Sports are ripe with examples of star athletes coming out because of injury to see their replacement gaining the limelight: Steve Young stepping in for Joe Montana, Tom Brady replacing Drew Bledsoe, and some are willing to put Brock Purdy on that list following injuries to Trey Lance and Jimmy Garoppolo this past football season. With annual sales of $278.8 million for the 52 weeks ending Jan. 1 in total U.S. multi-outlets data from Chicago-based Information Resources Inc. (IRI), non-alcohol beer sales are a fraction of the $44.6 billion U.S. beer market. However, experts note that its presence as substitute for its beer counterparts is helping the category retain consumers as some look to moderate their alcohol consumption.

“Non-alcoholic beer is a substitute when out from its alcoholic counterpart,” says Brian Sudano, managing partner at New York-based Beverage Marketing Corporation (BMC). “Primarily drank by men over 35.”

Jon Berg, vice president of Beverage Alcohol Thought Leadership at Chicago-based NielsenIQ, also notes the cross appeal for non-alcohol (NA) beer offerings.

“Over 80% of NA is purchased by people who also buy alcohol products,” he says. “NA is consumed to moderate overall alcohol consumption and maintain control. Gen Z is also very prominent in this key area.”

Scott Scanlon, executive vice president of BevAl Vertical at IRI, adds that households that purchase non-alcohol beer typically have upper incomes and 69% are 45 years old or older. But Scanlon notes that younger legal drinking age (LDA) consumers also are gravitating toward non-alcohol beers.

“[T]rends suggest younger LDAs will continue to gravitate to NA offerings: 27% of millennials and Gen Xers, respectively purchased NA Beer in [the last 52 weeks],” he says.

Grace Wood, senior analyst at New York-based IBISWorld, also points to the non-alcohol beer’s appeal to a younger LDA consumer.

“Younger drinkers may be more inclined to try non-alcoholic beer as they have more versatile preferences,” she says.

Conscious choices

Whether it’s seasoned adult beverage consumers or novices, experts note that the influence of health and wellness and conscious alcohol consumption is prompting consumers to purchase non-alcohol beers.

“From a consumer perspective, there is greater awareness of non-alcoholic options, driven by the ‘sober curious’ and ‘Dry January’ movements that have gained momentum among younger LDA consumers,” IRI’s Scanlon says. “To that end, we’ve seen NA cocktail and beer offerings increase at bars, restaurants and other on-premise locations.”

IBISWorld’s Wood also points to the impact of limiting alcohol consumption is having on non-alcohol trends.

“Rising health consciousness is urging consumers to limit their alcohol intake,” she says. “Per capita expenditure on alcohol will grow more slowly over the next five years than in previous years, especially amid inflationary pressures in 2023.”

Although this consciousness has elevated non-alcohol beer’s status, experts note that the segment’s smaller size has allowed it room to grow.

“The category is very small, so not much is needed to drive growth,” BMC’s Sudano says. “Marketing investment behind known brands extending into the non-alcoholic space is driving growth.”

What also has helped the growth is the investment to expand the options for consumers.

“NA Beer has increasingly become a more appealing option, given the variety at shelf,” IRI’s Scanlon says. “The number of NA Beer SKUs scanning through IRI has increased 10% versus [a year ago for the last 52 weeks ending] Jan. 1, 2023.” 

This can be seen by established beer brands entering the space, Scanlon says, including Heineken 0.0 and Budweiser Zero, as well as more recent entrants from Guinness, Samuel Adams and Lagunitas. 

Entrepreneurs also are expanding the non-alcohol beer space. For example, Partake Brewing, Calgary, Alberta, announced that its Hazy IPA Varietal now has joined the company’s wider portfolio, following consumer demand.

“I couldn't be more excited that we’ve decided to incorporate our Hazy IPA into our wider lineup of ongoing innovative product offerings,” said Ted Fleming, founder and CEO of Partake Brewing, in a statement. “The integration of the IPA also speaks to our continued focus on listening to our consumers and working to provide them with what they want.”

Generously dry-hopped with notes of ripe apricot, sweet mango and luscious berries, Partake Hazy IPA is a low-calorie, low-carbohydrate beer with only 25 calories and 4 grams of carbohydrates in each can, the company notes.

Nathan Greene, a consultant with BMC, adds that the hop water/seltzer category also has seen increased investments in recent years.

“While even smaller, the adjacent hop water/seltzer category continues to grow concurrent to NA Beer, with investments from HEINEKEN USA and [Constellation Brands],” he says.

Tempered expectations

Although non-alcohol beer sales were up 17.2% (case sales up 7.8%) for the 52 weeks ending Jan. 1, according to IRI data, the segment still will weather challenges going forward, experts note.

“Non-alcoholic beer will help maintain consumers looking to limit or halt their intake of alcoholic beverages,” IBISWorld’s Wood says. “Still, the beer market will rely more heavily on other segments to bolster its growth.”

This comes as non-alcohol beers will see competition from other non-alcohol segments as well as concerns regarding flavor profiles.

“Innovating flavor profiles to mimic those of alcoholic beers will be a continual challenge for non-alcoholic brewers since the largest pool of consumers will be former beer drinkers,” Wood says. “Non-alcoholic beer will also face ongoing competition from alcoholic substitutes.”

IRI’s Scanlon echoes these sentiments coupled with concerns of proliferation. 

“Proliferation of items will result in optimization at shelf (reduction of poor performing items), potentially jeopardizing space gains for the segment,” he says.

NielsenIQ’s Berg notes concerns regarding shelf space, but notes that the segment has more opportunities when securing distributor partners thanks to its non-alcohol status. 

“Since NA doesn’t need to follow three-tier rules, the go to market strategies have more space for creativity potentially,” he says.