New York (CNN Business)Americans are drinking less beer. Heineken has a plan to fix that.
Over the past four years, American beer consumption slid 5%, according to research firm Mintel. A quarter of US beer drinkers said in August that they consume less beer now than they did a year ago, Mintel added. American drinkers are more focused on health and wellness, but they also want quality beer, wine and liquor that tastes good. Some are swapping out beer for pricey liquor: Spirits stole market share from beer and wine for the ninth straight year in 2018, with the more expensive liquors leading the way. Those who are still drinking beer are reaching for premium options.
Heineken thinks its zero alcohol product, Heineken 0.0, will appeal to people who value health and flavor. The company hopes the new brew, which took about five years to develop, will win people over.
Heineken thinks that Americans will go for its non-alcoholic beer. “Making a brilliant non-alcoholic beer is really hard,” Jonnie Cahill, Heineken USA’s chief marketing officer, told CNN Business. When you remove alcohol from beer, you tend to remove flavor and aroma with it. But with 0.0 “we’ve cracked the technology.” Read MoreThe company wants to stop people from ditching beer and keep Heineken top of mind for consumers. The non-alcoholic product is designed to appeal to people who love how beer tastes, and sometimes crave it at times when they don’t want a buzz. With 0.0, Heineken wants to make non-alocholic beer a treat, rather than a lesser alternative to regular beer. Non-alcoholic beer is just a small sliver of America’s $112 billion beer market. But Heineken, which launched 0.0 in the United States earlier this year, is betting the zero alcohol sector will grow.
A post-Peloton treat
The 155-year old Dutch beer company first launched Heineken 0.0 in the Netherlands and Germany in 2017, where it has attracted a “younger, more urban, more premium demographic,” said Cahill. “Can you see this inhabiting an apartment where there’s a Peloton? Absolutely.” In the past, non-alcoholic beer has been “a distress category,” Cahill said. “It’s often been about what you couldn’t do — I can’t have a beer because I’m driving, I can’t have a beer because I’m on medication, I can’t have a beer because I have a big day tomorrow. Our belief is, well, now you can.”By offering consumers a new option, the product can help give Heineken a competitive edge. “The beer market is extremely crowded,” said Caleb Bryant, senior beverage analyst for Mintel. “If you can carve out that niche by having a non-alcoholic option, it gives you a leg up.” It’s also strengthening the beer sector overall, Cahill added. “The more you can invite people to stay in your category, the better it is for all of us,” he said.Plus, 0.0 is helping Heineken boost its brand.
Big in Europe
Though 0.0 has only been on the market for a few years in Europe, its already giving Heineken a boost.Internationally, the product has been “just flying,” Cahill said. In the United Kingdom, Heineken 0.0 makes up 5% of Heineken sales. In Spain, that figure is 7%, and in Russia it’s 20%, according to Cahill. During the company’s most recent earnings report, Heineken (HEINY) CEO Jean-François van Boxmeer said that “the ongoing success of Heineken 0.0” helped deliver the strongest growth by volume to the Heineken brand in over a decade.
In Russia, Heineken 0.0 makes up 20% of Heineken sales. Heineken’s not the only big company jumping on Europe’s non-alcoholic beer trend. Anheuser-Busch (BUD), Asahi (AHKSF) and Guinness all sell non-alcoholic beers internationally. For the most part, those companies have stayed away from the American market, where adoption is much lower. According to the Beer Institute, a group that represents the beer industry, non-alcoholic beer represented about 0.3% of the US beer supply in 2018.
Making it in America
Cahill said that the American non-alcoholic beer space is promising because in the United States, health and wellness trends are prevalent. Heineken decided that January was the right time to bring 0.0 to the United States. Americans may well be warming to the idea of a premium non-alcoholic beer. In the first three months of 2019, sales of non-alcoholic beer grew 6.6% compared to the same period last year, according to Nielsen.Although US consumers drink far less zero-alcohol beer than their European counterparts, “there’s a big opportunity for explosion of non-alcoholic beer” in the United States, said Bryant.
American brewers that make zero-alcohol beer, including Wellbeing Brewing, Surreal Brewing and Athletic Brewing, have been springing up across the country in recent years. This month, Pabst Blue Ribbon announced the launch of its non-alcoholic brew, noting in a release that “the next generation of America” has a “greater focus on health and wellness.” Bryant said that the “it’s really going to boil down to product development.” If non-alcoholic beer is truly comparable to craft beer in terms of taste, American consumers may well go for it. If not, the trend could fizzle out.
Source: edition.cnn.com