Is alcohol-free beer the solution to America’s drinking problem?
A strange category of drink is moving into grocery stores, restaurants and breweries. It looks like beer. It smells like beer. But there is no alcohol. In fact, you won’t find the word “beer” on the packaging. Instead, these drinks are labeled “cereal beverage,” “malt beverage” or simply “brew.”
The distillers of these seemingly paradoxical “near-beers” are unconventional and their backgrounds are surprising, but their motives are similar. They saw the negative effects of drinking alcohol in their friends, and wanted to do something about it.
Between 2019 and 2021, the U.S. saw a 5.5% increase in the amount of per-capita alcohol consumed. According to a study by the National Institute on Alcohol Abuse and Alcoholism, this was the largest two-year increase since 1969.
George F. Koob, director of the National Institute on Alcohol Abuse and Alcoholism, finds two trends occurring simultaneously. “While it certainly seems that opportunities to be mindful about alcohol use, such as ‘Dry January’ and ‘Sober October,’ are growing in popularity, alcohol consumption in the U.S. as a whole is increasing,” he told me.
Nonalcoholic beer, up until now, was rarely seen as an acceptable alternative to the real thing, but rather as a “time out drink,” as some brewers put it. But, in the U.S., the tides are shifting rapidly as big-brand backing and a “sober curious” culture have broken open the scene.
A new generation of brewers
Philip Brandes remembers going out to eat with a buddy from high school, a man who used to be the biggest craft-beer aficionado he knew. Now he was sitting in front of him, a watery nonalcoholic beer in hand.
“Unfortunately, he developed a drinking problem,” Brandes told me. “It got pretty bad and his wife one day said, ‘Look, I gotta make a decision here. It’s either your family or the beer.’”
The man chose his family, and the experience helped Brandes realize how lacking the nonalcoholic beer market was. Brandes worked in software, but he began experimenting with home brewing to see if it was possible to make a good beer with no alcohol. He didn’t want to use the typical methods: burning of the alcohol or removing it after the fact.
“When you start doing that, you start taking away all the good things that make the beer,” Brandes said. “There goes the hops, the aroma, the esters.” He put out an ad searching for a molecular biologist, convinced there was a better way. In 2015, after a year of experimenting, they found a recipe worth sharing and started North America’s first nonalcoholic craft brewery, Bravus.
The North American market has lagged behind the one in Europe. In Germany, for example, the low-alcohol beer AuBi was introduced in 1973. Germans now drink nonalcoholic beer the way Americans drink Gatorade. According to The New York Times, during the 2018 Pyeongchang Olympic Games, German athletes were supplied with 1,000 gallons of nonalcoholic beer as a recovery drink.
This trend didn’t hit America until more recently.
The story of Bill Shufelt’s and John Walker’s business is similar to that of Brandes’. Walker told me that his Athletic Brewing co-founder stopped drinking for a month in 2013, and two things happened. The first: Shufelt “quickly recognized the impact (not drinking) had on the quality of his life, his activities, his ability to get work done, his focus and acuity in general,” Walker said.
At the same time, Shufelt was from Vermont, where his social life revolved around the microbrewery. According to Walker, “He found himself just stuck to the kids’ menu.”
After extensive research, Shufelt recognized the potential to make nonalcoholic beer in ways that had not been fully explored and saw it as an exciting opportunity. Walker told me he “quickly recognized the fact that there’s a massive drinking problem in the U.S. … And this could potentially impact a lot of people in a very positive way, by giving (them) an opportunity to not drink.”
Shufelt, a trader at a hedge fund, recruited Walker, the head brewer at the Second Street Brewery in Santa Fe, New Mexico, to help him develop better nonalcoholic beer options. Investments poured into their startup, and by 2022 the company had raised $175 million in funding and were ranked as the 26th fastest-growing private company in America by Inc. Magazine.
What is nonalcoholic beer?
Remnants of Prohibition are seen in the legal restrictions regarding alcohol today. The Volstead Act of 1919 prohibited the manufacture and sale of “beer, wine, or other intoxicating malt or vinous liquors.” The threshold established then, 0.5% alcohol by volume, remains the point at which a cereal beverage legally becomes beer.
The descriptions surrounding the nonalcoholic beer market can therefore be confusing. Nonalcoholic beverages must contain less than 0.5% alcohol, around the same alcohol content of some fruit juices and baked goods. Beverages claiming to be “alcohol free,” in contrast, must contain no detectable trace of alcohol, according to the FDA.
