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Europe’s beer giant in trouble as thirst for lager fades

Brewers are weakening their drinks to boost their bottom line and counter changing consumer tastes

18 January 2026 12:00pm GMT Tom HaynesSenior Business Reporter

Heineken boss Dolf van den Brink was in ebullient mood last year when unveiled a new lager to take the Dutch brewer “into territory where beer brands couldn’t go”.

Heineken 0.0 Ultra, a “beer” with zero alcohol, zero calories and zero sugar, would target “the next generation” of drinkers by reaping the benefits of Gen Z cutting back on excess.

It was a sign of Van den Brink’s hubristic faith in non-alcoholic beers – but also of the desperate scramble by drinks bosses to solve a crisis engulfing the drinks industry.

Just a month after his comments, Heineken stunned investors with shock profit warning after a slump in beer sales. Van den Brink warned worse would come in 2026, sending shares cratering.

Now, the man who promised to pilot Heineken into the future, is gone. The 52-year-old announced his departure last week after six years in charge. One analyst said he had “not delivered” on the company’s high expectations.

His exit is a sign of the treacherous waters drinks giants must sail as demand for lager wanes.

In Britain, the company is taking drastic measures with dizzying price rises and watered-down beers aimed at boosting its bottom line.

Heineken is responsible for 30pc of lager pint sales in British pubs, owning brands like Fosters, Amstel, Birra Moretti, John Smiths, Sagres, Tiger as well as the Heineken range.

Despite some recent successes such as Cruzcampo and Murphy’s Irish Stout, the brewer is planning to raise prices on drinks supplied to pubs by 2.7pc next month because of the worrying sales figures.

It follows years of major price rises as the company struggles to keep hold of consumers who go out less often and drink less when they do. Keg prices were upped by 2.5pc last year and 1.7pc in 2024.

Heineken said it made the decision to raise prices in the face of soaring costs for the brewing and hospitality sector, not least surging beer duty.

At the same time, pub-goers will soon find themselves paying more for less, as Heineken slashes its beers’ alcohol by volume (ABV) level.

Foster’s, which had already been cut from 4pc to 3.7pc in 2023, is set to be further reduced to 3.4pc next month. John Smith’s Extra Smooth – the company’s top-selling ale – was similarly reduced from 3.6pc to 3.4pc last year.

Heineken is far from the only brewer weakening its beers. Asahi, Coors and Carlsberg have also cut the strength of certain drinks in the last three years to land in lower tax bands.

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Yet consumers will only tolerate lowered alcohol levels up to a point, says Julie Palmer, of business insolvency firm Begbies Traynor.

“I think around three per cent is quite a critical level,” she said. “Once you get below that, you start thinking, ‘Am I drinking alcohol at all?’”

“I think where this probably works better is with things like sports organisations, such as football, which carry brands like Fosters or Heineken. People are drinking volume and not really thinking about ABV.”

Cutting the ABV also has another benefit: potentially massive cost savings for Heineken and others.

Under the reformed UK alcohol duty system introduced in August 2023, beer below 3.5pc is taxed at a lower duty rate, creating a clear threshold that many brewers actively aim for.

Alcohol duty is set to rise by an inflation-busting 3.66pc at the start of February, equating to around 2p on the price of a pint in a pub.

This duty is charged per litre of pure alcohol, so dropping a beer from 4pc to just under 3.5pc both reduces the pure alcohol content and moves it into a lower tax band, saving brewers around 8p to 12p per pint in duty, with much larger savings at scale.

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Cutting ABV very slightly can be an easy win for brewers, since it is a change consumers tend not to notice, says Marten Lodewijks, from IWSR.

“They know at a basic level that spirits have more alcohol than wine, but beyond that, they are not very good at knowing alcohol content,” he explains. “Unless they are directly comparing ABV on a can, by and large, it goes unnoticed.”

Incentivising brewers to churn out weaker beer also suits a Government keen to reduce the public’s overall alcohol intake. “If the Government drives the regime by giving tax benefits for going lower, then companies will test the market,” says Palmer.

However, the Campaign for Real Ale (Camra) has criticised the move.

“What Heineken and other global giants have done is dilute their recipes to hit the lower tax band, without reducing prices, and sometimes hiking them. This is something that independent brewers can’t afford to do or won’t do because it will compromise quality,” said Camra’s Tim Webb.

Changing consumer tastes are also driving demand for weaker drinks.

Brewers that rely on shifting millions of litres of beer a day, like Heineken, have been forced to adapt to pubgoers drinking less often and less heavily.

Britain is becoming more sober, with the typical adult consuming 10 drinks per week on average last year down from 14 per week in 2003, according IWSR.

Heineken originally launched its first 0.0 offering in 2016, with Van den Brink saying it was an attempt to break down the “taste barrier” left by poor offerings such as Kaliber, Buckler and Clausthaler.

Yet its 0.0 offering was noted to have underperformed, beaten to the punch by brands like Lucky Saint.

“If anything, the trend is moving towards drinks that are simply really nice,” says Palmer “If it is a hot, sunny day, you might not mind if it has a lower alcohol content.”

Lodewijks says: “The growth of these products is solving a need for moderation. You might want to lower your alcohol intake but still be part of the occasion, and soft drinks do not always lend themselves to that.”

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Behaviour among drinkers is also diverging, especially at home. Households are turning away from regular-strength beer at a faster rate than lower-strength ones.

With brewers edging towards the floor of what alcohol level consumers will tolerate, and pubgoers increasingly opting for spirits, wine, or alcohol-free drinks – the days of “peak lager” are long gone, says Lodewijks.

“In developed markets, beer as a whole has been trending down, and that impact is felt most strongly in the core lager segment, particularly mid-priced standard lager,” he adds.

British drinkers have moved on to so-called premium brands, for which they are willing to pay more. These include lagers like Peroni, Camden Hells and Leffe.

Craft beers, now widely available, have also taken the shine off bog standard fizzy lagers.

In one of his final appearances as Heineken chief, van den Brink said the brewer had been “the pioneer and the leader” for the non-alcohol movement.

Drinkers taking a sip of their weaker pints next month may reluctantly be forced to agree.

Heineken was approached for comment.