UK sales of low-alcohol and no-alcohol beers almost double in 5 years

UK sales of low-alcohol and no-alcohol beers have almost doubled in five years as weaker versions of global brands such as Heineken and Budweiser helped convert drinkers from carbonated soft drinks.

Drinkers in the UK bought $454mn of alcohol-free and low-alcohol brews in 2021, up from $240mn in 2016, according to research group IWSR, as they tapped into lower drinking rates among younger generations and fresh marketing drives by global brewers.

This included $184mn of “alcohol-free” beers, which have 0.5 per cent ABV (alcohol by volume) or less, a figure more than triple the $52mn of these products sold five years earlier, even though the overall beer market shrank.

Trevor Stirling, analyst at Bernstein, said the country had become “one of the hotspots” for growth in low-alcohol and no-alcohol brewing.

“It’s an adult soft drink rather than a substitute for alcohol . . . the acceptance of the products is probably higher than I was expecting,” Stirling said.

UK innovations such as Brewdog’s Nanny State, launched in 2011, and Adnams’ Ghost Ship, launched in 2012, helped the UK market gain a head start, he said.

Fernando Tennenbaum, chief financial officer of Anheuser-Busch InBev, said the world’s largest brewer was recording double-digit annual growth in low-alcohol and no-alcohol beers, with softer versions of brands including Budweiser, Corona, Becks and Leffe on sale in the UK.

“Until five years ago no one was investing seriously in it [low and no alcohol],” he said. “We learned that it is better to have extensions of mainstream brands as opposed to developing new brands.”

The technology is evolving, he said, with brewers now extracting alcohol from finished beer rather than halting the process midway. Low-alcohol and no-alcohol brews account for 3.1 per cent of the UK’s beer market, IWSR said, compared with 2.7 per cent globally.

Heineken’s launch of the 0.0 version of its flagship brand in 2017 was a pivotal moment, analysts said, together with its decision to use the alcohol-free version as sponsor for the Uefa Europa League and Formula One.

Emily Neill, head of research at IWSR, said promoting low-alcohol drinks was partly a commercial decision.

“What you’ve seen in markets such as the UK and US is consumers becoming much more conscious of their health . . . there’s a higher proportion of younger consumers who don’t drink at all or would like to moderate their consumption,” she said.

“The other point is . . . it’s a push from the companies to meet their ESG [environmental, social and governance] targets, to actually do something about the issues around responsible drinking.”

Alcohol-free beers are often more profitable because they do not incur excise duty, said Stirling, although Neill said higher production and storage costs could cut into that advantage.

AB InBev said six years ago that it would aim for low-alcohol and no-alcohol beers to make up a fifth of sales by 2025, a target it admits it is unlikely to meet, with about 6 per cent of sales currently from the products. But Tennenbaum said the target had served to “send a signal inside the company”.

Neill said IWSR expected low-alcohol drinks to remain an “interesting niche” akin to speciality beers, rather than a large chunk of the market.

Additional reporting by Alice Hancock