Anheuser-Busch InBev Makes High-Stakes Bet on Low-Alcohol Beer
Anheuser-Busch InBev officials think that beer drinkers will soon value the healthiness of their beer over the alcohol content. In fact, the company has forecasted beer of up to 2.8 percent alcohol by volume (ABV) to account for 20 percent of the industry by 2025.
Considering the fact that beers 2.8 percent ABV and lower made up just 2.5 percent of beer industry sales in 2014, this goal is quite ambitious.
The Belgium-based company, known for its Budweiser, Stella Artois, and Corona brands, is buying its closest competitor, SABMiller; after that purchase, it will make almost 30 percent of the world’s beer.
The company has already started to take steps towards its lofty goal. In May, it launched Budweiser Prohibition Beer in Canada — the beer has no alcohol, and, if successful, it could come to other markets in the future. In other areas, AB InBev has pledged $1 billion to fight alcohol abuse and will focus its development of new products in the low- and no-alcohol sectors.
One reason for doing this could be to increase the company’s margins. With these new products, brewers are able to market low levels of alcohol as desirable, putting the price at or above that of regular beer. And since the tax on low-alcohol beer is lower or non-existent, it adds up to more profit for the brewers.
Another reason to focus on low-alcohol beer is the rise of craft breweries. Smaller craft brewers have saturated the beer market, offering higher-quality products at the higher end of the ABV scale. Simply put, big companies see little room for growth in that market for them — “the higher alcohol segment is largely covered by craft,” said Euromonitor senior drinks analyst Spiros Malandrakis. So, AB InBev will focus its efforts on the less-saturated end of the ABV spectrum.
AB InBev also believes that non-alcoholic beer could be appealing thanks to an increased focus on healthy eating and drinking. AB InBev will market specifically to those seeking more natural, low-calorie alternatives to soft drinks and regular, high-ABV (and more caloric) beer.