Sales of no or low alcohol beer are up 30% since 2016, as 18-24 year olds increasingly shun alcohol.
"Nolo" alcohol is set to be one of the driving trends of 2020, according to the craft brewers' trade organisation.
It says growing health consciousness has prompted almost one in four young people to become teetotal.
The number of alcohol drinkers across the British population also appears to have fallen slightly.
The number of 18-24 year olds who say they don't drink has increased by 6% in the past 12 months, to 23%, according to the Society of Independent Brewers' (SIBA) British Craft Beer Report.
The report is forecasting that no alcohol, low alcohol and "free-from" beers are set to be one of the fastest growing parts of the market in 2020, with under 35s choosing low alcohol versions of drinks for a quiet night in or to accompany meals.
"As the consumers in this age bracket get older, this is obviously going to have an increasing impact on beer sales in the future," added the association, which boasts more than 700 breweries.
"Consumers are more conscious of their physical and mental health than they have ever been, and this has driven the fall in alcohol consumption we are seeing, especially among young people."
Six in 10 of those aged 35-44 drink beer, compared with 44% of 18-24 year olds, the report found.
Growth in beer sales is slowing, with total beer sales in 2019 rising by 1.1%, compared with a 2.6% climb a year earlier.
The report also indicated a slight increase in the overall number of people who never drink alcohol, with 17% saying they were teetotal, compared to 16% a year earlier.
"The findings in this year's report show a drastically changing marketplace - with consumers opting for no or low alcohol options, particularly young people," said Caroline Nodder, editor of the report.
She added that there is likely to be more growth in no or low alcoholic drinks over the next 12 months as people become more health-conscious, providing a market for small independent breweries.
Research firm Kantar found that two-fifths of British people aged 18-24 do not drink or are trying to moderate their alcohol consumption.