![#](https://e-malt.com/Images/left_top_corner16x200.gif) | E-Malt.com News article: Australia: Zero alcohol beer segment growing faster than any other category![Brewery news](https://e-malt.com/Images/BeerBullet2.gif)
The chief executive of Australia’s biggest beer business says the zero alcohol beer segment is growing faster than any other category and easily outstripping the 8 to 9 per cent growth of craft beers, as the company tries to offset a flat mainstream beer market, The Australian Financial Review reported on June 16.
Robert Iervasi, the group chief executive of Asahi Beverages, which has owned the Carlton & United Breweries beer business for a year after a A$16 billion buyout, also says it is unlikely the overall beer market in Australia will make a full recovery until next year after the hit to hospitality venues in the pandemic.
He said the zero alcohol beer category is forecast to grow at above 30 per cent annually from a low base, driven by the increasing focus on health and wellbeing by many people.
The company’s brands in this segment, led by Carlton Zero and Great Northern Zero, are important growth drivers for the overall Asahi business in Australia which is projected to generate annual revenues of close to A$4.2 billion in 2021. It also includes soft drink brands such as Schweppes and Pepsi Max.
Mr Iervasi terms the zero alcohol segment as “beyond beer”.
“Certainly beyond beer is a large driver of our growth in the coming years,” he said.
Popular international brands such as Heineken Zero have been making solid gains in Australia. But Mr Iervasi said Great Northern Zero, which went national last week, had snared 12 per cent of the zero alcohol market nationally in the March quarter after a robust debut in Queensland and the Northern Territory.
While zero alcohol and craft beer are bright spots for the company which has an estimated market share of about 50 per cent in beer in Australia, it is still recovering from the big impact that hospitality venue shutdowns have had during the pandemic.
On-tap beer sales across the industry plunged by 30 per cent in calendar 2020 because of lockdowns and restrictions which hit pubs and bars hard. Across the industry, on-premise sales generally make up about 25 per cent of total beer sales.
Mr Iervasi said the overall beer market in the three months ended March 31 in Australia was down by about 2.1 per cent compared with the same three months a year ago, while packaged beer was 2.5 per cent lower.
“It’s a mixed bag across states,” he said.
Outside of the latest lockdown in Victoria, Mr Iervasi said the trend to more people working from home meant that CBD pubs and bars were still finding the going tough, even though suburban venues had made solid gains. CBD venues were still a long way off recovering.
“The CBD is not close to 2019 levels.”
Overall, Asahi Beverages had been able to generate a “mid-single digits” increase in total alcohol sales for the March quarter, compared with a year earlier.
Big beer companies such as Asahi and Lion, which makes rival brands such as Tooheys, XXXX and West End, have been battling to find any growth in the core mainstream beer market.
But Mr Iervasi said the craft beer category was expected to grow at between 8 per cent and 9 per cent.
The company has been active in the past few years snapping up craft beer brands to deliver growth. The Carlton & United Breweries operations acquired 4Pines, Pirate Life and Balter Brewing in quick succession from 2017 onwards, while Asahi itself bought the Green Beacon craft beer brand in late 2019.
Mr Iervasi hinted that Asahi Beverages may put a pause on more craft beer acquisitions in the short term. “At this point in time we’re looking to grow our craft brands that we currently have in our portfolio,” he said.
But it is the no-alcohol segment showing the fastest growth now, even though it makes up about 1 per cent of the total beer market.
Mr Iervasi said 27 per cent of all CUB’s beer sales are in the zero alcohol, low alcohol or mid-strength category. The company is also expecting solid growth from the alcoholic “seltzer” market through brands such as Good Tides and Actual. Alcoholic seltzers have been a big growth engine in the United States, where the White Claw brand has been a pioneer.
He said confidence in the economy seemed to be improving, even though there was the occasional setback from a short lockdown, the latest of which occurred in Victoria.
“From our perspective, the economy is in a good shape overall”.
In late April CUB, made its first foray into the coffee market, acquiring the Australasian coffee company Allpress. He said the company would pursue acquisitions when it found a gap in its overall portfolio.
“It’s not doing acquisitions for the sake of it,” he said.
17 June, 2021
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