Dry prospects for alcohol-free beer

CONCERN over binge drinking and related health issues has revived the market for low-alcohol drinks. Non-alcoholic beer (also called low-alcohol beer, small beer, small ale, or near-beer) is beer with very low or no alcohol content. Most low-alcohol beers are lagers, but there is some low-alcohol ale. This is usually accomplished through a heating or distillation process through which the beer is run after it has been brewed. The alcohol-removal process is most often completed after the beer has been brewed. Non-alcoholic beers usually resemble traditional beers. Depending on the brand name and the brewery, non-alcoholic beers range from a light, golden yellow tint to a thick, dark brown colour.

Beer has to meet different criteria in different countries if it is labelled "alcohol-free". In China, breweries are required to ensure that any beverage labelled as "non-alcoholic" contains no more than 0.5% alcohol by volume (abv). In the United Kingdom, the following definitions apply by law:

> No alcohol or alcohol-free: not more than 0.05% abv
> Dealcoholised: over 0.05% but less than 0.5% abv
> Low-alcohol: not more than 1.2% abv
In most part of the worlds, beer must contain no more than 0.5% abv if it is labelled "alcohol-free".

Overall picture
Global growth is still relatively robust, despite the global economic crisis, with a predicted average growth rate of 2.8% between 2009 and 2015. The world beer market increased less than 0.5% to 1.8 billion hectolitres in 2009. Expects beer consumption to fall 1.8% in Europe during 2010 and sees low growth in the Americas region, whilst Asia/Pacific and the Africa/Middle East regions are expected to show growth of above 4 per cent. The Asian beer market is to account for 38% of total beer consumption by 2015. The Asian market is dominated by China, which in five years time is predicted to account for over a quarter of all beer consumption worldwide. The Chinese beer market is forecast to reach 573 million hectolitres by the end of the forecast period, over twice the size of the US, the second largest beer market in the world.

China is expected to account for around half of the beer consumption growth during the next five years, whilst Russia and Brazil represent 8% and 7% of the total, respectively. In contrast, the East European market is only expected to grow by 1.5 %, whilst beer consumption in North America is forecast to deliver a CAGR of 0.5 %. Western Europe is expected to register a marginal decline.

Features of the China beer market
According to Chinese statistics and industry sources, local beer production reached 43 billion litres in 2009, up 5% from 41 billion litres in 2008. These increases over the last two years marked a significant slowdown from an average 10% growth in the preceding three years. The sluggish production increases in 2008 and 2009 were attributed to the economic slowdown, the Sichuan earthquake and severe winter weather conditions. Based on available trade figures, annual per capita beer consumption is estimated at around 36.5kg per year. This is less than half the levels found in developed markets.

The sector is also very concentrated with large domestic beer manufacturers dominating beer sales in China – the top six domestic manufacturers account for 52.6% of total beer volume sales. The number of large corporations decreased by 38 compared with the figure in 2008 via a series of adjustments of China's beer industry. Such expansions and mergers amongst the large corporations are continued and gradually expanding towards the central and the west in 2010.

Increasing acquisition and improved distribution channels continue to increase industry concentration. Snow has expanded its market shareSOCIETY