Big Beer Zeroes In on Non-Alc. Here’s What They’re Driving At

This weekend millions of Americans will tune into the Formula 1 Aramco United States Grand Prix, which is a car race in Austin that only a sliver of them even knew existed before binge-watching Netflix’s “Drive to Survive” during quarantine. Your humble Hop Take columnist would love to write about the various ironies of a fossil-fueled motorsport spectacle sponsored by Saudi Arabia’s state-backed oil conglomerate taking place in the financial and spiritual home of the United States’ climate-death psychosis energy industry, especially in these times. But this being a beer column, today we’re focused on a different Formula 1 sponsor — Heineken 0.0, F1’s global beer partner — and the curious case of macrobrewers and their relatively recent sober curiosity.

As non-alcoholic beers continue their media-abetted march into the hearts and stomachs of America’s not-drinking public, the category’s heaviest hitters — Heineken being the heaviest, thanks to the startling stateside success of 0.0 — present an apparent contradiction. (Four of the U.S. N/A beer category’s top five best-selling brands are macrobrewed products; the outlier is Athletic Brewing Company, which makes the fourth-bestselling N/A craft brand. It has no booze in its business model, and a different paradox to ponder.) On one hand, N/A beer is getting more popular in the lucrative U.S. market, and macrobrewers are in the business of launching new drinks to grab growth in popular categories. On the other hand, big beer companies make the vast majority of their money on alcoholic beer, not this sleek non-alc stuff that plasters billboards and fills airtime abroad and, increasingly here at home, too.

Call it Hop Take’s Double-Zero Dilemma of Non-Alcoholic Macrobrews: 0.0 beers are made for people who want to drink less, by companies who’d really prefer if you drank more. What gives?

For one thing, the margins are typically better on N/A beer than the real stuff, because it isn’t taxed the same way. So producers have the opportunity to make more money per barrel on booze-free beer, which they love. More significantly, the segment is still vanishingly small when compared to the overall U.S. beer market, with just under 1-share in dollars, and less in volume. N/A beers would have to get really, really, really popular to pose any meaningful cannibalization threat to their alcoholic pals in megabrewers’ portfolios. Even executives who’d like that to happen don’t see it happening any time soon. “Just looking at the trends, I think it should be a 5 percent market,” Borja Manso, vice president of marketing at Heineken USA, tells Hop Take. “How fast? That is the question.” Big Green will set the pace, to some extent: Heineken 0.0 is doing nearly double the volume of its next closest competitor, Bud Zero, according to a recent analysis of off-premise scan data from NielsenIQ. Still, the non-alc flagship represents just a fraction of the firm’s overall beer footprint in the U.S. (In 2020, Brewbound reported the N/A brand was closing in on two million cases in the U.S. The alcoholic flagship did several hundred million cases that same year.)

“My crazy dreams as a marketer would be that whatever the occasion, if you’re thinking about drinking a beer, you always have a Heineken 0.0 available,” says Manso, who views the N/A product as a “tool for moderation” that allows drinkers an alternative to the “all or nothing proposition” of teetotaling vs. tying one on. “Opening the floodgates of moderation, that’s where the volume is.”

Marketing will be key to the effort; Manso tells Hop Take that the biggest factor limiting Heineken 0.0’s growth is getting potential customers to taste-test it. But the brand isn’t eschewing traditional advertising while the live-activation legwork is underway, either. Over the past few years, as “Drive to Survive” has seduced millions of housebound Americans with the high-octane, high-dollar dramas of F1 racing, Heineken 0.0 ads have made frequent cameos in the background of the show’s hero shots. Not to mention shots of the show’s hero: McLaren Racing’s Daniel Ricciardo, whose “goofy-jock charms are very popular among new American fans” per The Atlantic’s Amanda Mull, and who has appeared in several commercials for Heineken’s booze-free offering, including a September 2022 sober-scooting spot entitled “Riding Is Still Driving.”

Right around the time that commercial hit YouTube, green-bottled rival Peroni made its own double-zero F1 move, announcing a stateside extension of its existing non-alcoholic Aston Martin sponsorship that will put the Italian comer’s 0.0 brand front and center in Austin next year. “If you’ve seen Drive to Survive, you know that F1 has seen a resurgence in culture. It’s one of the fastest growing sports in the U.S. with over 27 million fans, growing 50% since 2021,” Joy Ghosh, Molson Coors vice president of marketing for above-premium beer and FMBs, told the company’s American wholesalers last month. “This partnership will also help halo the core brand and enable us to activate together in markets that have both 0.0 and base Peroni.”

