AB InBev to explore all opportunities to expand low alcohol beer production

The world’s largest brewer could snap up fast-growing low alcohol beer labels over the next five years to meet consumers’ demands.

“When you represent over 30% of the world’s beer you have responsibility to offer a range of products,” Laura Diamond, AB InBev’s head of consumer strategy in Europe, told the drinks business during the Lo & No Summit this week.

AB InBev, which makes Budweiser and Stella Artois, has been on a drive to increase the number of alcohol-free drinks it sells, and has set a target for non-alcoholic and low ABV beverages to makeup one fifth of its global production by 2025. Currently, low ABV and alcohol-free make up around 10% of overall volumes.

The brewer rolled out non-alcoholic equivalents to Budweiser and Stella in the UK earlier this year to capitalise on the rapid growth of low ABV drinks sales in the country. The latter, Diamond said, took two years to develop and has already picked up two awards from beer tasting competitions, an achievement that would have been unheard of for an alcohol-free beer only a few years ago.

In March this year, the Society of Independent brewers recorded 30% leap in sales of no or low-alcohol beers since 2016, and increasingly expecting to have a wider range in pubs and bars. A separate study by Euromonitor has also shown that the UK market for no and low-alcohol beer has doubled in four years. Prior to lockdown, Euromonitor estimated that sales would reach £63 million by the end of 2020.

Global brewers have responded to the demand by creating booze-free alternatives to their flagship brands. Heineken rolled out a 0.0% ABV beer in 2018, and sold 15 million bottles in its first year. More recently, Irish brewer Guinness – which is owned by Smirnoff vodka-maker Diageo – introduced a 0.0% stout to the UK and Ireland with a view to rolling it out to more markets in the next year. The beer was recalled this week due to fears of contamination, but Diageo is still confident it will be able to start production again soon.

At the same time, craft breweries that have historically struggled to compete against multinational producers at the bar are gaining market share by investing in low ABV beer production. Lucky Saint, a UK-headquartered brand that sells a low ABV Pilnser brewed in Germany, recorded a 300% rise in online sales during lockdown which helped to make up losses caused by the closure of bars and restaurants this year. Meanwhile Suffolk-based Big Drop, which creates its own recipes and then partners with small international breweries to brew its 0.5% ABV beers, recently secured £1 million to start exporting to Australia and North America. One of its most prominent backers is Mark Hunter, the former chief executive of American brewing giant Molson Coors.

So far, most brewers have focused on expanding the range of beers available in well-known brands to accommodate the rising number of consumers who are moderating their alcohol intake. AB InBev’s reasoning on this, Diamond said, is to focus on “local, quality and sustainable” products to recruit consumers who already enjoy more established beers within the portfolio into the category. The Belgian brewer launched a 0.0% version of its Leffe blond beer in Europe last year, for example, which she said “has been driving a lot of growth in France for us”.

However, Diamond told db that AB InBev hasn’t ruled out acquiring new brands with promising sales figures to meet its target and get ahead of the competition.

“A lot of space here for us is to be listening to consumers with our portfolio, and there is where acquisition might play a role,” Diamond said.

“The most important piece today needs to be having better memory structures for these brands. We are still building credibility behind why you would have a non alcoholic beer, so we need to have even more offerings.”