghe said. “And in a bar you like the draft, it gives you the impression of authenticity.”

–With assistance from Tiffany Kary.

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