Wave Of Higher-Quality Products Boosts Non-Alcohol Beer Category
February 23, 2024Non-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, for the 52 weeks ended December 31, 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. The Wall Street Journal recently reported that Athletic produced 250,000 barrels last year, with sales topping $90 million. Shufelt believes NABs can someday account for as much as 20% of the beer market.
oyce 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.
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.
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.”
Leading imported beers are also gaining ground 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, 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,” adding that Diageo is hoping to expand Guinness 0 to tap handles in the future.
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.—Terri Allan
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