By Mohamed Ezz and Emma Rumney

CAIRO/LONDON (Reuters) – Egyptian Mohannad Abdelazeem, 35, does not drink alcohol. However he does devour three or 4 cans per day of Moussy and Fayrouz – alcohol-free beers.

Brewers together with Carlsberg (CSE:) and Anheuser-Busch InBev say curiosity is rising in such booze-free brews throughout the Center East and North Africa, presenting alternatives in a area with a few of the lowest alcohol consumption charges globally.

Reuters spoke to eight Egyptian shoppers, shopkeepers or cafe homeowners – together with Abdelazeem – who mentioned they or their prospects have just lately switched to non-alcoholic beers, ditching U.S. tender drinks manufacturers like Pepsi and Coca-Cola (NYSE:) as a result of they see them as supportive of Israel following its bombardment of Palestine.

PepsiCo (NASDAQ:), which acquired Israel-based SodaStream in 2018, and Coca-Cola didn’t reply to a request for remark.

There’s additionally a broader shift in shopper tastes underway, some executives say.

AB InBev has seen demand for zero-alcohol brews rising amongst locals in some Center Jap nations, together with Saudi Arabia, in line with Jason Warner, its CEO for Europe and the Center East. Gross sales to vacationers and expatriates have additionally grown.

AB InBev launched its flagship alcohol-free beer Corona Cero in Saudi Arabia within the first quarter. Saying the deliberate launch in September 2023, Brian Perkins, AB InBev’s head of Western Europe, mentioned Corona Cero provided “new frontiers of growth and brand building in expansion markets”.

Abdelazeem, a genetics researcher, mentioned he used to drink seven or eight cans of Pepsi or Coca Cola day-after-day, however anxious about its well being impacts. He sees drinks like Carlsberg’s Moussy as being good for digestive well being and stopping kidney stones, including his complete household had now made the change.

“Honestly, we like it even more given its health benefits,” he mentioned.

Moussy is made by avoiding alcoholic fermentation, as an alternative of by eradicating alcohol afterwards as is frequent with many non-alcoholic beers. Carlsberg refers to Moussy as a non-alcoholic beer, although it’s marketed as a malt beverage in Egypt, the place it has been offered for 30 years.

Whereas Carlsberg mentioned rising curiosity in zero-alcohol brews introduced an “opportunity” within the Center East and North Africa, they had been unlikely to make any substantial contribution to revenues any time quickly.

“Culturally it is going to take time for people to be comfortable with the notion that it is a beer,” CEO Jacob Aarup-Andersen instructed Reuters in an interview earlier this yr.

Carlsberg’s groups had been working to develop markets within the area, however this was a long-term endeavour, he added.

AB InBev is targeted on interesting to present beer drinkers, who presently drive zero-alcohol gross sales globally, executives instructed Reuters.

It sees demand for non-alcoholic beer within the Center East largely concentrated in worldwide venues like inns and western eating places. Whereas traits in cosmopolitan cities are inclined to unfold over time, AB InBev had no plans to attempt to drive uptake, Warner mentioned.

Heineken (AS:)’s internet income grew by upwards of 40% in Egypt within the first half of this yr, partially because of gross sales of Fayrouz. The corporate doesn’t break down its outcomes by nation and declined to supply additional particulars.

“PIVOTAL PERIOD”

Non-alcoholic beers stay a small a part of brewers’ revenues, however are more and more central to technique as they provide development. Up to now, that has largely been pushed by increasing the alternatives for present drinkers to sip on beer manufacturers, resembling throughout working lunches.

The executives’ feedback, nevertheless, point out potential for zero-alcohol brews to recruit new prospects in nations with giant populations that brewers have barely penetrated so far.

Whereas all brewers function within the Center East and North Africa, their beer gross sales in lots of nations are centered on a distinct segment market of travellers and expatriates – which is rising as tourism will increase.

Manufacturers like Carlsberg’s Moussy and Heineken’s Fayrouz, against this, have focused the native inhabitants.

Carlsberg commenced native manufacturing of Moussy in Egypt in 2023, and has additionally constructed an area sourcing hub in Jeddah, Saudi Arabia, the place it says Moussy and one other Carlsberg model Holsten maintain over 50% of the zero-alcohol beer market.

It has developed new flavours, together with lemon and mint, a preferred style regionally.

“We are at a pivotal period in the Middle East where local preferences and aspirations are changing rapidly,” mentioned Alexander Hauberg-Jensen, Carlsberg’s vice chairman for Center East & Africa.

Carlsberg, which sells tender drinks in addition to beers, plans to broaden its portfolio to incorporate different non-alcoholic drinks, he mentioned.

AB InBev’s chief advertising officer Marcel Marcondes mentioned the corporate was not making any particular effort to develop in Center Jap markets, which aren’t a precedence and the place it doesn’t promote.

The corporate works to make sure product is obtainable to satisfy demand and supply companions with instruments to serve its drinks properly, resembling glassware, Warner added.

CULTURAL BARRIERS

Even oblique promotion of alcohol is prohibited in Gulf nations, together with the United Arab Emirates, and it’s unclear if promoting a zero-alcohol model of an in any other case alcoholic model would class as such, mentioned David Yates, Companion and Head of Digital & Information at company legislation agency Al Tamimi & Firm.

Corporations must seek the advice of rigorously with authorities to know what advertising, if any, is permitted, and even then threat offending conservative shoppers, he added.

Any important cultural shift is generations away, mentioned Laurence Whyatt, analyst at Barclays, including the model consciousness and pursuit of moderation that drive zero-alcohol gross sales elsewhere don’t exist in areas the place most don’t drink.

“I’m not holding my breath,” he mentioned.

In some nations, zero-alcohol brews are rising for various causes, resembling in Egypt the place they’re perceived to be good for digestion, mentioned Alexandra Molokova, research analyst at market research agency Euromonitor Worldwide.

This presents a possibility for brewers however they should adapt their methods and pricing to replicate these differing motivations, added Susie Goldspink, Head of No- and Low-Alcohol Insights at beverage market research agency IWSR.

Most prospects within the area would in any other case be consuming a tender or scorching drinks – far cheaper than the alcoholic beers brewers often price in step with, she mentioned, including well-known manufacturers like Moussy have the higher hand.