Australia’s no-alcohol beer market froths up

All the key players in the Australian market sell no-alcohol beer, some also sell “low-alcohol” beer and the range of non-alcoholic beers is set to grow further.

So what is it about no-alcohol beer that is winning over some consumers? Who drinks it and what were those people drinking before? And how much potential do brewers think the product has?

Sid Ajala is head of beer at liquor merchant BWS, which is owned by supermarket Woolworths. He says people are getting their first taste of no-alcohol beer at a friend’s house, parties, functions and other social occasions, and after their initial discovery some are buying it for themselves.

“We’re selling plenty of non-alcoholic beers,” Ajala says.

According to BWS, sales of non-alcoholic beers at their outlets have climbed  60 per cent since July, no doubt helped by the introduction in 2018 of Carlton Zero sold by Carlton & United Breweries and Heineken 0.0, sold by Lion. CUB and Lion are Australia’s biggest and second-biggest brewers.

Industry statistics obtained by The Age and The Sydney Morning Herald  show the scale and growth of the segment in Australia.

CUB, for instance, says it will brew about 3.5 million litres of Carlton Zero this year. Given 330 millilitres fits into a Carlton Zero stubby, that’s plenty of stubbies. Currently, non-alcoholic, low-alcohol and mid-strength beers make up about 25 per cent of all CUB beer sales.

Scott Harris, marketing manager brewing products at Coopers, Australia’s biggest independent brewer, says the entire non-alcohol beer market in Australia is up  about 50 per cent over the past year.

It’s not uncool to drink non-alcoholic beer, they actually think it’s a good idea … sometimes they just don’t want the alcohol.

Scott Harris, marketing manager brewing products at Coopers

BWS says it is prepared for the rise. “We saw this trend coming a couple of years ago,” says Ajala.

“We started talking to our suppliers about bringing products into the market for our customers because we knew our customers would want them. And the sales are doing what we expected them to do, it’s strong customer demand,” he says.

BWS currently stocks four beers with an ABV (alcohol by volume content) of 0.0 per cent and a further five with an ABV of 0.5 per cent. The business also plans to increase its range of no and low-alcohol beers.

Asked how sales will perform this summer given the greater awareness, range and advertising of no-alcohol and low alcohol beers, Ajala says: “The growth is not slowing, and our team are across it and our customers are after these products.”

He says feedback from customers is that the taste of no-alcohol beers has improved markedly over the past couple of years.

“I’ve been in stores myself and conducted tastings with customers and the surprise on their face when they try non-alcoholic beer and find out the flavour, it’s just quite incredible,” Ajala says.

“You can see the realisation, that ‘this tastes as good as any other beer’,” he says.

So who is drinking no-alcohol beer?

Is it big guys in blue singlets who drive trucks all day and tough guys with tattoos who work outside with their hands and work up a sweat?

Or is it mainly people who like the taste of beer but want to avoid or limit their alcohol intake?

Market research conducted this year by CUB gives an insight about customers drinking Carlton Zero.

The research found the average age of Carlton Zero drinkers was between 25 and 34 and more than 40 per cent of drinkers were women. This is a higher proportion of females than found for alcoholic beers.

“It [Carlton Zero] is selling really well, we’ve been very, very happy with how it’s gone so far. In its first 12 months it recorded more than $10 million in sales,” says CUB external relations manager Reid Sexton.

“And it’s been one of the most successful product launches we’ve ever had. It has been really well received by beer lovers because it’s a non-alcoholic beer that actually tastes like beer,” he says.

Sexton says Carlton Zero is not trying to replicate the taste of the brewer’s full-strength, big-selling beers, but points out that the brewmasters who make the new non-alcoholic beer also make their other names.

“Carlton Zero would have a very familiar taste for people who drink Carlton’s traditional beers … It’s a familiar taste but it is its own taste,” he says.

“We would love it to get to something like 2 per cent share of beer. If non-alc [beer] was to get to 2 to 5 per cent of all beer sales in Australia, then the size of the prize would be hundreds of millions of dollars,” he says.

“We’ve seen it through sales of mid-strength [beers]. There’s just no doubt that people still love beer but want to moderate their drinking, and there’s a multitude of reasons that I would guess could be the cause of that,” he says.

