The rise of the alcohol-free beer market in the UK has captured attention in 2018. The IWSR caught up with Carlsberg’s Global Insights and Analytics director Jenny Syddall to gauge her thoughts on the dramatic rise in demand.
IWSR: What do you think is driving the interest in alcohol-free beer in the UK?
Syddall: The trend towards moderation is shaping consumption patterns as people are aspiring to healthier lifestyles. This is predominantly driven by Millennials coming through, but there is also rising awareness of the negative effects of alcohol consumption on health.
This is coming together with an ageing population, as the health issues associated with growing old are also encouraging more people to seek healthier solutions, often through reducing their alcohol and soft drink consumption.
In addition, we see that how young people are socialising is evolving. They meet in running clubs, at Starbucks and in Joe & The Juice. It is still about catching up with friends, feeling part of something and keeping in touch, but regular alcoholic drinks are not a good fit with these occasions.
Taste is also an important factor. Anybody who is older than 30 did probably try the few products on offer in the past and they failed to deliver on taste. However, brewers have now really got their act together and are producing a far superior taste experience.
Finally, there is also more of a willingness to experiment. The advent of craft has given consumers a broader taste profile and this is encouraging interest in alcohol-free beer.
IWSR: So now that the demand is there and the products taste better, will the trend continue at such a pace?
Syddall: If you look at the UK, the alcohol-free beer category remains underdeveloped when compared to other markets globally, but it is growing quickly as more Millennials enter the category. However, we anticipate greater growth. If you take the share of beer in the UK, AFBs (alcohol-free beer) is running at a bit over 1%, but one only needs to look at Spain to see how the market could develop, where AFB has over 10% share of the beer business. That represents a massive opportunity for future growth.
We see good gains coming through as awareness by the trade continues to grow. But typically, it is the off-trade where AFBs are gaining more space, distribution and hence growth, in part because supermarkets tend to be quite quick and nimble at spotting trends. The creation of AFB zones in-store is becoming the norm.
While in the on-trade AFB doesn’t have the same visibility – but this is what we see as a great opportunity. Most commonly, AFB products are only available in the fridge at the back of the bar; the consumer has to ask for it and the bar staff have to search for it. What has really driven demand in Spain has been that every bar has an AFB product. Even if they only have two taps, they will make sure they have an AFB and that has helped to change the mind set on AFB. Currently, Carlsberg is testing AFB on our new keg system in Denmark and Sweden, which uses compression rather than CO2 to keep the beer fresher for longer.
To conclude, if you look at the whole alcohol-free brews segment, there is a lot of opportunity for future growth. The UK is under-trading compared to a lot of other markets and is miles off hitting saturation.
IWSR: The IWSR’s consumer survey highlighted choice as a barrier to people entering the segment. Do you see this?
Syddall: Actually, as noted, we see taste as the key barrier to the category. In the past, the core AFB drinker was the drinker who just wanted a straight replacement for their current brand/variety, which was not done so well in the past, creating a negative perception. Fortunately, this is really not the situation any longer as more and more new brands and brews are being launched, bringing excitement and variety, driving category development. As we and other brewers continue to develop greater-tasting brews, more and more consumers are trying, discovering and adopting AFBs because of the great tastes available to them.
As well, AFBs are not just alcohol-free beers. AFBs are leveraging the alcohol-free brew base, but addressing other taste profiles such as radlers (half beer and juice), which deliver against a different consumption moment. Because of the simple clean ingredients, the health perception of such brews opens up the opportunity to expand the AFB category and drive trade in from CSDs, tea products and water. If you look at France, for example, we have a popular brand called Tourtel Twist, which is like a radler product with beer and fruit juice. This brand has seen strong growth over the past few years as consumers seek alternatives to soft drinks.
Because fermentation also brings some health benefits, the growth opportunity for AFB is considerable – just look at the growth of brewed products like kombucha and other teas in the US, which are inherently quite healthy products.
IWSR: Other than shelf space, do you see any other hurdles to non-alcoholic beer development?
Syddall: The hurdles remain overcoming the past stigma and poor taste perceptions of AFBs through educating consumers on the wonderful taste, refreshment and healthier options that AFB can offer. We believe that through increased availability, awareness and trial we will see continued category growth for AFB.
IWSR: Which non-alcoholic beer do you like to unwind with?
Syddall: I am a big fan of our Birell Wit product, which launched in Poland and Bulgaria last year. It is a lovely crisp wheat beer with a citrus kick. I’ve also been lucky enough to try some of the test products coming out of our research laboratory, which we think have the potential to really shake up the soft drink category.
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