Non-Alcoholic Beers Pour In New Partnership Revenues

BY ADAM GROSSMAN

While it may seem that 2020 is a year for which everyone could use a drink, beer companies are not immune to the current macro challenges facing the economy. Even with these headwinds, however, non-alcoholic beer is achieving significant growth and sports partnerships will play a continued role in their success. 

New non-alcoholic products represent the latest efforts by beer companies to have healthier offerings for consumers. In a past post, we focused on the recent growth of the hard seltzer category. One reason for hard seltzer’s current success is that hard seltzer typically contains lower calories and carbohydrates than beers, including even many light beers.

This new focus on “calories and carbs” has been cited has one of the key reasons for the decline of beer-specific sales. As, head of partnerships and consumer experiences for Heineken USA, Quinn Kilbury said, “there’s a wide swath of millennials and younger who are, for a variety of reasons, driving this trend…These are real things that are happening with or without us and we should be pushing and embracing it.”

While being lower-calorie and lower-carb offerings, non-alcoholic beers are clearly different than hard seltzer in that they are designed to achieve similar taste to their alcoholic counterparts. Combining beer’s taste with a focus on healthier benefits has helped drive a 44% increase in year-over-year growth of the non-alcoholic beer category. Heineken alone sold one million cases of its Heineken 0.0 beer last year and expects to double that this year.

Established companies including Heineken and Anheuser-Busch in addition to newer participants such as Athletic Brewing are looking to further capitalize on these consumption patterns.  A sports-based strategy to achieve this goal has been shown to be successful before for beer companies.

 In a previous post, we highlighted research on Super Bowl ads that showed that Budweiser saw a statistically significant increase in sales in the week prior to the Super Bowl and generated $45 million in direct revenue from ads during the game. Budweiser also achieved a statistically significant increase in sales in the 8-weeks following the Super Bowl when it was the sole or primary advertiser.

Non-alcoholic beers should potentially achieve greater revenue lifts. B6A’s research using our Media Analysis Platform and Corporate Asset Valuation Model (CAV) has found that television ads and TV-visible signage (frequently staples of past beer companies sports partnerships and more likely to be used during COVID-19) are particularly effective at driving brand awareness. Our CAV research has also shown that lifts in brand awareness and brand sentiment have a strong and statistically significant correlation with increases in the likelihood of revenue growth for the beverage category.

 In addition, beer companies have used sports to “de-stigmatize” alternatives to their core products such as non-alcoholic beer and hard seltzers. Budweiser Vice President of Marketing Monica Rustgi stated this is one reason that the company will work with former Miami Heat guard Dwayne Wade as part of its launch for Budweiser Zero. As Rustgi said, “our goal is to de-stigmatize the association with non-alcoholic beer by showcasing the new and exciting opportunities it provides for people to continue celebrating across occasions big and small.”

There is one advantage, however, that non-alcoholic beer has over hard seltzer (and alcoholic beer) when it comes to sports partnerships. Most (if not all) sports leagues and teams have restrictions on when the team can sell alcohol during games. More specifically, alcohol sales stop during the last portions of games, contest or events.

The teams and beer companies now have a new option to sell to fans at venues with non-alcoholic beers. Rugsti stated that she wants Budweiser Zero to become the beer of the fourth quarter and ninth inning. As Kilbury said about  Heineken’s partnership with MLS, “It’s not the hardest sell in the world; in MLS after the 75th minute they’re not getting money in the beer category — now they are. It’s getting it right from responsibility and clarity and in the end everyone wins in this.”

We often emphasize how sports properties need to focus on how a partnership can drive revenues for their partners. However, the non-alcoholic beer category creates an opportunity for leagues, teams, and events to generate additional in-venue revenues (when fans can return to venues) because of offering a new sponsorship category. This clearly demonstrable mutually beneficial relationship is the critical reason that non-alcoholic beer partnerships will be signed in the current environment while also being positioned to maximize long-term success.