USA: Non-alcoholic beer gaining traction in complicated space

Non-alcoholic beer is gaining traction in the US and brands are trying to get in on the action. But the space is complicated. Companies are simultaneously tapping into an increased interest in moderation and sobriety, while also fighting a stigma about the quality and relevance of non-alcoholic beer, the Morning Brew reported on September 27.

IWSR, an alcohol industry market research firm, found that the US market for no- and low-alcohol drinks grew by more than 30% in terms of volume last year. Despite the upward trajectory, brands are still largely trying to figure out who their audiences are and how to capture them.

“We are very much in category-creation mode,” said Borja Manso Salinas, VP of marketing at Heineken USA, which brought its Heineken 0.0 drink to the US in early 2019. He explained that the non-alcoholic category in the US is still nascent compared to the scene in Europe.

In Spain, for example, beers with little to no booze account for 13% of all beers sold, according to data from the country’s brewer’s association. Heineken’s research finds that the US market, although growing, is still around the 1% mark, Manso said. That’s miniscule, but brands are starting to take note of the opportunity here. Brewing companies large and small, like AB InBev, Boston Beer, Molson Coors, BrewDog, and Athletic Brewing, have entered the space in recent years and are vying for a piece. Manso said Heineken is less concerned about the competition and more focused on growing the market.

“The cake is still so small and the potential is so huge, that we are not too worried about the proportion of our piece. We’re worried about making the cake grow,” he said.

Heineken 0.0’s arrival in the US came with a $50 million marketing investment that included video spots, which ran on TV and digital. Manso declined to share more recent numbers, but said the company is spending nearly half its US media budget in 2021 on marketing 0.0.

Samantha Itzkovitz, VP of marketing at Brooklyn Brewery, told Marketing Brew the company was surprised at how fast its Special Effects line of non-alcoholic brews took off when debuted in late 2019.

“We thought it was going to take a lot longer for the US to come around, but because of just the health and wellness trend boom and everything with Covid over the last two years, the US consumer and the conversation around non-alcoholic has accelerated,” Itzkovitz said.

In the beverage industry, sampling is a go-to method to get the word out on a new product. Both Heineken and Brooklyn Brewery had hoped to rely on it for their relatively new offerings, but the pandemic complicated those plans.

Pre-pandemic, Brooklyn Brewery was partnering with Daybreaker, an events company focused on wellness and sobriety, to hand out samples of its Special Effects line at day parties in New York.

“Anything that happened prior to March was all good, but we had a year-plus of strategy that we were going to execute that completely flipped on its head,” Itzkovitz said. She added that Brooklyn Brewery has still been running digital ads for Special Effects since its debut. In the coming months, the brand plans to introduce a variety pack with two new styles.

Heineken found ways to adapt its sampling efforts to Covid, Manso explained. At the 2020 Tribeca Film Festival in New York, which was a drive-in-theater event, the company went around to cars passing out cold packs of 0.0. Heineken also partnered with meal-kit service HelloFresh to send samples to users.

“We basically had to learn, okay, how can we do this in a world where there are no mass events, or where it’s very difficult to be in-person?” Manso said. The brand has also been running ads on linear TV, digital, and social media.

A significant hurdle in marketing non-alcoholic beer is convincing people of its utility. Heineken and Brooklyn Brewery told us people are often puzzled by the product. For many, beer is...alcohol. You drink it to at least get a buzz.

“Non-alcoholic beverages—beer, specifically—they get kind of a bad rap in the US. Everyone thinks they don’t taste good, they’re really only for pregnant women, or recovering addicts, or if you’re driving,” Itzkovitz said.

But an increased interest in health and wellness has allowed brands to try to own the practice of moderation. A 2019 Nielsen survey found that 66% of millennials are trying to cut back on alcohol consumption, compared with 47% of all people of drinking age in the US.

It makes sense, then, that cultural events around sobriety and moderation like Dry January are taking off. Morning Consult found that 13% of Americans were taking part in Dry January in a 2020 survey, whereas 11% said they observed it in previous years. Sober September is also a thing.

But Brooklyn Brewery doesn’t want to anchor the Special Effects brand to the notion of cutting out alcohol consumption altogether. Dry January “is a fleeting concept in and of itself. It’s just this one month,” Itzkovitz said. “We’re not trying to be associated with sobriety. We’re trying to just be a non-alcoholic option year-round.”

Heineken did take a stab at Dry January with a “31-pack” of 0.0, akin to an advent calendar. Manso said the company hasn’t decided how it’ll approach the event in the future.

Manso and Itzkovitz both said they’re positioning their non-alcoholic brews as an option for people who want to be part of a social gathering, but don’t want to drink alcohol.

“Maybe you’re in a bar and...you want to remain in that social interaction with your friends, but you don’t want to drink more alcohol because you have to work tomorrow or whatever the reason,” Manso posited. “That’s where the volume is. It’s not in the committed non-drinkers; it’s in normalizing this as a moderation tool.”

28 September, 2021