Heineken beer bottles. Photo: Igor Golovniov/SOPA Images/LightRocket via Getty Images

Last year was the best in a decade for Heineken, the world’s second-largest beer maker. One of the big drivers was its alcohol-free Heineken 0.0, which was launched in the summer of 2017, and is now seeing sales grow at a double-digit clip.

Why it matters: Defying the laws of reason and good sense, alcohol-free beer has become an important segment of the beer market, per Wall Street Journal's Carol Ryan.

The big picture: While non-alcoholic beers make up just 5% of beer volume sold worldwide, the category has grown at 3.9% on average for the past 5 years compared with 0.2% for traditional beer. A report from GlobalData finds that non-alcoholic beer is the fastest growing segment of the beer market, just ahead of strong beer.

  • Budweiser maker AB InBev says it plans to generate at least one-fifth of its global beer sales from low-or-no alcohol brands by the end of 2025.
  • "You could expect 10 to 15 years down the road this would be more or less the global trend," senior Heineken brand director Gianluca Di Tondo told Reuters when it launched Heineken 0.0.

How it works: The popularity is apparently the result of a confluence of increased health consciousness among younger consumers and FOMO.

  • "Consumers are becoming increasingly aware of their alcohol intake and see low-alcohol and alcohol-free variants as a healthier alternative, while still allowing for participation in traditional cultural events," Andrew Curran, Beverage Analyst for Canadean, told Food&Wine in 2017.

Details: It's also the result of growing popularity in places like the Middle East where alcoholic beverages are prohibited by law. The Middle East now accounts for almost a third of worldwide sales by volume of non-alcoholic beer.

  • Despite overall beer declines between 2011 and 2016, consumption of non-alcoholic beer in Germany increased 43%, according to Euromonitor International. In China, about 30% of the new beers launched in 2016 were non-alcoholic, according to market research firm Mintel.

Surprise: While non-alcoholic beer has traditionally been seen as a replacement for alcoholic beer, today, one in five low-or-no-alcohol products sold is replacing a soft drink, according to a recent UBS survey.

Go deeper: Bud Light to begin disclosing nutrition facts

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