Zero alcohol drinks: The European picture

Consumption of zero alcohol drinks has been rising rapidly – much more rapidly than beer in general – but it’s still important to give the overall market size in perspective. Zero alcohol volumes represented 3.4% of the total beer volumes sold in Europe in 2017, for example: so it must be considered as a niche - but nevertheless growing - category.

Zero alcohol – defined here as those containing less than 0.5% ABV* – is dominated by zero alcohol beer.

Top markets: Germany, Spain, Russia 

The zero alcohol market is much more developed in Western Europe than Eastern Europe**: accounting for 81% of total European volumes in 2018.

Germany and Spain are very much the largest markets. Germany alone accounted for almost a third of total European volumes with Spain accounting for a further 29.5%.

“The German market has been driven forward by the trend towards healthier living and by high levels of New Product Development and creative marketing, for example, positioning zero-alcohol beers as isotonic sports drinks,"​ explains Akos Petri, commercial consultant, Zenith Global. "New brewing technology has improved flavour."​

Generally speaking, demand for zero alcohol drinks in Germany has long moved away from drivers and is increasingly targeted on the basis of lifestyle and health-focused demographics. Zero alcohol beer has been building as a category for some time - making up for continuous loss of alcoholic consumption reaching back to the early 90s - helping it reach a strong level of acceptance today. On shelves, for example, zero alcohol products are displayed adjacent to alcoholic counterparts.

France, the UK and Italy are other significant Western European markets.

Despite its smaller volume share, consumption has latterly grown more vigorously in Eastern Europe. The region’s volume share of the market share rose from 16% to 19% in 2018, illustrating its growth.

Russia is the largest zero alcohol market in Eastern Europe: and comes in at the third-largest market in Europe overall at 7% of total volume. Here, the emphasis on beer is even more pronounced than the rest of Europe - some 98.5% of the zero alcohol drinks market is in beer. 

"Growth of the zero alcohol drinks market in Russia will be provided by the growth of the non-alcohol beer segment,"​ said Petri."Other types of non-alcoholic drinks are too niche yet, but demonstrate high growth potential if the trend of health consciousness continues."​

Poland and the Ukraine are other significant markets in the region.

Zero alcohol: a premium product?

The difference between the zero alcohol market in Western Europe and Eastern Europe is even more marked in value terms: with Western Europe accounting for 91% of value in 2018.

Looking at the European market overall, zero alcohol is not a premium product per se. However, its value per liter is significantly higher in Western Europe than in Eastern Europe, illustrating more premium positioning in Western Europe.

In Western Europe, the value per liter is 3.81 euros per liter; compared to 1.59 euros per liter in Eastern Europe.

“In Western Europe, generally, a lower price has not been a key selling point for zero alcohol, in part because brewers have sought to offset declining sales of alcoholic drinks and in part because zero alcohol itself has been moved increasingly towards the premium end of the market,"​ said Petri. ​

"Zero alcohol beer is sold as at least as good as – if not better – than standard alcoholic beer: consumers are not buying into a product with ‘something left out’ but into an alternative with its own premium virtues.”​

What to watch 

Looking forward, Zenith forecasts that Western Europe will remain the dominant region, keeping a similar volume share. That’s because a lot of NPD and marketing is focused in Western European markets, where consumers are more open to health and wellness messaging and whether both prices per liter and margins are at their highest. Germany will remain the largest zero-alcohol market by a large amount.

But there are shifts emerging. In Russia, for example, low and no alcohol alternatives have traditionally been marketed towards drivers. While this is still the case, brewers such as Baltika have been widening their message to talk to consumers looking for healthier lifestyles.

And in terms of growth, however, it’s not the big markets that are the stars in volume growth terms: Poland and the Netherlands being the markets showing the most growth in recent years.  

Across Europe, public health campaigns may have also been making a contribution to change. But perhaps most noticeable is the noise in the category around events such as the ‘UK’s Dry January’ and increased NPD and awareness.

However, at the end of the day, it will all come down to taste, emphasises Petri.

“While campaigns can prompt consumers to try zero-alcohol, only better-tasting products can persuade them to stay with them.”​

* Definition of low and zero alcohol varies between markets

** Eastern Europe: Belarus, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Ukraine. 

Western Europe: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, UK.

Data taken from Zenith Global's European Zero Alcohol Drinks Report​. The report period is based on 2018.