In 2023, for the first time excluding 2020, craft beer in the US saw an overall decline in sales and was the first year almost as many small breweries closed as new ones opened. A prominent and potential component of this decline is the growing trend toward “Mindful Drinking”. A bright spot during an industry-wide decline has been the significant growth of the non-alcoholic beer category. The NA (non-alcoholic) beer segment hit 1 percent of overall US beer sales, a major milestone, while the leader in the craft subsegment of the category, Athletic Brewing, surpassed $60MM in sales. While these numbers are well behind some of our European counterparts like Germany and Spain, where non-alcoholic beer makes up over 10% of overall beer sales, the strength of those markets might illustrate the potential of the category in the US. Investors are seeing that potential, too, backing brands like Rationale and Best Day who are exploding onto the scene and quickly gaining market share.
I started following the non-alcoholic craft beer sector in 2020 and my fascination evolved into building a national map of all the breweries who make at least one of their own NA Beer. Until 7 months ago, I still drank alcoholic craft beer and continued frequenting local spaces and breweries. Doing this, I noticed a massive change; not only did restaurants, bars, and liquor stores go from no/minimal options to a variety, but nearly every small-scale craft brewery in my area started carrying at least one craft NA beer option, sometimes multiple. This was incredibly helpful, especially since a lot of the local run clubs in which I participate hold runs from breweries. However, these options were usually limited to “national” brands like Athletic, not their own self-produced beer. While I love bigger, established brands like Athletic, Gruvi, Best Day, Untitled Art, and Rationale, I hope to see more local breweries seize this opportunity and brew their own beer, too.
I asked multiple breweries in Colorado, and many have told me that carrying alternatives has been great for them; it helps when customers want one more, and it helps mitigate lost business during “Dry Months,” especially January. Most of them added NA alternatives to their menus in 2023 and kept them year-round because they did well. A brewery I visited in March 2023 had 2 national NA beers, and multiple NA wines and kombuchas on their menu. Another had Untitled Art on draft that sold out so fast I didn’t even get to try it (they still have 2 brands in cans). I regularly visit 10 local breweries. In 2022, none of them carried NA beer options. Now, 9 out of the 10 carry at least one, the other carries a local NA kombucha on draft. Many of these breweries chose to carry products produced by other companies because they thought the process of making their own would be too complicated.
Nationally, many breweries have chosen to make their own, with mixed results. There might be other reasons, but a lack of marketing leading to a lack of consumer awareness during launch seems to be a major pitfall of the brands that fail. As a mapmaker who follows breweries who make their own proprietary NA beers, February is always a sad month. While many who carry products from other producers keep them as year-round offerings, several who made their own for Dry January often discontinue those products. It’s usually accompanied by the refrain that it was too expensive and didn’t sell well enough to justify the expense. Yet when I look back at the social accounts and menu placement (hello tiny print on a different page), it’s always the breweries who didn’t market their NA beer during the month on social media or their menus who discontinue production.
However, for brands that give their proprietary NA beers more support and attention, this can create a different problem: they sometimes have trouble keeping up with demand, as a result, they often expand their production and keep lineup throughout the year. Two Frays, started January 2023 with one beer, now has several NA beers in their lineup and dedicate the first Monday of each month to “MOD Mondays” where their whole menu is non-alcoholic (More in a future post). People’s Brewing started and collaborated with Generation NA to make more and expand into canned NA beer to add to their distribution around the city. According to them, this has increased sales and opened new markets. Talea Brewing in NY had 5 in January 2023, heavily promoted 1-2 options the rest of the year, and entered 2024 with multiple draft options and an amazing sour which is canned and distributed. There are many other breweries across the country not just continuing with making an NA, but adding canned options or more NA taps. (Blog continues after example posts from Talea Brewing and Two Frays Brewing)
Breweries who are debating brewing their own NA should consider the business benefits; increased sales during “Dry months”, the category’s growth overall, and the potential to increase the per-person spend per visit. Two Frays in Pittsburgh, People’s Brewing Company in Lafayette, IN, and Figurehead Brewing in Seattle, have worked on ways to brew using their own existing equipment. The ability to add an NA option without extra capital, and just a few more safety precautions (like a dedicated draft line) make NA possible at a wider scale. For those who prefer to produce NA beers by removing alcohol, companies like ABV Technology make it possible by providing a hub-spoke model to remove alcohol from fully fermented beers on-site in places like the Twin Cities and New York. ABV utilizes a proprietary vacuum distillation machine called the Equalizer and keeps them in hub breweries around the country.
For breweries that are not in areas serviced by ABV Technology or similar alcohol removal companies, biological methods of producing beer without alcohol are possible on existing equipment, a method preferred by many small craft breweries. For example in Germany where over 700 breweries produce their own NA beers, many of the smaller breweries use biological methods to create NA Beer without the need for dealcoholization equipment.
As fast as the NA beer category is growing, many believe the category is still in its infancy. While many breweries now carry NA options like Athletic, Best Day, GO Brewing, Untitled Art, Rationale and more, there are numerous benefits to brewing their own. This is for several reasons:
-Customers go to small craft breweries for their beer. While having NA beers from national brands available is nice, customers likely would be more interested in the brewery’s own NA beer.
-Growth in the sector is rapid, this has primarily been driven by the nationally distributed brands. The space for small breweries to fill is remaining and quite large, especially if the US market goes on to approach countries like Poland where NA beer makes up 10% of overall beer sales.
-NA Beer does not compete for tap space. The majority of NA consumers also drink NA beer. This means that it would increase the amount customers spend at breweries. Burial Brewing, for example, had concerns about dedicating taps initially, but have no regrets at all. As Doug Reiser told the US of N/A Podcast their NA options have more than held their own against their alcoholic beers. A study in the UK showed that offering NA beer options did slightly decrease sales of alcoholic beer at bars, but more than compensated with the increase in NA sales.
-A good place to involve and engage customers even more in your brewery’s journey. Figurehead Brewing in Seattle and Two Frays Brewing went through many iterations of their NA beers before settling on their current ones, for example. Figurehead Brewing even has a blog series on the development. People’s Brewing was under-confident about their first NA, but put it on draft anyways and it turned into a resounding success. New NA beers can potentially also be a place to engage customers for increased loyalty.
-Employee consumption – There is a tendency in the brewing industry of drinking too much. Yet, anecdotally we know this might be changing. Doug of Burial Brewing mentioned on the US of N/A podcast that multiple of their staff were fully sober, which made his offering their own NA an even easier decision. It can help create a culture of support for employees who want to drink more mindfully too.
Brewing your own NA can be a solid business growth and diversification strategy. With the capability to make quality NA beers becoming more accessible, changing attitudes towards alcohol consumption, and a growing need to provide brewery employees with alcohol alternatives, it’s no surprise that many small-to-mid-sized breweries who now make their own don’t regret “giving up” the tap real estate and see NA beer as a large part of their future. Don’t wait for this emerging market to pass you by: if you’re a craft brewery, the right time to make your own NA beer is now.
Special thanks to Mark LaFaro an amazing wealth of knowledge of the NA Beer Sector, genuinely nice guy, and excellent writer for all his help with the edits and more for this post. It’s his excellent article in Good Beer Hunting on the drinking culture within the industry referenced above as well.