Australia: Data relesead by IWSR projects significant growth of no- and low-alcohol beer consumption in next four years

Globally, Australia is one of the leading markets for no- and low-alcohol (NoLo) beer, which has traditionally been one of the strongest performers in Australia’s broader NoLo market, the Beer & Brewer reported on January 31.

The Australian Bureau of Statistics has reported a clear and progressive drop in alcohol consumption since the 1970s, and data released by the IWSR in 2023 projected significant growth of NoLo beer consumption in the next four years.

NoLo beers have held a strong position in the overall beer category for many years now, and John Preston, CEO of the Brewers Association of Australia, told Beer & Brewer that this is driven by a sustained shift from full-strength to mid-strength over the last decade.

“About 30 per cent of the beer market is mid-, low- and zero-strength beer in Australia, which is one the highest in the world. That is driven primarily by mid-strength, which makes up 26 to 27 per cent of the market in itself.

“Two of our greatest selling beers, Great Northern and XXXX Gold are both mid-strength beers, they make up a big part of the Australian market and have done for decades.

“I think it’s fair to say we are behind Europe in terms of zero-strength, which only makes up about one per cent of the market here. It’s definitely growing, and we’ll possibly see it double in the next five years as we see people start to embrace it as part of their drinking patterns.”

Reflecting on the accelerated growth of mid-strength beer, Preston sees consumer choice as a key driver.

“Overall in Australia, we have seen a really significant reduction in the amount of alcohol people have been consuming generally. Within that, for beer, this has been driven by a switch from beers at 4.5 per cent ABV and over, to beers around three and 3.5 per cent ABV. People have just made a decision to drink less alcohol and to drink more responsibly.

“The most significant driver has been consumer choice. One of the key trends of beer in Australia at the moment, is people wanting more information and choice in terms of what they’re drinking. Whether it’s mid-strength, zero-strength or low carb, they are now represented by all of the majors, and a lot of the craft guys are embracing these trends as well.”

Comparative to the full-strength segment of the beer category, Preston says that mid-strength consumers have often opted for something lighter with light craft beers leading the way, but post-pandemic, he says more traditional brands have started to reemerge.

“We have seen a drift back towards those traditional, state-based brands, such as Coopers, XXXX Gold, Toohey’s, VB and Carlton. I think that is possibly one of the reasons that the craft sector has struggled a little bit over the last few years.”

Interestingly, Preston also referred to the Australian alcohol tax system, which he says discriminates in favour of mid-strength beer and provides an incentive for brewers to make the crossover.

“For draught beer, you have a lower rate of tax for mid-strength beer than you do for full-strength beer. There is a price incentive to switch down to mid-strength, and I don’t think there are many other countries that do that.

“[In some countries] you may pay less tax, because it has less alcohol in it, but in Australia, we actually pay a lower rate of tax. This incentivises people to shift down, and we have seen some really beneficial outcomes in terms of consumption.”

While the beer tax system favours low-alcohol beers, it’s also a detriment to category recruitment.

“I often get asked, if there is no tax on zero-strength beer, why does a six pack of zero-strength cost the same as a six pack of full-strength beer,” says Preston.

“The answer there, is that it’s obviously a smaller product which makes up only one per cent of the market, so there are a bunch of fixed costs. But the way that you brew zero-strength beer, is to brew a full-strength beer and then take the alcohol out, that’s an additional process which is expensive.

“I do suspect brewers are looking at ways to make the brewing process for zero-strength beer more efficient in order to bring the price down, making it more attractive to consumers and taking advantage of the fact you’re not paying tax on it.”

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .