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Non-alcoholic beer is having a moment

Daniel Roberts
Editor-at-Large

Heineken, the world’s second-biggest beer giant, beat expectations with its Q4 2019 earnings on Wednesday, driven by an 8.3% sales surge for the core Heineken brand. That was the best single-year growth the Heineken brand has seen in a decade.

And the biggest gainer was Heineken’s (HEINY) portfolio of non-alcoholic beers, which saw double-digit sales growth.

Heineken’s global “no alcohol” portfolio includes Heineken 0.0, Affligem 0.0, Amstel Radler 0.0, and Cruzcampo 0.0. The industry rule for the “non-alcohol” label is 0.5% alcohol by volume (ABV), and 0.51% to 3.5% ABV for “low alcohol.”

Heineken does not break out the sales of its individual beers, but it disclosed that Heineken 0.0 saw mid-double-digit growth. The brand first launched in Europe in 2017, then in the U.S. in 2019, and is now selling in 57 markets. Heineken says its global master brewer Willem van Waesberghe worked on the product for 15 years to get it just right.

The U.S. marketing blitz for Heineken 0.0 in the last year included a campaign with Andy Roddick at the US Open in August, an on-air integration with “The Daily Show with Trevor Noah” on Comedy Central, a partnership with Nike master trainer Alex Silver-Fagan, and a limited-edition “Dry January” 31-pack. It’s also the official beer of the UEFA Euro 2020 soccer tournament. In the spring, Heineken 0.0 will run a James Bond promotion timed to the new movie “No Time To Die.”

The blitz has worked, and the non-alcoholic brew has been a giant hit.

“We expect to see this segment continue to grow,” says Heineken spokesperson Dayna Adelman, “and we believe this can be attributed to the continuous rise of wellbeing, mindful drinking, and living a balanced lifestyle amongst consumers.”

MONTMELO, SPAIN - MAY 14: A 'Heineken 0.0' is served at the Heineken 0.0 grandstand, celebrating the launch of the zero alcohol beer 'Heineken 0.0' during the Spanish Formula One Grand Prix at Circuit de Catalunya on May 14, 2017 in Montmelo, Spain. (Photo by Alex Caparros/Getty Images for Heineken)

It isn’t just Heineken.

The research firm Morning Consult said in August that 46% of American adults have now purchased a non-alcoholic beer or cocktail, and that the trend is “led not by teetotalers but by drinking adults.”

In a Morning Consult survey in July, 40% of 1,166 U.S. adults surveyed said they are drinking less than they were five years ago—that number is up from 31% when Morning Consult asked the same question just one year earlier. The trend has been a huge boon to low-alcohol and non-alcohol beers, and all the big names have jumped in.

Last year Peroni, owned by Asahi (ASBRF), launched Peroni Libera 0.0. This year Carlsberg (CABGY) replaced Carlsberg 0.0 with a new zero-alcohol beer called Nordic. Anheuser-Busch InBev (BUD) in just the last three months has launched four new low- or no-alcohol beers: Goose Island So-Lo IPA (3% ABV); Four Peaks Brewing Gilt Lifter Ale (3.4% ABV); Breckenridge Brewery Resolution Blueberry Acai Golden Ale (3.5% ABV); and Golden Road Brewing Mango Cart Wheat Ale (less than 0.5% ABV).

AB InBev also owns the existing non-alcoholic household names Beck’s and O’Doul’s, and last year launched a zero-alcohol Leffe. The world’s biggest brewer says it has “set a goal of 20% of global beer volumes to come from non- and low-alcohol products by the year 2025.”

That’s not to mention the smaller craft brewers: Athletic Brewing Co., founded in 2018 and based in Stratford, Conn., has targeted athletic millennials and is putting out more than 10,000 barrels per year, a huge volume for a craft brewer. The brand scored a coup when it got into MetLife Stadium in New Jersey this past NFL season. On its web site, founder Bill Shufelt writes that he created the brand after he decided to stop drinking but then noticed “limited non-alcoholic options (at best) to fit my new healthy, active lifestyle... The only options were flavorless, watery, metallic in taste, and came with punchlines of decades-old jokes. The void in the market was clear.”

So, why the non-alcohol beer boom now, where there was a social stigma in the past?

Beyond the general rise in consciousness around health and fitness, Heineken USA CMO Jonnie Cahill says the appeal of N.A. beers is for the many moments throughout a week “when you’d love a beer, but life is going on. You have to pick up the kids at soccer... or you have a big meeting tomorrow... it might be on a Monday night when you’re watching football at 11:00.”

The hard seltzer boom has been borne out of the same factors: young people seeking a drink with fewer calories and lower alcohol content. That category has exploded fast and includes, just to name a few: Bud Light Seltzer (from AB InBev); Bon & Viv (also AB InBev); Truly (Boston Beer); White Claw (owned by Mark Anthony Group, the owner of Mike’s Hard Lemonade); Henry’s (MillerCoors), and more.

The success of Heineken 0.0 feels hard-seltzer adjacent. Heineken has not jumped into the hard seltzer craze yet, but the company tells Yahoo Finance, “We are observing with care.”

Daniel Roberts is an editor-at-large at Yahoo Finance, and often covers the beverage business. Follow him on Twitter at @readDanwrite.

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