FoodDiageo acquires nonalcoholic spirits brand Ritual

Diageo acquires nonalcoholic spirits brand Ritual

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Dive Brief:

  • Alcohol giant Diageo announced its purchase of Ritual Zero Proof Non-Alcoholic Spirits, the bestselling booze-free spirits brand in the U.S. according to IWSR data. Financial terms of the deal were not disclosed. 
  • Diageo first acquired a minority stake in Ritual through beverage brand accelerator Distill Ventures in 2020. Ritual sells alternatives to gin, whiskey, rum, tequila and aperitif designed for cocktails like an old fashioned, negroni and margarita.
  • Sally Grimes, Diageo North America’s CEO, said in a statement Ritual will help complement the rest of the company’s portfolio in offering consumers “choice and variety.”

Dive Insight:

Companies that traditionally sell alcohol are paying attention to the increasing number of adults choosing to moderate their drinking.

The Guinness maker pointed to IWSR data which indicated nonalcoholic spirits is the fastest-growing category in the adult beverages landscape, with 31% overall growth in nonalcoholic drinks. In the press release announcing the Ritual purchase, Diageo said it owns three of the five largest nonalcoholic adult beverage brands globally, including Gordon’s 0.0 and Tanqueray 0.0 gins. In 2019, the company acquired a majority stake in nonalcoholic spirits brand Seedlip.

Marcus Sakey, who co-founded Ritual in 2019, said in a statement the purchase reflects a broader acceptance of nonalcoholic spirits in the CPG industry.

“This acquisition is proof of the mainstream potential of the category, and our shared ambition to make sure a non-alc cocktail is available on every menu and on every grocery and liquor store shelf, providing sophisticated choices to today’s consumer,” Sakey said.

In a note to investors, TD Cowen analyst Robert Moskow said the purchase signals a significant investment in nonalcoholic spirits.

“While small, we view the deal as further evidence that non-alc has become a legitimate subsegment of the market, which captures incremental occasions and enhances growth,” Moskow said.

The investment comes after Diageo reported a decline in sales of its higher-end spirits in the most recent financial quarter. Sales of George Clooney’s Casamigos tequila dropped 22%, and Johnny Walker Whisky fell 10% over the past year. On the earnings call, Diageo’s global CEO Debra Crew attributed the declines to a “volatile operating environment,” as consumers grapple with higher prices across the board. 

Several other low and no-alcohol spirits brands have emerged in recent years, promoting moderation.

Aplós, which launched in 2020, sells functional nonalcoholic spirits infused with hemp, and aims to provide a cocktail experience without the negative traits associated with alcohol: high calories and hangovers. Sommarøy — a Chicago-based startup which told Food Dive last year it aims to bridge the gap between nonalcoholic and full-alcohol spirits — sells vodka and gin that only contain 27.5% alcohol-by-volume. 

But not all of the brands in the space have seen success since their launch. In 2022, nonalcoholic aperitif maker Haus shuttered its operations after Constellation Brands backed away from leading a $10 million funding round at the last minute.

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