Non-alcohol beer sales were up nearly 30% in 2023 in multi-outlet stores.
FEBRUARY 19TH, 2024, Market Watch
While still only a niche in the beer category, non-alcohol beers (NABs) have seen sales skyrocket in recent years as consumers and marketers have responded with a plethora of new brands. Nowhere has the surge been more evident than at Whole Foods, the upscale grocery chain. “Non-alcohol beers started as a small percentage of our beer sales, but that has now jumped to about 10%,” says Mary Guiver, principal category merchant for beer. With the stores’ focus on health-forward food and drinks, the emerging segment is a good fit for Whole Foods. Indeed, NABs are now the third largest beer sector for the chain, following crafts and imports, Guiver notes, and sales continue to soar, up 50% last year.
Non-alcohol brews are easily outperforming the overall beer category in growth rate terms. According to Circana, the Chicago-based market research firm, for the 52 weeks ended December 31, 2023, sales of NABs in multi-outlet stores jumped 29% to $361 million. Guiver and others point to the wave of new quality products in recent years as contributors to the segment’s growth. “Many of today’s non-alcohol beers are high quality options with exciting marketing support,” says Bill Shufelt, co-founder of Athletic Brewing Co.—which only produces NABs—as compared to years ago when below-premium entries caused the category to be “stigmatized and penalized.” As a result, today’s products are earning space at retail, including in cold boxes and case stacks, Shufelt notes, and are providing retailers with incremental beer sales. In groceries, the most established trade channel for the products, non-alcohol brews already account for a bit more than 2% of beer sales, he adds.
Changing consumer dynamics are also at play in the segment’s boom. “We’ve seen an overall increase in sober curiosity,” says Jasen Holley, senior brand manager for Samuel Adams at Boston Beer Co., which now markets a couple of non-alcohol brews. “Younger drinkers are becoming more conscious about their alcohol consumption and are looking for alternatives to pace their imbibing while staying in the moment.” Joyce He, Guinness brand director at Diageo Beer Co., adds that NABs allow those who don’t want to consume alcohol to still feel social. “Non-alcohol beers give consumers a full-flavored beverage to enjoy while also feeling included in social moments,” she says. Diageo launched Guinness 0, packaged in 4-packs of 14.9-ounce cans for $14, in 2022.
Triple-Digit Growth
Leading non-alcohol beers are enjoying double- and even triple-digit rates of growth. According to Circana, Heineken 0.0 and Budweiser Zero lead the group, but the Athletic portfolio is quickly on the rise. The brand more than doubled in sales in 2022 and was named an Impact Hot Brand. Triple-digit growth continued in 2023, with Circana reporting a jump of 114% in dollar sales during the 52-week period, placing it in the No. 4 spot among NAB brands. Produced at breweries in Connecticut and San Diego, the Athletic line features a variety of beer styles, with about a half dozen sold at retail and others available online. Athletic’s Run Wild IPA and Free Wave Hazy IPA are among the top performing non-alcohol brews sold through Drizly, according to the beverage alcohol e-commerce marketplace. Still, Shufelt sees much more opportunity for his products via enhanced distribution and continued innovation. Late last year, the company began rolling out product on draft in select markets, which he called, “a first for a non-alcohol beer.” Marketing support includes sponsorships and activations at racing events, sampling at professional sporting matches, and the brand’s “Two for the Trails” charitable endeavor, which donated nearly $2 million last year to efforts like hiking trail restoration and maintenance. Recently, the brand launched the “Track Record” tool on its mobile app that helps consumers keep a tab on their alcohol-free days.
Leading imported beers are also finding success in the NAB space. Anheuser-Busch InBev’s Stella Artois Liberté has received a strong response, with sales up at a triple-digit rate, according to Circana’s 52-week data. Constellation Brands introduced Corona Non-Alcoholic beer last year, and John Linn, director of brand marketing for the product, says the company is “incredibly excited by the initial consumer response.” Meanwhile, Diageo’s He says the triple-digit growth behind Guinness 0 is being driven by distribution gains and because “the liquid resonates with consumers. Boasting the same smooth taste and balanced and bold flavor of Guinness Draught, with only 60 calories per serving, we’ve received great consumer feedback,” she says, adding that Diageo is hoping to expand Guinness 0 to tap handles in the future.
Craft brewers are also leaning heavily into the fledgling NAB segment, particularly with the slowdown of craft beer sales in the last few years. Like Athletic, some craft brewers are now marketing non-alcohol brews in an array of styles. Boston Beer has offered Just the Haze non-alcohol IPA for a few years now, and in 2023, Gold Rush non-alcohol golden lager was added. Holley notes that the brewery conducted extensive research and “brewed countless iterations” before launching the NAB to ensure it got “the taste and profile just right.” In fact, he hints that more NABs in additional styles may be forthcoming. “While Gold Rush was our follow-up non-alcohol beer style, it may not be our last,” Holley says. Among other leading craft brewers, California’s Sierra Nevada launched two NABs, Trail Pass IPA and Trail Pass Golden, late last year.
