- Anheuser-Busch InBev is betting on growth for low- and nonalcoholic beer as more consumers, including beer drinkers, push for healthier lifestyles.
- AB InBev predicts low- and nonalcoholic beer will comprise 20% of its sales by the end of 2025.
- Beer containing up to 2.8% alcohol by volume claimed a 2.5% market share in 2014, but the category posted annual growth of 4% to 6%. The beer industry overall only grew 1% in that time frame, according to Plato Logic.
AB InBev's projected growth target seems high compared to current consumption rates. But if the company can capitalize on key trends and incorporate the right ingredients and processing methods to create a desirable flavor, such growth could become a reality. Brewers' attempts at nonalcoholic beers have flopped in the past, but with new processing innovations, they may be able to make consumers believe they're drinking an actual beer -- without the alcohol.
This could be a huge development for reaching new consumers and appealing to current drinkers' motivations for a healthier lifestyle. Nonalcoholic beverages is a relatively untapped market for AB InBev, and category growth for beverages continues. U.S. liquid refreshment volumes increased by 2.8% in 2015, outpacing 2.2% growth in 2014, according to data from the Beverage Marketing Corporation.
While expanding into low- and nonalcoholic beer could impact other existing AB InBev brands, that's not necessarily a bad scenario for the company as a whole. Brewers can charge the same price or even more for nonalcoholic beer, while reducing or avoiding excise taxes. That means higher margins per product in addition to potential sales growth by attracting new consumers that don't drink alcohol.
And with craft brewers taking the lead in innovation and expansion into higher-ABV products, that leaves major brewers like AB InBev to find other potential growth segments. However, a move by AB InBev into this category could pressure more craft brewers to also enter the nonalcoholic beverage arena too. Some already have, particularly in products like root beer and craft soda.
A shift into low- and nonalcoholic beers may also be crucial as AB InBev and other brewers start rolling out beer packaging with information about ingredients, calorie counts, alcohol content by volume and other factors that could impact purchase decisions. The Beer Institute announced the voluntary labeling and transparency initiative earlier this week, and major brewers that together produce more than 81% of beer sold in the U.S. have already committed to the labeling changes.