Booze-Free Spirits Are Going Mainstream

Ben Branson wanted a sophisticated and refreshing tall drink—hold the alcohol, please. But what he got instead was “a pink, fruity, childish, sickly-sweet mocktail.” That was his lightning bolt moment. “It was so terrible,” he said of the Shirley Temple-like concoction served to him at a fashionable London restaurant. “I thought maybe I could figure out a grown-up option.” That was the beginning, back in 2013, of Branson’s journey into the nonalcoholic spirits category, which was so niche at the time that it was little more than a novelty. But that’s no longer the case, with Seedlip—Branson’s line of booze-free, botanical beverages—blazing a trail in what has become a closely watched and fast-growing space. Seedlip founder Ben Branson Sales are pouring in Sales of low- and no-alcohol libations, which accelerated during the pandemic, are expected to grow by 31% over the next few years, according to the IWSR Drinks' market analysis of 10 countries, including the U.S., U.K., Canada and France. In the U.S. alone, which the research firm called the second-largest market behind Germany and “currently the most dynamic,” sales of low- and no-alcohol drinks jumped by more than 30% in 2020. That figure includes zero-alcohol beers and low-alcohol hard seltzers, with the latter continuing their meteoric rise and spawning offshoots like teas, kombuchas, coffees and ranch waters. The spirits substitute segment, a nascent part of the business with brands like Proteau, Everleaf, Pentire Adrift, Curious Elixirs and Mingle Mocktails, is predicted to have the biggest annual growth in the space—14% between 2020 and 2024—“due to new product development and consumer demand,” per IWSR. Ritual Zero Proof, which recently stripped out artificial additives and added a rum alternative, mimics the alcohol it’s replacing. But at the individual brand level, some are reporting dramatic surges, with growth well into the triple digits. Ritual Zero Proof, for instance, grew 241% in 2020. The Chicago-born teetotaler-friendly line, which just added a rum alternative to its faux gin, whiskey and tequila lineup and stripped all artificial additives, saw its revenue jump 452% in the first quarter of this year compared to Q1 2020. The momentum will likely snowball as bars and nightclubs reopen, with mixologists and servers being some of the most dedicated and influential ambassadors for premium booze-free cocktails. Another future driver? Legacy marketers like Diageo are getting more involved, developing their own booze-free versions of Tanqueray and Gordon’s Gin, for instance, and investing in boutique startups. Competition heats up Catering to what it calls “conscious hedonists,” London-based Three Spirit Drinks infuses plants and herbs into products that aim to simulate the feeling of cocktails but have their own unique flavor profiles. The brand's natural caffeine-boosted Livener, mood-elevating Social Elixir and end-of-evening Nightcap use functional ingredients like guava leaf, green tea, lion’s mane mushroom and valerian. From its 2008 founding, its mission has been to find “a better way to feel good that didn’t ruin Monday.” “People are looking to nature, and they want transparency,” said Tatiana Mercer, Three Spirit co-founder and co-creator of online nightspot finder BarChick. “And the younger demos, if they’re not drinking spirits, will they be looking to imitate something they never had, or will they try something based on new benefits?” Three Spirit goes the botanical route with ingredients like ginseng, apple cider vinegar, yerba mate and white willow bark. Taking a different approach and closely mirroring rum, whiskey, gin and tequila, Ritual Zero Proof is helping build a “deeply relevant” category, similar to what Impossible Foods and Oatly have done in the plant-based food world, said co-founder Marcus Sakey. “It’s not anti-alcohol—it’s giving people healthier choices and sticking to the classic use cases they know, like mixing a drink they’re familiar with,” he said of the product line he debuted in late 2019, comparing some zero-alcohol fans to flexitarians. “And this is not a fad or a blip any more than dairy or meat alternatives are.” As evidence, Sakey points to the “43 brands that have launched after us,” by his last count, with “a new one coming every week. We’re in the middle of a sea change in this category," he added. Meanwhile, the gin-like granddad of the space, Seedlip, has gone from a copper still in Branson’s kitchen to distribution in 37 global markets and 20 U.S. states, along with a thriving ecommerce platform. (Diageo is now a majority stakeholder.) Branson, whose initial concept for a side hustle filled a hole in adult drinks and helped bring the temperance movement into the mainstream, predicts “a lot of money flying around, lots of M&A activity and inflated valuations” in the months ahead. “I see the Wild West.” Becoming more ‘sober curious’ There’s no question that people imbibed traditional hooch during lockdown, when “Chardonnay O’Clock” and #DayDrinking were common social media descriptors. At the same time, many American consumers got serious about health and wellness, boosting the profile of the sober-curious movement and chipping away at the old definition of “adult beverage.” Dry January, long embedded in the U.K. population, continued picking up steam in the U.S., with a record high 13% of Americans reportedly participating, according to Morning Consult. The trend toward zero-proof tipples is largely being driven, not surprisingly, by millennials and Gen Z, who are demanding well-considered brands with artisanal ingredients and beautiful packaging. They’ve turned their noses up at the uninspired soda and seltzer offered to nondrinkers in the past, and they’re challenging the long-standing notion that celebrations—whether happy hours, weddings or parties—must revolve around alcohol. “Younger consumers look at alcohol consumption with a more critical eye, and they’re pressure testing cultural norms that have been in place for decades,” said Bethany Gomez, managing director of data firm Brightfield Group, which coined the phrase, “drinking smarter, drinking less,” to describe the phenomenon. “These are bougie consumers, very discerning, who take this lifestyle very seriously.” Recent research from Brightfield found that 64% of consumers say they are drinking less alcohol than in the past or have ditched it completely, and notably for brands, 75% of those consumers wish there were more nonalcoholic choices. Fitter, happier, more productive Some consumers in this moderation wave are looking to drop some weight they gained during quarantine. Brightfield’s study found that 48% of all Americans say they are actively trying to lose weight, and 50% of alcohol consumers share that goal, which may include ditching the calories and carbs found in most alcohols. Those who abstain, as well as those who just want to pace themselves, are part of the zero-alcohol trend as people look for ways to socialize and relax that don’t involve a hangover—or a drink from the kids menu. “Consumers want to take better care of themselves and wake up with a clear head,” said Kara Nielsen, director of food and drink at research firm WGSN. “They also want to mark certain moments with interesting beverages that don’t feel like a compromise or a punishment.”

Alcohol Industry News

Booze-Free Spirits Are Going Mainstream as Nightlife Takes on a 'Conscious' Vibe

With huge growth and emerging brands, it's a 'Wild West'—without the bar fights and hangovers

T.L. Stanley

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