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Diving overview:
- Spirits giant Diageo announced that it has acquired Ritual Zero Proof Non-Alcoholic Spirits, the best-selling non-alcoholic spirits brand in the United States, according to IWSR data. Financial terms of the deal were not disclosed.
- Diageo first acquired a minority stake in Ritual in 2020 through beverage brand accelerator Distill Ventures. Ritual sells alternatives to gin, whiskey, rum, tequila and aperitifs and is designed for cocktails such as old fashioneds, negronis and margaritas.
- sally Grimes, Diageo North America The CEO said in a statement that Ritual will help complement the rest of the company’s portfolio by providing consumers with “choice and variety.”
Dive Insights:
Companies that sell traditional alcohol are taking note of the growing number of adults controlling their drinking.
The Guinness maker points out IWSR data shows non-alcoholic beverages are the fastest-growing category in adult beverages, with non-alcoholic beverages growing 31% overall. In a press release announcing the Ritual acquisition, Diageo said it owns three of the top five non-alcoholic adult beverage brands globally, including Gordon’s 0.0 and Tanqueray 0.0 gin. In 2019, it acquired a majority stake in Seedlip, a non-alcoholic liquor brand.
Marcus Sakey, who co-founded Ritual in 2019, said in a statement that the purchase reflects the broader acceptance of non-alcoholic spirits in the CPG industry.
“This acquisition is a testament to the mainstream potential of the category and demonstrates our shared ambition to provide sophisticated choices to today’s consumers by making non-alcoholic cocktails available on every menu and on every grocery and liquor store shelf,” said Sakey. “It will,” Sakey said.
The acquisition represents a significant investment in non-alcoholic spirits, TD Cowen analyst Robert Moskow said in a note to investors.
“Although small in scale, we see this transaction as further evidence that this is a legitimate sub-segment of the non-alcoholic market, capturing incremental opportunities and enhancing growth,” Moskow said.
The investment comes after Diageo reported a decline in premium alcohol sales in its most recent financial quarter. Sales of George Clooney’s Casamigos tequila have fallen 22% over the past year, while sales of Johnny Walker Whiskey have fallen 10%. On the earnings call, Diageo’s global CEO Debra Crew attributed the decline to a “volatile operating environment” as consumers struggled with higher prices across the board.
In recent years, low-alcohol and no-alcohol spirit brands have emerged that encourage moderation.
Launched in 2020, Aplós sells cannabis-infused functional non-alcoholic spirits and aims to provide a cocktail experience without the negative traits associated with alcohol: high calories and hangovers. Chicago-based startup Sommarøy told Food Dive last year that it aims to bridge the gap between non-alcoholic and pure alcoholic spirits, selling vodka and gin with an alcohol content of just 27.5%.
However, not all brands in this space have found success since launch. In 2022, non-alcoholic aperitif maker Haus ceased operations after Constellation Brands backed out of a $10 million funding round at the last minute.
