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In recent years, the global beverage industry has witnessed a remarkable shift as non-alcoholic beer goes mainstream. Once relegated to a niche market, these brews have surged in popularity, reflecting evolving consumer preferences and innovative brewing techniques. This week ABSI delves into the burgeoning world of non-alcoholic beer, exploring its market dynamics, consumer demographics, brewing processes, and the sustainability of this trend.

The non-alcoholic beer market has experienced significant growth over the past decade. In 2024, global sales reached approx. US$22 billion, with projections indicating a year-on-year growth of 9.3% to US$24 billion in 2025. Looking ahead, the market is expected to continue to expand rapidly at a CAGR of 10.2%, potentially reaching US$35.4 billion by 2029. In contrast, alcoholic beer volumes are flat or contracting in many regions.

Source: Business Research Company

This is a remarkable transformation for the industry with no one defining contributor as the appeal of non-alcoholic beer spans various demographics and trends, however, certain groups have emerged as primary consumers:

• Health-Conscious Individuals: Many consumers are gravitating towards non-alcoholic options to align with healthier lifestyles, seeking the taste of beer without the associated health risks of alcohol.
  
  
• Younger Generations: Millennials and Generation Z are leading the charge in moderating alcohol consumption. A study revealed that these age groups are more inclined to try non-alcoholic alternatives, with 68% having sampled such beverages.
  
  
• Moderation Seekers: Post-pandemic, there's a noticeable shift towards moderation, with consumers alternating between alcoholic and non-alcoholic beverages during social occasions, indicating that the majority of non-alcoholic beer drinks aren’t completely abstinent but are instead complementing their habits.

A critical driver for the prominence of non-alcoholic beer has been innovations in brewing techniques which has expanded the range of products available to customers. Historically, the choice was limited to a couple of brands that tasted like, to put it kindly, dirty water. Thanks to investment and innovation, the production of non-alcoholic beer has evolved to intricate brewing techniques aimed at preserving flavour while eliminating or reducing alcohol content. 

The approach preferred by the incumbent alcoholic beer brands is to dealcoholise traditional recipes through either vacuum distillation, lowering the boiling point of alcohol allowing its removal, or reverse osmosis, filtering out alcohol molecules. Guinness, for example, employs a cold filtration process to create its 0.0 variant, adding an extra day to their nine-day brewing process to ensure flavour retention.

For the pureplay non-alcoholic beer start-ups, unburdened with legacy recipes and processes, they have been able to be more innovative in their techniques. These players have pioneered non-alcoholic brewing through controlled fermentation, adjusting the fermentation conditions to limit alcohol development, and employing alternative yeast strains that produce minimal alcohol in the first place.

Source: Wall Street Journal

This brewing innovation was captured by upstart Athletic Brewing, which was founded in 2017, when the non-alcoholic beer category was nascent, and has since gone on to define what success means in the space. Today they’re the market leader in the US beating out established alcoholic brands such as Heineken and Budweiser to the crown. 

The sustained growth and diversification of the non-alcoholic beer market to date suggests that this is more than a fleeting fad and that non-alcoholic beer is here to stay. One of the key contributors to longevity is acceptance in social settings, which is being facilitated by bars and pubs offering a broad range of SKUs. In Australia, these products are a godsend for struggling pubs and bars in a cost-of-living crisis exacerbated by rapidly rising alcohol excise duties. Non-alcoholic beers are higher margin products for retailers compared to their alcoholic counterparts due to the lack of alcohol excise tax on the product.

Source: Spirits & Cocktails Australia

The rise of non-alcoholic beer is no fleeting trend—it's a reflection of broader societal shifts toward moderation, wellness, and inclusivity in drinking culture. From its humble beginnings as a niche product to its current status as a rapidly expanding market, the industry has been fueled by innovation, changing consumer preferences, and growing investment from major breweries. With advancements in brewing technology improving taste and quality, and social acceptance of alcohol-free drinking on the rise, the sector is poised for sustained growth. Whether as a substitute or a complement to traditional beer, it's clear that the demand for high-quality, alcohol-free options is here to stay.

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