(Bloomberg Businessweek) -- To boost sales in Australia, a land where the ability to drink large quantities of ale can be a badge of honor, brewing giants Anheuser-Busch InBev NV and Kirin Holdings Co. think they’ve found a new weapon: weaker beer.
Pitching lower-strength brews might seem strange in a country that named a lager after Bob Hawke, a former prime minister and speed drinking champion, and where throwing back beers is de rigueur for watching sports or backyard barbecues. But a new era of healthier, image-conscious drinkers is cutting back on booze, forcing brewers to roll out weaker versions of everything from Stella Artois to local tipples such as James Boag and Hahn.
AB InBev, the world’s largest brewer, in April even started offering Australians a lower-alcohol version of Corona, the country’s best-selling foreign beer. “The mentality now is not to get drunk, but to drink,” says Jonny Forsyth, global drinks analyst at researcher Mintel Group Ltd.
Some full-strength brews have alcohol levels approaching 6 percent. Midstrength beers typically contain 3 percent to 4 percent. Corona Ligera contains 3.2 percent alcohol, almost a third less kick than the original’s 4.5 percent.
Among the biggest influences behind the industry’s downward shift is social media, according to Forsyth. Younger consumers weaned on smartphones are becoming wary of having embarrassing drunken photos of themselves appear on Instagram or of not looking their absolute best on Facebook the next day, he says. “They really link food and drink and alcohol consumption with how they look,” he says. “You can’t underestimate the impact of technology on this.”
Four decades ago, Australians typically guzzled 13 liters (3.4 gallons) of pure alcohol a year each, of which more than two-thirds came from beer, according to the Australian Bureau of Statistics. These days, they’ve cut back to 9.7 liters of pure alcohol a year, with beer contributing a little more than a third. (Consuming 1 liter of pure alcohol means drinking about 29 liters of midstrength beer.) Total beer consumption in Australia has more than halved, to 89 liters per person a year, and lower-alcohol brews make up a quarter of the total.
Of course, lighter beer isn’t necessarily a healthy option. And it’s not as if Aussies save much money drinking it. A 24-pack of Corona Ligera in 355-milliliter bottles costs A$47.95 ($35.94) at liquor chain Dan Murphy’s. The full-strength case costs only A$2 more.
In China, the world’s biggest consumer market, weaker beers have also done well, largely because they’re cheaper there. Almost one-third of beers launched in China in 2016 contained little or no alcohol (defined as less than 3.5 percent alcohol content), according to Mintel. That compared with 7 percent of beers in the U.K. and just 1 percent in the U.S.
Around the world, brewers are turning to lighter liquids as beer consumption falls. In Western Europe, the largest market for Heineken NV and Carlsberg A/S, demand for beer with no more than 0.5 percent alcohol jumped about 20 percent from 2011 to 2016, according to researcher Euromonitor International Ltd. AB InBev, which makes alcohol-free Budweiser, plans to have low- and nonalcoholic products make up a fifth of its global beer volumes by 2025.
For Australia, the weaker brews are a U-turn of sorts after years of celebrating drinking legends. David Boon, a former Australian cricketer, is almost as well-known for drinking an unprecedented 52 cans of beer while flying from Sydney to London in 1989 as he is for his sporting career. Retired politician Hawke, 88, is still revered by some for the fastest consumption of a yard of beer—more than a liter—as an Oxford student.
That relationship with alcohol may be changing. The nation’s No. 1 beer is a midstrength lager, XXXX Gold, which is made by Kirin’s Lion unit. Gold is favored by many Australians because it’s a beer they can drink all day and still remain standing. And local rival Carlton & United Breweries, owned by AB InBev, says its fastest-growing beer is one of similar strength, Great Northern Super Crisp.
“We see more and more consumers heading into that space,” says Brian Phan, director of brands including Great Northern and other light lagers at Carlton & United. “If you’re going to drink over a few hours, a midstrength does make sense.”
Still, the boom in weak beers may not be enough to resurrect total consumption. In Australia, annual growth in beer industry revenue will slow to 0.6 percent in the next five years, from 2.1 percent over the past half-decade, as alcohol consumption continues to drop, researcher IBISWorld Pty. forecasts.
Demand for lighter and healthier drinks has spread even to the growing craft beer segment, says Charles Hahn, brewmaster at Lion’s Malt Shovel Brewery in Sydney, which produces Lion’s James Squire craft beers, including the new midstrength ale Mid River. The evolution in taste is giving him a technical headache because craft beers are typically stronger and more bitter than lagers.
“It’s really challenging,” Hahn says. “Alcohol acts as a flavor enhancer. But the beauty of the midsegment is there’s just enough alcohol to give you a little bit of relaxation, and with that much alcohol you can still deliver flavor.”
For AB InBev and Kirin, the midstrength segment could also help draw more young women to beer as well as bring back older drinkers who’d become fed up with the physical effects of full-strength ale, Forsyth says. “A lot of people don’t want to give up on alcohol, but they want to be a lot more balanced and a lot more sensible,” he says. “That’s the way the market’s going.”
To contact the author of this story: Angus Whitley in Sydney at awhitley1@bloomberg.net.
To contact the editor responsible for this story: James Ellis at jellis27@bloomberg.net.
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