No Booze, Big Blues: Non-Alcoholic Beer Impacted By Tariffs

By Helena Fox-Mills, Olivia Gryson, Regan Byrne and Sara-Rose Smith through a collaboration with News Corps at CU Boulder’s College of Media, Communication and Information

Keith Villa remembers fondly the day, as the founder of Blue Moon beer, that he decided to take his expertise, honed for 32 years as the former Coors brewmaster, and break out on his own. 

He had been looking at trends that showed one of the biggest opportunities for beer going forward would be to turn it on its hoppy head. Cannabis had just been legalized in Colorado, and the rise of its recreational use in the U.S. was siphoning away customers from the beer industry. 

The non-alcoholic beer market had boomed in recent years. The desire not to drink was becoming more and more popular, resulting in a 26% increase in non-alcoholic beverages within the past year. 

“After I was about halfway through my college, I got to a point where I was going out clubbing and getting drunk pretty much routinely every Saturday,” 24-year-old Christian Place said. “When I realized I didn’t have control, I was in a rhythm for it. I really wanted to stop, so then I went alcohol-free for about a year and a half.” 

Because of individuals like Place, Keith sensed an opportunity to redefine what beer could be. Drinking culture was changing, and the future of beer might not have to involve alcohol at all. 

A regrettable reality for the non-alcoholic beer market, after all, was that the brews still contained small levels of alcohol. What if he could make a beer without any alcohol and infuse it with THC, the psychoactive good stuff in weed?

His innovative ideas led to the first U.S. patent out of a craft brewery for making a completely alcohol-free beer. However, due to federal laws prohibiting cannabis use in states where marijuana had not been legalized, the concept faced difficulties in gaining traction. 

So, Keith and his wife, Jodi Villa, launched Ceria, an alcohol-free beer, and out of the gate, they knew they had tapped into something. 

“We saw that the non-alcoholic beer world was growing,” Jodi said. “And since we were already making a bunch of alcohol-free beer and infusing it with cannabis, it was just only natural that, why don’t we just carve off some of this and we’ll infuse some of it with cannabis and sell it through dispensaries, and the rest of it we won’t infuse and then we can sell it,” Jodi Villa said. 

Brewing Trouble: Rising Costs and Production Hurdles

Ceria Brewing, a family-owned alcohol-free craft brewery founded in 2018 and located in Arvada, just got its breakthrough into the market—but now may have to pivot again following a new economic hurdle. The Trump administration’s reinstatement of Section 232 of the Trade Expansion Act of 1962 on Feb. 10 has elevated the tariff on aluminum and steel to 25%. The importation tariff officially went into effect on March 12.

With the non-alcoholic beer market rising and an increased 25% tariff on aluminum, independent craft brewers find themselves at a crossroads. Proper pasteurization is essential for non-alcoholic beers to prevent pathogen growth, making them unsuitable to be served on tap without this process. Aluminum tariffs limit packaging abilities, leaving craft breweries with a product but limited ways to safely and affordably distribute it. Since many independent breweries are worried about possible pathogen growth, they rely on aluminum cans as the primary method of distribution. 

“Pasteurization makes the beer safe and stable to drink,” Keith said. “The worry comes when you put the beer on tap. A lot of establishments don’t clean them properly. Somebody may go to the bathroom, not wash their hands, touch the tap and infect it, which in turn gets into the lines and can infect the beer. In alcoholic beer, the alcohol kills the pathogens, but without alcohol, it’s a whole different story.” 

With the 25% tariff imposed on aluminum, craft brewers like Ceria are among those who will be impacted the most. All of Ceria’s beers come in aluminum cans, and there is still no cheaper alternative to aluminum cans, even with the tariffs imposed. 

“You’ve got to buy cans, and we had been buying them from Canada because the cans from there were at lower costs,” Keith said. “But I have a feeling next time I look into cans, it’s probably not going to be that way.”

Given the challenges posed by the rising cost of aluminum cans and the complexities of pasteurization, Ceria Brewing plans to pivot to ensure its product remains possible in an increasingly competitive market. Ceria has thought of exploring alternative packaging options. Like several other breweries, Ceria uses cans because it is the easiest and most reliable packaging system for their beer. Other alternatives are kegs, which several brewers use; however, for Ceria and non-alcoholic beer companies, it is challenging to ensure proper pasteurization when using kegs. 

“The issue is that in a brewery, a lot of the majority of the contamination that you see occurs at that filling point, and so even though you have sterilized the beer upstream, by the time you’re packaging it, you could get something in there,” Keith said. 

To combat this, Ceria has been looking into flash pasteurization methods. This involves running the beer through a series of pipes that heat it to a point where any potential microorganisms are killed before moving it to a sterilized tank for filling. Yet, Keith cautioned that this process is very risky.  

“I’ve worked with [The Brewers Association] for years now to gently suggest to brewers not to put any beer or AF beer in kegs until all the science is there to prove that it is 100% safe for consumers,” Keith said. “Because really, the last thing we want to see is somebody get sick by drinking non-alcoholic beer on tap.” 

Gen-Z Shifts and the Limits of the NA Market

Consumers are looking for alcohol-free alternatives that don’t sacrifice the craft experience, fueling demand for non-alcoholic beers. Nicholas Collier, a triathlete and ambassador for Athletic Brewing, values the message behind Athletic Brewing because he gets to do just that—“enjoy the craft experience” without the alcohol.

“The Athletic Brewing message is like, ‘Hey, you can still have fun and enjoy your friends and not be left out or have that fomo that you’re missing out on a good time,’ and you don’t have to compromise on anything else you have going on,” Collier said. This shift in mindset reflects a broader cultural shift in active individuals like Collier, who still want the social aspect of beer but not the consequences of alcohol.

“There’s definitely been a big shift in like the number of people who are willing to drink a non-alcoholic beer compared to five years ago when it was like, ‘What’s even the point of drinking a non-alcoholic beer?’” Collier said.

But now, this question of “What’s even the point of drinking a non-alcoholic beer?” is haunting the non-alcoholic beer industry again, as Trump’s aluminum tariff makes meeting rising demand more expensive and logistically difficult.

Without a cheaper alternative coming soon, as quickly as alcohol-free beer rose to popularity, it may just as quickly crash and burn. A typical six-pack of beer costs around $9 in 2018, according to Business Insider, whereas a six-pack of non-alcoholic beer from the popular brand Athletic Brewing Co. costs $13.99.

People are already not willing to pay the extra money for something that does not even give them a buzz, and without a cheaper way to distribute alcohol-free beer with the new tariffs, the NA beer market may very well be a bust. 

“I’d rather spend money on a drink that actually gives me a buzz with THC rather than spend money on NAs that essentially do nothing,” said a recent University of Colorado Boulder graduate who didn’t want her name used.  

For social outings, Gen Z individuals who prefer not to consume traditional alcoholic beverages seek out beverages such as Nowadays, a THC-infused, non-alcoholic drink. 

“If there’s no gain in it, then I’m not wasting my money,” she said. 

Can the NA Boom Survive?

The production challenges faced by independent brewers may push smaller operations out of the market entirely. While large corporations may be able to absorb the increased costs or find alternative packaging methods, smaller brewers who rely solely on aluminum packaging could be left struggling. This may result in an industry consolidation in which only large corporations dominate.

“The whole craft alcoholic-free beer movement started around the same time we did,” Jodi said. “Back then, in 2017/2018, there were just a handful of players in the industry. Now, there are several hundred, as well as big players like Sam Adams, Heineken, etc.”

The non-alcoholic beer industry faces steep challenges ahead. From tariffs to taste and cost to contamination, it’s an uncertain time for brewers like Villa. The question now is whether the momentum can be maintained or if the non-alcoholic beer wave has already crested.