Is America ready for lower alcohol beer?

In Europe, lower alcohol beers – and in particular radlers – have been a rare sales bright spot for major brewers in recent years. Can the same happen in America? Not judging by recent beer innovation. Despite a more health-aware consumer, the US has seen ABV (Alcohol by Volume) beer levels rise to unprecedented heights over the past few years.

For example, in 2013, three in five of all new beers released into US retail had a high ABV of 6.6%+. While this proportion has since reduced to 45% so far in 2015, such a proportion is still huge in comparison to Europe. In fact, so far in 2015, just 2% of all new beer innovation in America can be defined as having a lower ABV, which we define as between 0.6% and 3.5% ABV.

The reason for America’s higher ABV levels is down to the influence of craft beer, which has dominated retail releases in the past decade, and is in turn dominated by beers pushing the limits of traditionally acceptable ABV (4-5%). Even the American radler equivalents – such as the Bud Light Rita range and Redd’s – have a high ABV of 6-8%, rather than the 2-3% more typical of European radlers/beer mixes.

But why, you may ask, is craft beer so synonymous with high alcohol levels? Because it is much easier to brew beers which have a fuller and more distinctive flavor, not to mention recruit new consumers. High ABV beers are also another way to distance craft beers from the milder and (what some beer drinkers refer to as) “more watery” mainstream light beers which dominated America in the 1980’s. As Lew Bryson, an American beer writer and creator of the Session Beer Project has blogged: “Unfortunately, we have come to associate low alcohol with low flavor.”

US craft brewers are, however, increasingly trying to produce lower ABV, yet still flavorsome beers. While this trend for more “sessionable” craft beer has gained momentum in the US in recent years, almost all such innovation targets the 4-6% ABV level ― which means alcohol content remains very high and still much higher than the lower alcohol beers currently conquering Europe.

Lower alcohol beer is thriving in Europe

In Europe, the ABV picture is very different than the US. Unlike the US, innovation of 6.6%+ ABV beers is low: 17% of all new releases so far in 2015, while the majority of new beer releases come at 5% ABV and under. In Europe, lower ABV innovation has consistently been above 10% share of beer innovation annually. Within the 0-3.5% ABV segment, there has been a broadly equal split between non-alcohol beer (technically 0-0.5% ABV), which is flourishing in parts of Europe, and lower alcohol beer (0.6%-3.5%).

Intriguingly, Europe is starting to follow American trends and see innovation shift towards higher ABV levels. For example, the proportion of 0-3.5% beer has declined from 14% of all new releases in 2012 to 10% so far in 2015, while the share of 6.6%+ ABV beer over this period has jumped from 14% to 17%. This is the craft effect fanning out into Europe, where it has more recently exploded.

However, that the European preference is still for much weaker alcohol beer perhaps reflects that Europeans are much bigger drinkers of pure alcohol per capita than in the US – and have been so for many decades. This has made consumers and governments more proactive in seeking the adoption of healthier drinking habits. Europe also lacks a widespread legacy of “light beers,” with many mainstream beers throughout recent decades focusing on an ABV level closer to 5%, rather than 4%.

Marketers should focus on positives not negatives

Given the success of lower alcohol beers in Europe, there is no reason to think the concept cannot work in America, if positioned correctly. Europe provides some learnings on how to best position lower alcohol beers. These mostly involve not focusing on any potential negatives such as the words “lower,” “reduced” or “lighter.” As Mintel research shows, a significant minority of European beer purchasers expect lower-alcohol beers to not taste as good as standard strength varieties. Yet data also shows that a majority, in all but Italy, “would drink lower alcohol beer if the taste was as good as standard beers.”

The solution from a marketing point of view has been to accentuate the positive refreshment benefits of lower alcohol beers rather than position them as lower alcohol (or calorie): something which hints to consumers of lower taste. For example, Foster’s Radler in the UK has been communicated as “taste the new refreshment,” while Tiger Radler is positioned as “double refreshment.” What helps to make these claims authentic is that Radlers are heavily communicating their citrus juice flavors – fruit juice can make up to 50% of the product. That the beer is also lower alcohol – often less than 3% ABV – receives secondary and more discreet mention on pack.

Not all lower ABV beers in Europe are radlers/mixes which use fruit flavors – but that is how innovation is increasingly evolving. For example, 49% of all lower ABV beer innovation in Europe was flavored in 2006, compared to 79% in both 2014 and so far in 2015, according to Mintel Global New Products Database (GNPD). The use of flavors – primarily lemon/citrus but increasingly venturing into other fruits – taps into the preference for fruit flavors among younger consumers. It also helps to satisfy consumer concerns that the beer will not have the fuller, dialed up flavor now desired by younger beer drinkers.

America is experiencing a slight backlash against very high alcoholic beers; even the more “sessionable” craft beers being released have a strong alcohol content. This suggests brands may have an opportunity to deliver lower ABV beers – especially from mainstream US beer brands. Our research indicates that the biggest consumer barrier for lower alcohol beers is taste, and the key to the success of European radlers/beer mixes has been flavoring the beer with citrus fruit and accentuating summer refreshment cues, rather than implying a low taste by talking about a lower ABV. Health trends, coupled with the desire for more “sessionable” beers suggests there is an untapped opportunity for lower ABV beers in the US, if positioned correctly.

Jonny Forsyth, Global Drinks Analyst, is responsible for researching and writing all of Mintel’s UK drinks reports. He brings ten years of experience working in the marketing industry, with roles at Starcom Mediavest, AB-Inbev, and Trinity Mirror. He is a regular contributor in global and national media outlets such as BBC, CNBC and Bloomberg.