Health-Minded Consumers
Marketers and retailers say that while non-alcohol brews appeal to a wide swath of consumers, certain demographics are beginning to emerge. “No- and low-alcohol beer drinkers tend to be active and health conscious, with millennials consuming the highest percentage,” says Frank Chandler, director of wine, spirits, and beer at the Save Mart Cos., which operates nearly 200 Save Mart, Lucky, and FoodMaxx grocery stores in California and Nevada. “More people are adopting sobriety and moderation as a lifestyle in an effort to manage their physical and mental health.” According to Linn, Corona Non-Alcoholic over-indexes with Hispanic and Latino drinkers as compared to its competitors, “which is important because that’s also the fastest growing consumer group within the non-alcohol segment.”
Non-alcohol beer suppliers, distributors, and retailers also maintain that unlike in the past, today’s consumers of the products aren’t necessarily teetotalers. “We’ve found that consumers aren’t looking to cut out alcohol entirely,” notes the Constellation Brands executive. “They want choices and products that fulfill the roles of a traditional beer, without the alcohol.” Shufelt says that 80% of Athletic’s customers consume beverage alcohol at other occasions. Indeed, Chris Pankiewicz, general manager of a couple of Super Buy Rite liquor stores in New Jersey, notes that his NAB customers also purchase full-strength beer and wine. “A lot of them are starting with regular beer and then switching over to non-alcohols so they don’t get out of control,” he explains.
With increased consumer interest in the brands, many retailers are now boosting stocks. Super Buy Rite offers about 16 NAB brands, generally priced at $10-$11 a 4- or 6-pack. Athletic is a strong performer, Pankiewicz says, with monthly sales since January 2023 reaching at least 30 cases at the chain’s Hopewell, New Jersey store alone. Save Mart lists 25 non-alcohol beer options throughout its system, Chandler notes, with top sellers including Heineken 0.0, Corona Non-Alcoholic, Athletic, and O’Doul’s. The products are generally priced at $9-$13 a 6-pack. “We’re expecting NABs to be a healthy contributor to our overall sales and growth plans for 2024,” remarks the grocery executive, pointing out that 38% of shoppers are curious about living a sober lifestyle. “Non-alcohol beer will be a bigger part of our monthly plans year-round.”
At Whole Foods, meanwhile, NAB offerings—available in more than 500 stores—can reach up to 40 SKUs, Guiver says, priced from $11-$13 a 6-pack. “Whole Foods loves to incubate new products, so we were ahead of the trend with non-alcohol beer,” she remarks. Where possible, NABs are sold chilled, while additional merchandising efforts include sampling and displays. Not only has Athletic emerged as the top-selling NAB at Whole Foods, but it’s the No.-1 seller within the stores’ overall beer category. Moreover, in January 2023, Athletic topped all adult beverages sold at Whole Foods for the month, Guiver reveals.
NABs are also making strides on-premise. At New York’s craft beer-focused Pony Bar, five of the ten canned beers offered are non-alcohol, all priced at $7 a 12-ounce can. “Customer response has been positive,” says owner Dan McLaughlin. “Guests who are interested in these offerings are happy to see a popular place making an effort.” Expansion of draft NABs by the likes of Athletic and Guinness will only further expand awareness of the brews in bars and restaurants.
Incremental Sales
Marketers of non-alcohol beers encourage retailers who may be holding back to jump into the category. Diageo’s He notes that the products allow retailers to reach a new customer base while Constellation Brands’ Linn says NABs “translate into more incremental sales for the retailer, more occasions, more inclusivity, more consumer satisfaction, and more loyalty. It’s really a win-win.”
With the recent surge in NAB sales, leading marketers and retailers are expecting a continued deluge of brands into the segment. They caution that for any new entries to succeed, they’ll need to offer a point of differentiation. “Brands will have to be disruptive in ways that allow them to effectively break through the clutter and get consumers to notice their offerings,” He says.
Competition aside, excitement for continued growth for the category remains high. “The non-alcohol category is ripe with opportunity,” says Boston Beer’s Holley. “Drinkers are embracing the sober-curious movement and partaking in a ‘damp’ lifestyle,” allowing brewers to get creative. Shufelt believes NABs can someday account for as much as 20% of the beer market. Pointing to changing consumer behavior and the wave of quality non-alcohol brews that have arrived, he says, “we’re excited to see where we’re at in ten years.”