Non-alcoholic beer as a trend started spreading through America and Europe some two to three years ago in earnest, and now Australia is set to follow. While consumers reasons for shifting to a non-alcoholic option coincide with a global health and wellness culture shift, for operators’ non-alcoholic beer has a clear advantage; it is more profitable and meets a rapidly growing consumer demand.
The increase in non-alcoholic beer consumption is exponential. A recent study of Australian adults showed that one-third said they had reduced how often or how much they drank in the past year and 29% said they had reduced the frequency of their drinking, with 6% kicking the habit for good. While there is a decline in those wanting alcoholic drinks, there isn’t a lost appetite for social hubs to drink in, nor non-alcoholic versions of beer and wine.
Sales of non-alcoholic drinks have risen 57% in Europe over the past five years and sales of European non-alcoholic beer rose to reach nearly €900 million in 2017. While the shift isn’t as clearly defined in Australia yet, mid strength beer makes up 14% of the total beer market. Brewer AB InBev’s predicts that 20% of the world’s beer production volume will be non-alcoholic or low alcoholic by 2025 and Heineken’s flagship non-alcoholic beer is set to challenge Coca Cola as the in-venue non-alcoholic drink of choice.
Coca-Cola seems to be sensing that threat and has reacted by acquiring kombucha business, Organic & Raw Trading Co, which makes the MOJO brand of organic, naturally fermented kombucha. Kombucha’s popularity across Australia s demonstrated by Nielsen Homescan data which shows that carbonated soft drink sales have fallen 0.5 per cent and kombucha sales have risen 174 per cent over three years. Other big brands are also changing strategy with Diageo advocating an alcohol-free gin alternative and Budweiser brewer Anheuser-Busch InBev selling spiked coconut water.
The trend goes beyond just selling non-alcoholic beers, wines and cocktails. In Ireland, the well-known home of Guinness and pub culture, the move to non-alcoholic evening venues has already begun. The Virgin Mary bar is set to be Ireland’s first permanent alcohol-free bar opening in Dublin in February 2019. Its co-owner highlights the rise in the number of people wanting a similar social situation to a bar, without the alcohol “We want it to have everything you’d expect from a bar – a premises that looks, sounds and tastes like a bar, but without the booze. We want customers to feel that they are not missing out.”
While consumers are looking to lower their drink’s alcohol level, they’re not looking to change the bar experience; whether the target market is a millennial looking to capture Instagram friendly snaps at the bar, or an older customer wanting the authentic taste and texture of an alcoholic beverage. To fully capitalise on the trend, operators need to make sure there is a diverse range of options by offering packaged and on tap varieties to preserve the in-venue experience has never been so vital. The price point will also be important.
For manufacturers, although making non-alcoholic beer is more expensive it can be significantly more profitable as it doesn’t attract the same excise taxes alcoholic beverages attract. With the same price point as regular, alcoholic beer, margins can be higher. With big brands including Heineken, Beck’s and Budweiser already shifting a significant focus to their non-alcoholic offerings, a tidal change is on its way and it’s a wave Australian bar operators need to catch. To remain relevant and on trend, operators need to at least offer packaged and on tap non-alcoholic beer offerings to attract the drivers, the health conscious and the parents who need to take their kids to sports in the morning. These options will increasingly become a factor in venue selection when deciding where to go for a night out.
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