Gerard Smith, marketing director at Lion, says a broad range of people are buying Heineken 0.0, with some seeing it as an alternative to a light beer and for whatever reason don’t want alcohol in their system after having a drink.

He also thinks that sometimes people are drinking it instead of a soft drink or water.

“About 25 per cent of the sales of Heineken [0.0] are people buying it in addition to their regular beer. So what that says to me is that people are buying their standard beer, and then they’re also adding in some ‘zero’ beer … and they might have a couple of regular beers and then they’ll have a zero beer just to moderate it up,” he says.

Smith says that in similar beer markets to Australia where Heineken 0.0 is sold, such as Britain, New Zealand and some European markets, the no-alcohol Heineken beer is responsible for up to about 10 per cent of all Heineken sales.

“In Australia, it’s up to about 4 per cent of total Heineken sales,” he says.

So who drinks no-alcohol beer? Is it big guys in blue singlets who drive trucks all day, and tough guys with tattoos who work outside?

“Since we’ve really put the full distribution out and the marketing campaign, we’ve seen massive growth. And we’re at a situation where we are really quite tight on stock. It’s been much bigger than we’ve expected,” he says.

“I think the overarching trend that seems to be going on in beer is related to people becoming more conscious about what they drink. Whether that means that they’re thinking about beer styles in craft, so whether there’s more sort of flavour and understanding the hops and how beer gets made, and I then think there’s an overarching trend then about people wanting to drink better. And I think wellness is part of it,” he says.

The big beermakers say people who are now drinking their no-alcohol offerings were probably drinking a range of beers before their no-alcohol labels arrived, including the best-known brands, some premium international beers and craft beers.

It’s not all new

No-alcohol beer might be considered a new trend, but it isn’t a new product. South Australian-based brewer Coopers, the country’s largest independent brewer, started making its first offering in the category long ago.

“We’ve been doing that now since the late 1970s. So it’s kind of funny when we hear people talking about this new craze,” says Scott Harris, from Coopers.

This beer is called Coopers Ultra Light, which has an alcohol content of 0.5 per cent. Harris says the beer’s alcohol content is so minimal it can be considered no-alcohol.

By way of comparison, the big-selling Coopers Pale Ale has an alcohol content of 4.5 per cent.

Coopers also sells a no-alcohol beer called Holsten 0.0, which it has been importing under licence from European beermaker Carlsberg for about eight years.

Holsten 0.0 is produced in the same manner as a German pilsner, but once it’s made Harris says the brewers “use a vacuum method to remove the alcohol from the beer … under vacuum they basically spin it and remove the alcohol at low temperature so that it doesn’t damage the product”.

A different approach is used to make Coopers Ultra-Light. With this beer a special yeast is used that doesn’t ferment as deeply as other yeasts used to make full-strength beers.

“When you remove the alcohol afterwards in Holsten, we’re also ending up with a beer that’s not only no-alcohol, it’s also low in calories as well, which is leading to what’s happening with the market now. The market’s changed dramatically over the last few years,” Harris says.

Perhaps Holsten 0.0 has been on a slow burn because almost a decade after it hit Australia Harris says its sales are up about 20 per cent so far this year. “If you look at the whole non-alcoholic market at the moment for beer, it’s roughly up 50 per cent on last year,” he says.

Harris, who has been in the beer industry for more than 30 years, says that in earlier years people drank no-alcohol beer mainly for health reasons or religious reasons.

“But that’s all changed, that’s not what the drivers are nowadays. What’s happening nowadays is it’s more your younger crowd, your 18 to 35-year-olds, and they’re very health conscious and it’s all part of this ‘what’s good for me type movement’,” he says.

These consumers still drink full-strength beers when they feel like it, but they prefer a no-alcohol beer to soft drinks.

“It’s not uncool to drink non-alcoholic beer, they actually think it’s a good idea … they like beer, but sometimes they just don’t want the alcohol,” he says.

Harris says in recent years no-alcohol beer sales have been rising at about 8-9 per cent each year, but that has jumped recently due to the increasing consumer preference for no-alcohol beer, combined with the arrival of no-alcohol beer by the major brewers.

“It was always going to happen, it’s just sped up,” he says.