Soup-To-Nuts Podcast: AB InBev seizes opportunity in non-alcoholic beverages as sober-curious movement grows
According to an International Food Information Council survey of 1,000 US adults in early December, roughly one in five Americans planned to reduce their alcohol consumption this year and 13% planned to cut it out of their diets completely. This is up from the 15% of US adults surveyed by YouGov last year who said they planned to participate in Dry January in 2021, which in turn was a five-percentage point increase from 2020 when 10% of US adults planned to hop on the wagon in January.
While these numbers may still sound small, steadily increasing consumer interest in non-alcoholic beverages is driving a notable uptick in sales in the category, which data analytics firm Statista estimates is worth more than $414 million and projects will grow 5% annually from 2021 through 2026.
At the same time, alcohol sales in the US are declining after an initial surge early in the pandemic. According to SPINS data, sales of beer dropped 1.9% to $20.5 billion in the 52 weeks ending Oct. 31, 2021. Wine sales also fell 3.2% to $14.2 billion in the period, dragging overall alcohol sales down 2% to $43 billion. Now, to be fair, sales on a two-year stack for each were up 13.7% and 10% respectively – but the drop off is still noteworthy, especially when paired with the sales growth of non-alcoholic beer, which SPINS said grew 28.9% overall and a whopping 519% for craft options in the same time period.
These figures show that consumers are looking for more options, and leading brands are moving fast to provide them, including Anheuser-Busch InBev, which is building out its non-alcoholic beverage portfolio to include several recently launched zero-proof beers, carbonated soft drinks, low- and no-sugar energy drinks and functional shots that promote healthy living.
In this episode of FoodNavigator-USA’s Soup-to-Nuts podcast, Ana Henriques, global vice president and head of NABev at AB InBev, shares more details on how the world famous brewer is filling out is non-alcoholic portfolio to reach a larger audience across more occasions and dayparts. She also shares insights behind what and who is driving the sober-curious movement and how it is not a zero-sum game for most consumer. Finally, she reveals where she sees the most opportunity, and what ingredients and claims appeal to consumers.
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Blurring lines: The merging of social and wellness drinking
According to Henriques, the so-called sober curious movement is driven by consumers who are increasingly aware of the health impacts of what they eat and drink and who are looking for products that will boost their health and wellness. At the same time, they might not want to give up social drinking or alcohol completely – but rather find a healthy balance.
“What we see is really that the social beverage trends and the wellness beverage trends are blurring. They’re coming together. For consumers, it’s really no longer one or the other. Consumers are looking for both options that are fun as well as bring wellness. And we are always developing our business with those consumer needs in mind,” she said.
As such, she explained, AB InBev’s nonalcoholic portfolio is a key component of the company’s commercial strategy that allows it to reach more consumers during more occasions with more options.
Creating non-alcoholic options that actually mirror their alcoholic counterparts
A key component of the company’s nonalcoholic portfolio in recent years has been creating a line of zero-proof alternatives to the brewer’s classic beers.
This includes the launch last year of Liberte, a non-alcoholic option under the Stella Artois brand, and Budweiser Zero in 2020. It also has options under its Busch, Goose Island, Four Peaks Brewing, Breckenridge Brewery and Golden Road Brewing brands.
In every case, Henriques says, the success of these lines depends on the taste and drinking experience of the beverages.
“From my perspective and my experience in the industry taste is king when it comes to anything that you’re going to consume,” which is why the industry is investing in new technologies to enhance the flavor and taste profiles of nonalcoholic options, Henriques said, acknowledging that until recently much nonalcoholic beer has fallen short of consumer demands. “As the industry continues to invest in new technologies and more development in the space, I believe that in five, ten years from now, the space will look very different than it does now, because it is very nascent and it continues to evolve very, very fast.”
Gen Z is leading the non-alcoholic movement
Leading the sober-curious movement, according to Henriques, is Gen Z consumers – very few of whom are old enough to drink alcohol legally in the US as they range in age from nine to 24 years. But as Henriques adds this doesn’t diminish their importance or the opportunity for brands looking to create life-long relationships with consumers by offering a range of beverages that fit their needs at different life stages and occasions.
“From our consumer work, we see that in reality people are not about the extremes. And I think Gen Z in particular has been a big driver of this kind of fluid movement and the word fluidity is really important because what they are looking for are the options. They want to be able to have different choices for different occasions or to be able to choose different choices even in the same occasion,” Henriques explained.
As such, AB InBev offers both zero proof alternatives to its classic alcoholic beverages but also an increasingly broad range of solutions that are not related to alcohol or beer brands.
An example of the company’s diversity and how social and functional beverage trends are merging to create a more dynamic non-alcoholic beverage set can be seen in how NABev at AB InBev is meeting the needs of the emerging esports category. Here the company offers functional beverages that are energizing, that boost focus and aid in relaxation and hydration.
Meeting consumers where they are with what they want
Consumer interest in sophisticated non-alcoholic options is also leading to the development of more complex flavors in sparkling water and reduced sugar in more traditional nonalcoholic and soft drinks, said Henriques.
For example, within sparkling water, AB InBev sees demand for flavors like ginger, hibiscus, and lemon.
Consumers’ focus on wellness also is opening the door for more functional beverages with value-added ingredients, including those that offer antioxidants, natural energy, and enhanced performance, Henriques said.
More nascent functional health areas that are piquing the company’s interest include gut health and athleisure, which Henriques explains taps into the social aspects of taking fitness classes or doing something physically active with friends.
As illustrated by the diversity of need states and options that NABev at AB InBev is creating, the potential for non-alcoholic beverages appears limitless, and Henriques says she is looking forward to continuing to evolve the company’s portfolio to “celebrate all of life’s moments” so it can reach more consumers during more occasions.