Moscow - Russians are among the biggest
drinkers of alcohol in the world, yet are developing a new taste
for alcohol-free beer, which could help save a brewing industry
that has stalled under government initiatives to discourage
drinking.
Sales of zero-alcohol beer jumped 12 percent last year even
as the broader Russian market shrank by 2 percent, according to
research firm Nielsen, extending a 40 percent slide in beer
sales since the government tightened regulations in 2008.
Anheuser Busch InBev plans to promote the
alcohol-free version of its Bud brand as a sponsor of soccer's
FIFA World Cup when Russia hosts it next year. Carlsberg's
Russian unit Baltika, which has the largest share of
Russia's alcohol-free beer market, said this month it was making
new investments in zero-strength beer.
The trend, say people in the industry, is being driven by a
move towards healthier lifestyles among Russian consumers,
nudged by government measures that include restrictions on
alcohol sales and tougher penalties for drunk-driving.
"This market is absolutely undeveloped in Russia. We plan to
expand our range, we want more," said Dmitry Shpakov, head of AB
InBev's Russian business, which markets alcohol-free versions of
its international Bud, Stella Artois and Hoegaarden brands as
well of some of its Russian brands.
Last year, AB InBev saw double-digit growth in Russian sales
of its alcohol-free beers, and it expects to achieve a similar
pace this year.
The segment is growing from a low base. Alcohol-free beer
accounts for around 1.2 percent of Russia's beer market,
according to Nielsen. That, said Shpakov, compares to 5 percent
of the German beer market and 13 percent in Spain.
AB InBev has a global aim for weak and alcohol-free beer to
account for 20 percent of its total sales by 2025.
Read also: Zimbabwe's flat economy hits beer sales
"I'm not saying it can't be 20 percent in Russia. It
certainly can. We are thinking about a number of very strong
initiatives, which can drive this process," Shpakov told Reuters
in an interview. "It's a very important focus."
Philip Gorham, analyst at Morningstar, said the Russian
government's push to curb drinking would help the segment: "Per
capita [alcohol] consumption has been declining. If that
continues, I do think there is room for non- and low-alcohol
alternatives to act as a substitute."
Brewers pioneered non-alcoholic beer in the 1980s and 1990s,
but with only limited success, partly because consumers did not
like the taste. Since then, changes to the production process
have made it taste more like regular beer.
"I think the stigma attached to drinking non-alcoholic beer
is less today than it used to be. Ten years ago, non-alcoholic
beer was rare whereas today there is greater consumer
acceptance, partly helped by the much-improved taste profile,"
said Ed Mundy, analyst at Jefferies.
"Do I think that the 1 percent beer share of Russian beer
can that grow? Yes I think so. As consumers come to accept that
the product offering is much improved."
Cutting back
Alcohol-free beer is a rare bright spot for a Russian
brewing industry which Euromonitor estimates was worth an
estimated $15 billion in 2016, but which shrank as the
government has sought to reduce drinking.
The average Russian over the age of 15 consumed the
equivalent of 15.1 litres of pure alcohol per year in 2008-2010,
according to the most recent figures from the World Health
Organisation. That was a litre less than five years earlier, but
still among the highest in the world: only the citizens of two
other ex-Soviet republics, Belarus and Lithuania, consumed more.
While spirits still account for 51 percent of the alcohol
consumed in the birthplace of vodka, beer's share rose rapidly
after 2000 as international brewers invested heavily.
But beer sales tumbled after 2008 when Russia started to
increase the excise tax on it, tightened rules on its
advertising and banned its sale in street kiosks. Brewers have
since shut 12 plants.
AB InBev has closed five plants, and Shpakov said the firm's
remaining five were running at between 40 and 90 percent of
capacity last year depending on season and regions they serve.
The industry had hoped to halt the slide this year, but a
new ban on beer in popular plastic bottles larger than 1.5
litres has again hurt sales. Shpakov said he expects the market
to fall a further 5 percent in 2017.
None of the new regulations affect beer without alcohol, and
increasingly Russians see it as a safer way to enjoy their
traditional drinking culture. Alexander Bumagin, a 40-year-old
self employed Muscovite, said he has not drunk alcohol for more
than 10 years, but likes an alcohol-free beer to wash down
prawns, a typical Russian "zakuska", or drinking snack.
He drinks it "for the sake of the process," he said.