Similar to the off-premise, the non-alcoholic (NA) beer segment is outperforming the broader beer category in bars, restaurants and other venues, according to CGA, an NIQ-owned on-premise market research firm.
At on-premise retailers tracked by CGA, NA beer sales have grown +33.7% year-to-date (YTD) through mid-May compared to the same period last year, while the overall beer category’s dollar sales have declined -2.9% in the same time frame.
“While no-alcohol beer remains a relatively small element of U.S. on-premise drinks sales, it’s one of the most explosive categories for growth,” CGA client solutions director Andrew Hummel said in a press release. “It’s powered by a global trend for moderation in alcohol intake as consumers focus more sharply on their health, and reinforced by the flow of new, distinctive and high-quality, alcohol-free products from major-league beer brands.”
NA beer’s share of the U.S. on-premise market is small – at 0.49% of total on-premise beer dollars – but it has grown by +0.13 share points compared to last year, a CGA spokesperson told Brewbound. This is slightly less than half of NA beer’s share in the off-premise, which was 1.01% at multi-outlet grocery, mass retail and convenience stores (MULO+C) YTD through June 16, according to market research firm Circana.
In the off-premise, NA beer dollar sales have increased +29.2%, to $204.6 million, YTD according to Circana. Overall beer sales have fared better in the channel than in the on-premise, roughly flat at -0.5% YTD.
NA beer is outpacing total beer in other on-premise metrics beyond just dollar sales, CGA reported. Rate of sale (ROS) for NA beer increased +13.6% YTD through mid-May, while total beer’s ROS declined -9.4% in the period.
The NA beer segment increased points of distribution by +11.9%, just about three times the rate of the overall category (4.1%), according to CGA.
The price of total beer has increased in the on-premise channel, with the U.S. Bureau of Labor Statistics (BLS) recording the consumer price index (CPI) for beer away from home at +2.9% year-over-year (YoY) in June. NA beer’s average selling price in the on-premise has risen at a much higher rate (+5.2%), according to CGA.
So far this year, Colorado and Washington – both mature craft beer states – are leading in terms of YoY growth in NA beer. CGA estimates that NA beer will account for 1% of total on-premise beer sales in the western U.S. by 2026.
NA beer brand Al’s focuses on the on-premise and, as a result, 60% of its distributed business flows through bars and restaurants, co-owner Alban de Pury told Brewbound.
“We always wanted Al’s to be the NA beer to order at your favorite local bar or music venue,” he wrote. “Your go-to classic NA lager that feels at home in a nightlife venue or diner, a beer first, NA second – Al’s came after years spent in the hospitality and music industries in New York City.
“Selling to on-premise is much more hands-on than grocery stores,” he continued. “These are very difficult accounts to get, but once we’re on the menu, we do very well.”
Quantifying conversion rates for drinkers who try Al’s in the on-premise and purchase it in the off-premise is difficult, but de Pury said the rate “is especially high in NYC where many people know Al’s because they go out a lot and have found us in all the nice bars, restaurants, music venues and taprooms we’re in.”
“We now see a correlation between off-premise success and the on-premise presence in the vicinity,” he said. “It’s taken us years to build and we’re always working on it.”
Al’s is available in New York and New Jersey (Sarene), Massachusetts and Rhode Island (Craft Collective), Ohio (Sixth City) and North Carolina and South Carolina (Advintage). The brand also ships directly to consumers (DTC) in 41 states (excluding Alaska, Hawaii, Georgia, Idaho, Kansas, Michigan, Mississippi, Nebraska and South Carolina).
Pale lager – which Al’s is – remains the dominant NA style in the on-premise with a 55% share of the channel, according to CGA. NA pale lagers have increased dollar sales +8% YoY, but with the expansion of NA beer, other styles are gaining as well:
- NA IPA, +170.9% YoY;
- NA blonde/golden ale, +165.5% YoY;
- NA stout, +113.9% YoY.
NA stout’s growth is “from a smaller base,” and the style is likely driven by sales of Diageo’s Guinness 0.0 stout, which launched nationwide in spring 2023. Guinness 0.0’s off-premise dollar sales have increased +72.6%, to $14.4 million, in the 52-week period ending June 15 at retailers tracked by NIQ.
Dedicated NA craft brewer Athletic Brewing is likely contributing to on-premise growth of NA IPA and NA blonde/golden ale, as its core portfolio includes Run Wild IPA, Free Wave Hazy IPA and Upside Dawn golden.
Athletic kicked off the summer selling season with its “Ask for Athletic” campaign, which prompted drinkers to order its NA offerings on-premise on May 16 and be reimbursed up to $7 with proof of purchase.
The drinker activation was bolstered by “a multi-million dollar strategic media plan” that included TV, out-of-home, audio and digitals, as well as influencer relationships and a sampling push.
Athletic’s on-premise distribution is only about 5% – primarily via packaged product – although draft is a growing part of the company’s mix, co-founder and CEO Bill Shufelt told Brewbound.
“That is somewhere we’re seeing continue to grow very fast as our distributors get more bought in and realize what a growth opportunity on-premise is,” he added. “Honestly, most bar and restaurant owners are very hesitant to put non-alcoholic beer on tap yet, but we’ve lost almost no tap handles to my knowledge,” Shufelt said.