The three main methods for brewing beer without alcohol are vacuum distillation, where alcohol is evaporated off, reverse osmosis, where alcohol is filtered out, or limited fermentation, where the process is halted before alcohol is produced.
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This is where nonalcoholic craft breweries are different from larger companies like Anheuser-Busch or Heineken. The craft brewers I spoke to used a fourth method. While each company is very secretive about their proprietary process, they all experiment with the type of grain, yeast and some treatment of wort (a watery grain mixture) to keep the sugar to alcohol conversion extremely low while allowing for the full fermentation process to occur.
It is this innovation (along with widespread aspirational marketing and serious venture capital) that is changing the perception of these beverages.
Who is drinking nonalcoholic beer?
I sat down with national ranking beer judge Kelsey Booth, as well as Ross Metzger and Cody McKendrick (both certified beer judges) from Bewilder Brewing Co. They taste beer from all over the world, scoring the beverages on stylistic accuracy, technical merit and other “intangibles.” In front of us were more than a few cans and bottles of nonalcoholic beer. I asked them to mentally put themselves in the shoes of someone who has never been exposed to beer before, while they used their training to evaluate the diverse array of beer impersonators.
The judges used the jargon of their trade — some brews had an aroma of spicy dry hops, or light grainy malt, the taste of caramel with sweet hay. Draught after draught, some were undrinkable due to overwhelming fake flavorings or oxidation that left a cardboard mouthfeel. Many were plagued with the taste of raw hops or unfermented wort — the price of preventing alcohol production.
But others were delightful, they said — a lager with a hint of molasses and light carbonation, an oatmeal stout that left a taste of roasted dark cacao on your tongue and finished dry. Some of the most accessible styles were the farthest from “beer” as it is known. I asked Walker whether it is to the detriment of nonalcoholic beer to replicate its alcoholic counterpart.
“That’s probably my favorite question because I think that you’ve nailed it,” he said. “You see this in nonalcoholic spirits. They try so hard to replicate the taste and feel of alcohol that it destroys what could be a delicious product on its own.”
In 2022, beer consumption in the U.S. declined by 3% despite the increase in overall alcohol consumption. It is unclear whether this was an adjustment back to pre-pandemic levels of drinking, or a sustained change in lifestyle. In contrast, nonalcoholic craft beer sales are booming. In 2021 and 2022, the category grew 288% and 101% respectively, according to NielsenIQ.
Even George W. Bush and Mike Pence are drinking it.
But market research from NielsenIQ indicates that the segment is not fueled by nondrinkers. Eighty-two percent of these consumers also purchase alcohol. In fact, these consumers (typically earning more than $100,000 a year) spend $157 more on alcohol yearly than households who exclusively purchase alcohol-containing beer.
But the research indicates that those who purchase non alcoholic beverages reduced their alcohol consumption by 22%. Walker agrees. “I have this saying, it’s kind of cheesy — since Athletic, I drink a lot less alcohol and a lot more beer.”
The National Institutes of Health make it clear who should not drink nonalcoholic beer. First, no amount of alcohol is safe during pregnancy, so it’s not a good alternative for expectant mothers with a hankering for an IPA.
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It also may not be a good substitute for those in recovery from alcohol addiction. “Drinking NA beer could be risky for people in abstinent recovery because cues associated with alcohol (e.g., the sight, smell and taste) can trigger craving, which increases the likelihood of relapse,” Koob said.
Nor is it suitable for those who abstain from alcohol completely because of their religious faith or other reasons. Even beverages like Heineken 0.0, a “no alcohol beer,” contains trace amounts of alcohol (between 0.01 and 0.03 percent). This, among other reasons, is why there have been no alcohol-free beers certified halal (permissible) by organizations like the Islamic Food and Nutrition Council of America, which vets products on behalf of Muslim consumers.
But is nonalcoholic beer winning the newest generation to come of drinking age, and could it alter America’s drinking culture? Maybe. The typical customer is currently 45 to 54 years old, but the market is developing and changing dramatically, year to year.
It makes sense. These are highly unique flavors. Brandes compared the bitterness of hops to cilantro — “you love it or hate it.” But for those who don’t want to drink alcohol, or don’t want to drink as much, the growth of this market seems promising. These unique, flavorful drinks are being developed that have significantly less sugar than soda, and they challenge the palate in ways that fizzy flavored water can’t.
Maybe, after this stage of market adolescence, there will be enough money in the industry for a craft brewery to make a no-alcohol cereal beverage that stands on its own. Maybe they already have.