(Molson Coors, which owns the U.S. rights to Peroni, did not respond to interview requests.)

If you’re James Wilt, these sorts of just-below-the-surface corporate machinations give the 0.0 game away. Wilt is the author of “Drinking Up the Revolution: How to Smash Big Alcohol and Reclaim Working-Class Joy,” a new deeply researched, unrelenting critique of the global booze business’s sophisticated methods of “captur[ing] and commodif[ying] genuine desires for collective pleasure” for profit, and the social, environmental, and political downsides of such a system. (Speaking of which: Did you know ABI’s corporate PAC donated nearly $160,000 to aspiring and current U.S. politicians who deny the legitimacy of the 2020 presidential election? But I digress.) Wilt argues, both in his shit-stirring book and in a recent conversation with Hop Take, that macrobrewers’ 0.0 offerings are less about corporate responsibility and more about fat margins, alibi marketing, and plausible deniability.

“All of this fits well within the alcohol industry’s desire to foster consumption patterns not only today but for decades to come,” he says, pointing out that 0.0 logos look similar to their ABV-having namesakes, command better profit at a similar price point, and can go places where the alcoholic flagship could be considered inappropriate. Like, for example, a car race in a state where alcohol-impaired driving deaths exceed a national average that’s already higher than most other industrialized nations. Advertising N/A macrobrews at F1, Wilt says, is a way for corporate brewers to have it both ways: to sell a bit of 0.0 beer at a great rake, sell a helluva lot more of the virtually eponymous alcoholic beer, and tell a compelling story about moderation in the meantime. “This has definitely been used as a loophole to get around advertising regulations to further entrench profitability,” Wilt says. Even if craft brands like Athletic lead the way on N/A innovation, he adds, macrobrewers’ scale enables them to produce their own 0.0 beers more efficiently, thus maintaining their hold on the market. “It’s like how fossil fuel companies have added renewable energy [assets] to their portfolio. It’s not that those things don’t exist, but they are such a minor fraction of their operations compared to the big picture.”

As a glass-half-empty columnist with “Merchants of Doubt” on his bookshelf, I find this argument fairly persuasive. To be clear, I don’t consider macrobrewers’ entries to the N/A segment to be the existential threat to public health that oil companies are to a just transition away from carbon-based fuels, but in both cases, you have global corporations with skin in one game suddenly interested in another. That demands scrutiny. I tend to believe individual executives like Manso when they tell me that they want to broaden access to N/A beer so drinkers have more options. I hope they do! But make no mistake, if macrobrewers are driving hard at 0.0 beer right now, it’s because they think it’ll benefit their core business first and foremost. If it does, you’ve got a for-profit fox running the harm-reduction henhouse. Maybe that works out. But if it doesn’t… well, you don’t have to be an F1 pit boss to see why that would knock Big Beer’s incentives out of alignment.

🤯 Hop-ocalypse Now

It’s not every day that the American right wing’s ouroboros of grift overlaps with the beverage-alcohol business, but when they do, it’s truly glorious. Er, make that GloriFi: a new “anti-woke bank” that, according to The Wall Street Journal, has struggled to get off the ground thanks in part to competition from another MAGA-aligned financial services firm, which GloriFi’s co-founder actually invested in thinking it was a “conservative beer start-up.” You hate to see it! Totally unrelatedly, Hop Take is rebranding as a conservative beer column called… hmm… The Malt Right, and is now accepting investment from true American patriots. Please send cash, challenge coins, and hops contracts to VinePair HQ, or just Venmo me.

📈 Ups…

Yuengling expands to Missouri, Kansas, and Oklahoma… Trillium is moving into Reebok’s old HQ… Alcohol stocks resilient in recessions, which is a) true and b) a bleak coda to the story above… I’m choosing to read this as an endorsement of Beer Cup Snakes… Readers really seem to be loving the column…

📉 …and downs

Anheuser-Busch’s corporate PAC has donated $158,500 to election-denying candidates… Kroger/Albertson’s want to merge in a $24.6 billion deal, so good luck in grocery, craft brewers… PBR Hard Coffee a has-bean as Pabst kills category leader… Private-equity portfolio Made By the Water lays off 10 at Catawba Brewing Co…. Beer, spirits lobbies to square off in a dozen state tax-equivalency fights… Beer inflation still outpacing wine and spirits at 4.5 percent in latest CPI…