Please ensure Javascript is enabled for purposes of website accessibility

Non-Alcoholic Beer Stages a Rally

By Rich Duprey - Oct 8, 2019 at 10:46AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Brewers are adding more "near-beer" labels as consumer preferences shift to healthier beverage options.

It may have been the "summer of seltzer," but better-for-you beer has also been popular, led by Anheuser-Busch InBev's (BUD -0.75%) Michelob Ultra and its 2.6 grams of carbs, 95 calories, and 4.2% alcohol by volume.

While sales data indicates people might say they want these healthy session beers, but actually buy more hearty brews, we're now seeing a new push to introduce more non-alcoholic beer, with both Anheuser-Busch and Molson Coors (TAP -0.44%) MillerCoors division preparing their own near-beer labels.

Friends drinking beer at pub

A search for lighter, healthier drinks is leading millennials to non-alcoholic beer. Image source: Getty Images.

A market soon awash in near-beer

While Prohibition caused the popularity of non-alcoholic beer to explode as the Volstead Act set the maximum alcohol content to 0.5%, the law's repeal saw such brews fade, not least because they didn't taste very good (the one-half of one percent threshold lives on today, however, in the Alcohol & Tobacco Tax & Trade Bureau's definition of beer). Now they're making a big comeback.

Non-alcoholic beer is popular in many countries, particularly those with religious prohibitions on drinking. But in the U.S., O'Doul's is arguably the best known brand among designated drivers, as it was first introduced by Anheuser-Busch in 1990.

The near-beer now has a number of rivals, including Coors Non-Alcoholic, Genesee N.A., and Miller Sharp's. There are plenty of options within the brewer's own portfolio, too: Anheuser-Busch issued the non-alcoholic Budweiser Prohibition Brew two years ago, and over the past year launch 12 new no- and low-alcohol beers.

More to come

The newest addition will be under the Budweiser brand. According to the MillerCoors blog, the can will be all white, with the traditional Bud logo grayed out and the word "zero" printed in red. The label says it is "a fresh take on a classic recipe" stretching back to Prohibition, but the new packaging harkens back to the early days of generic branding when food came in white boxes with stark black letters.

Yet the push by Anheuser-Busch into near-beer shouldn't be surprising, as it said in 2016 it wanted low- and non-alcoholic beer to account for one-fifth of sales by 2025, up from about 8% currently.

Other brewers see the potential too. Heinken (HEINY -0.66%), for example, launched its 0.0 brand (pronounced "zero zero") earlier this year, and it has the distinction of actually having no alcohol. Next month MillerCoors will release Coors Edge with 41 calories, 8 grams of carbs, and less than 0.5% ABV. 

Looking for something different

As beer consumption has fallen, with flat to negative growth rates, and even craft beer has grown at only low, single-digit percentages, it seems the potential for healthier beer been realized. Analysts expect near-beer to become a $25 billion global market by 2025.

Still, there's always been something odd about the availability of non-alcoholic beer -- if people are interested in healthier lifestyles and they're trying to avoid alcohol consumption, there are plenty of beverages available, so why near-beer? Apparently they're still looking for beer, but now are adding in more low- and no-alcohol options.

The popularity of hard seltzer certainly suggests consumers are not looking to avoid alcohol altogether, but rather they want a drink that's lighter and more refreshing. It's not certain that near-beer fits the bill despite its sudden proliferation, but brewers seem intent on making a big splash with it.

Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of Molson Coors Brewing. The Motley Fool recommends Anheuser-Busch InBev NV. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Anheuser-Busch InBev SA/NV Stock Quote
Anheuser-Busch InBev SA/NV
BUD
$54.48 (-0.75%) $0.41
Heineken N.V. Stock Quote
Heineken N.V.
HEINY
$48.54 (-0.66%) $0.32
Molson Coors Beverage Company Stock Quote
Molson Coors Beverage Company
TAP
$56.46 (-0.44%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.