Like any good entrepreneur, Palestinian beermaker Nadim Khoury knew that adaptation would be key to his brewery's survival under a government led by the Islamists of Hamas.

So anticipating the hardliners' rise to power in January's general election, Khoury decided to develop a new product - a non-alcoholic microbrew brandished with a label that coordinates perfectly with Hamas's trademark color.

"I figured why not have a green label so it will match?" said Khoury, who runs the Taybeh Brewing Company, the only brewery in the Palestinian territories. "All customers will notice the green for the Hamas flag."

The alcohol-free version of Taybeh beer, with a label inscribed only in Arabic and whose name means "delicious," is to be released this summer and will target the "local market," he said.

Non-alcoholic beer is already popular in a number of conservative Gulf Arab countries which officially ban booze sales.

The lucrative market potential was highlighted by a deal four years ago which saw Egypt's largest brewer of "near-beer," Al-Ahram Beverages, bought by Heineken for 280 million dollars.

Khoury says he will start small with his new beer, maybe only a few hundred bottles at first, but he has big dreams for his brewing factory in the hilltop village of Taybeh, a historically Christian town of about 1,300 people near Ramallah in the West Bank.

A sense of homeland pride and the family's ability to invest more than one million dollars spurred Nadim, who was born in Taybeh, to return after two decades in the United States in order to build the brewery shortly after the signing of the Oslo peace accords in 1993.

Now in its 11th year of business, Khoury said the brewery sells the equivalent of about 1.2 million pints per year, though its peak output was more than twice that in 2000 prior to the outbreak of the second intifada against Israeli occupation.

Violence was bad for business, and the intifada brought a wave of harsher regulations in many Palestinian cities.

Khoury hasn't been able to sell his beer in the Gaza Strip for years, since militants torched the home of one of his distribution outlets and radical Islamists effectively made selling alcohol impossible throughout the crowded territory.

But Khoury hopes attitudes will change with his new non-alcoholic beer.

"I don't want to smuggle my beer in Palestine. I believe I have a right to sell mine (in the Gaza Strip)," said Khoury, an unabashed nationalist who touts his beer factory as a boon to the Palestinian people and their economy.

"Every time we sell a bottle of beer it goes toward building the state of Palestine," said Khoury.

Khoury says his first name Nadim means "your friend who sits at the bar with you, your drinking buddy," and his chief product is Taybeh Golden beer, though he also makes a light version and a dark beer.

The Taybeh brews are concocted from four natural ingredients -- malted barley, hops, yeast and pure spring water. Each bottle sells for around one dollar.

The gentle, amber-colored Taybeh Golden is sold in parts of Israel, the West Bank, Britain and Germany.

However, among secular Muslims in the area who do drink alcohol, not all are devoted fans of its mellow taste.

"It's okay. It's good," shrugged one Arab-Israeli taxi driver in Jerusalem, who admitted he hadn't drunk any Taybeh in at least two years.

A waiter at a bar in occupied East Jerusalem said: "I prefer Irish whiskey. Jameson."

Hamas leaders, who now dominate parliament, have not made clear whether or not they will seek to impose conservative sharia law which would impose a wider ban on alcohol.

Khoury remains optimistic.

"I think they (Hamas) are very smart, very educated. I believe they will think twice before they do anything to hurt our business."