AB InBev's CEO predicts a bright future for low- and no-alcohol beers
AB InBev plans to expand its no-alcohol and low-alcohol beer offerings so customers have more choices, according to FoodBev.
CEO Carlos Brito said during a fourth-quarter earnings call March 1 that no-alcohol and low-alcohol products now make up about 8% of the company's total portfolio. Brito said the beer giant plans to have about 20% of its sales volume coming from its low- or no-alcohol portfolio by 2025, the publication reported.
Brito noted the U.S. market hasn't seen as much activity in this area from the company because it has been busy with other products while the testing of no-alcohol and low-alcohol items goes on in other markets. "You can be sure that some of those things will be migrating to the U.S. pretty soon," he added.
AB InBev sees no-alcohol and low-alcohol beers as a promising growth area it can turn to as sales of its core products continue to slump in the U.S. And the beer giant may be right. A study it did in the U.K. in 2016 found nearly one-third of British consumers had tried alcohol-free beer and many couldn't tell the difference. That's important because many people still want the taste of beer even if doesn't contain the buzz-inducing alcohol.
The recent trend toward these products is being driven by millennials, many of whom want healthier beverages, along with anybody else who wants to cut back on alcohol for a variety of reasons yet still appreciates beer flavor. Taste doesn't have to be sacrificed in the production of low-alcohol and no-alcohol beer, according to some craft brewers who have entered the market. They say their products have a full flavor because they're made without alcohol rather than being produced in the usual way and then having the alcohol removed.
Beer companies also stand to benefit from producing no-alcohol and low-alcohol products since the retail price is the same as regular alcohol beers, but they aren't taxed as heavily.
AB InBev said in 2014 it had a responsibility to encourage consumers to make smart drinking choices by offering no-alcohol and low-alcohol product options, while also making health information available about the products. At the time, the company said it defined no-alcohol beers as containing between 0% and 0.5% alcohol by volume and lower-alcohol ones as having between 0.51% and 3.5% alcohol by volume. Regular beer typically has 5% alcohol by volume, and light beers usually have about 4.2%.
U.S. sales of no-alcohol and low-alcohol beer products have picked up and are doing better than the higher-alcohol category. According to GlobalData, their compound annual growth rate was 5.2% between 2010 and 2016, yet it was less than 1% for the beer sector as a whole during that period.
Several of the larger beer companies now have products in the sector, with Heineken launching its 0.0% MAXX last year and Coors offering its Non-Alcoholic brand. Guinness owner Diageo has Open Gate Pure Brew, and Carlsberg has been making no-alcohol beers since 2015.
If sales of these beers continue to increase and outpace regular beer products, it's likely we'll see even more no-alcohol and low-alcohol beers entering the market from both the big brewers and the craft breweries. With most large beer companies desperate to find ways to grow, these brews may be one way to do that.