Amin Alkhatib, a research analyst at Euromonitor, told FoodNavigator that the market size for non-alcoholic beer for the Middle East is estimated at 680m litres—where the major markets are Iran, Saudi Arabia, Egypt, UAE, Israel, Bahrain, Oman, and Qatar.
“Growth rate for non-alcoholic beer is expected to be 10% in the aforementioned markets. Before 2013, the segment was growing at double digit rates, especially after the flavour revolution in Iran in 2003,” he said.
According to Alkhatib, there are multiple factors supporting the demand for non-alcoholic beer in the region, adding that the region has potential deriving from its population's demographic shift, with a Saudi Arabian median age of 33 years old and a regionally-relative longer life expectancy, at 77 years old.
“This is further supported by the tendency for consumers to maintain brand loyalty to non-alcoholic drinks throughout their young adult lives,” Alkhatib said.
It’s all in the name
“The most important aspect is flavouring. Malt-based drinks are usually bitter and the introduction of flavours has reshaped consumers’ product perception. Manufacturers such as Iran’s Arpanoosh changed the perception of this drink from a non-alcoholic beer to a flavoured carbonated malt-drink,” he added.
“The foamless image for a malt-based drink is key to convince consumers of its non-alcoholic connotation. Detaching the brand from alcoholic brands of beer will gain confidence and sales from Muslim consumers,” he added.
Alkhatib pointed out how Fayrouz in Egypt is positioned as a malt beverage, unlike Birell and Amstel Zero that are clearly positioned as beers. “Barbican in Saudi Arabia and Moussey Classic in the UAE are both positioned as foamless malt-based drinks’.”
To further penetrate the market, Alkhatib suggested that the beverage industry can look at seasonality and market these drinks as winter soft drinks using winter flavours, like lemon tea or hibiscus.
“Manufacturers can look at boosting sales in the on-trade by utilising local franchises to provide malt-based drinks or NABs as an alternative,” he said. “However, this will be limited to malt-based positioned brands, not for beer-based brands.”
Carbonated drinks a hindrance
Alkhatib said that there is a limitation for this market that can be attributed to the soft drinks sector, as competition from non-cola carbonates is likely to be an obstacle to the growth in this sector in the next five years.
“Non-alcoholic beer is relatively small when compared to the carbonates market in the Middle East. The size of the carbonated drinks market in the Middle East and North Africa region is estimated to be 16.2bn litres or 4% of the entire beverage market,” he added.
“However, non-alcoholic growth rate outperforms carbonated drinks and is likely to take up a bigger share of the non-alcoholic carbonates market in the next five years. Markets like Iran, SA, Egypt and UAE can see growth rates between 5% and 10%,” he added.