E-Malt.com News article: EU: Big brewers arm themselves with nonalcohol beer to battle for market share

Spain is a world leader in sales of nonalcohol beer and some of Western Europe's biggest brewers are taking notice. To help combat flat sales at home, brewers are looking to Spain as a model for marketing nonalcohol beer, The Wall Street Journal reported on August, 30.

Netherlands-based Heineken NV has introduced at least 10 nonalcohol beer brands and varieties at home, in Italy and elsewhere since 2008. Denmark's Carlsberg A/S recently introduced varieties of its nonalcohol beer in Norway, Finland and other countries. AB InBev NV this year began pouring a nonalcohol version of its Hoegaarden brand in the company's home market of Belgium. The company also introduced Jupiler Force, a nonalcohol, brewed soft drink that tastes like pilsner.

The need to branch out is clear. Heineken and Carlsberg this month warned that weak consumer demand in developed markets will hurt earnings. And while retail sales of beer in Western Europe dropped 7% to 27.3 billion litres over the last five years, sales of nonalcohol beer increased 37% to 520.5 million litres, says market-research firm Euromonitor International. David Bird, a senior analyst with Datamonitor Ltd., projects that Western European sales of nonalcohol and low-alcohol beer will rise 1% by volume by 2015 from last year, while the overall beer market will shrink 7%.

Brewers are hoping to capitalize on health consciousness and to lure more female consumers. The companies also want to hold onto older drinkers longer and get consumers who would choose soda or juice before taking the wheel, as authorities crack down on drunk driving. Some brewers say profit margins can improve since nonalcohol beers carry lower alcohol-based taxes, tend to sell for similar prices as traditional beers and are discounted less frequently.

Nonalcohol beer is a largely unexploited opportunity for big brewers, says Lene Dyrby Andersen, a Carlsberg executive for new-product development.

"It is quite a natural move when you see that the overall beer markets [in Western Europe] are going down. So, of course, we're battling for market share," she says. In addition to rolling out new varieties of nonalcohol beer, Carlsberg this year reformulated its Holsten Alkoholfrei nonalcohol beer in Germany so it tastes more like a traditional brew and introduced two flavors—orange-hibiscus and apple-green tea—of its Beo nonalcohol drink brewed like a beer and mixed with fruit juice.

Traditional beer, which typically is about 6% alcohol, remains an important source of growth for brewers in increasingly affluent, growing populations in emerging markets. And nonalcohol beer is still a small segment in the West, accounting for under 2% of all beer consumption in most markets.

Spain, though, is the Mecca of nonalcohol beer. About 13% of the beer consumed here is nonalcohol, according to the Brewers of Spain trade group. The country is the world's biggest per-capita consumer of nonalcohol beer, with sales of 5.8 litres a person last year, according to Euromonitor. Spain even leads such Muslim countries, which have cultural prohibitions against alcohol consumption, as Iran and Saudi Arabia.

Nonalcohol beer gained visibility on Spain's shelves in the 1980s and then took off about a decade ago, around when the government and brewers started advertising campaigns to curb drunk driving by reminding people about nonalcohol beer. Some officials credit the ads for helping cut Spanish traffic deaths by about 50% since 2000.

Today, bars here commonly have nonalcohol beer on tap, and just about every restaurant carries it. The segment often occupies a third of the beer section in supermarkets and convenience stores.

Spanish brewers regularly advertise nonalcohol beer on television, at bus stops and on billboards. Grupo Mahou-San Miguel, Spain's largest beer maker, spends about 20% of its marketing budget on nonalcohol beers, up from 10%–15% in 2005, says Javier Herrero-Velarde, the company's marketing director.

Confident in its alcohol-free-brewing prowess, Heineken's Spanish unit this year eliminated a line of its Buckler brand that had 0.9% alcohol, leaving only the 0.0% version.

Brewers are hoping to attract younger consumers by focusing more on nonalcohol beers with flavors, such as lemon and apple. Spaniards typically start to drink nonalcohol beer in their mid-30s. But people as young as 18, Spain's legal drinking age, pick up the flavored beers, says Mahou-San Miguel's Mr. Herrero-Velarde.



31 August, 2011