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Zero-Proof Spirits Gaining Traction As Major Players Enter The Category

May 9, 2023

Demand for zero-proof spirits is at an all-time high, buoyed by a new approach that ditches the all-or-nothing drinking mentality and encourages people to embrace alcohol-free spirits on their own terms. For some, that means mixing zero-proof spirits with other non-alcohol ingredients to create upscale alcohol-free cocktails. But for others, zero-proof spirits are a good accompaniment to traditional spirits and provide a lower-alcohol twist for well-known drinks.

The alcohol-free spirits segment has been showing strong growth, albeit from a small base, as major alcohol players invest in the trend. Sales of zero-proof spirits were up 90% in 2022, totaling $6.1 million, according to NIQ (NielsenIQ), with volume up more than 100% to nearly 22,000 9-liter cases. “It’s an incredibly exciting time to be in the non-alcohol space,” says Marcus Sakey, co-founder of Ritual Zero Proof, which counts Diageo as a stakeholder. “We believe the inflection point is right now. The last few years have given us time to prove it’s not a blip.”

Diageo’s Distill Ventures arm acquired its stake in Ritual Zero Proof in 2020. The brand currently offers four expressions: Tequila Alternative, Rum Alternative, Whiskey Alternative, and Gin Alternative (each $30 a 750-ml.). For the 52 weeks ending January 28, 2023, Ritual was up 337% to 4,250 cases in NIQ channels. Sakey calls Ritual Zero Proof the non-alcohol spirits category’s captain, and claims market leadership. He likens non-alcohol spirits to the dairy- and meat-alternative sectors of the grocery industry, which were slow to gain traction but now have a presence in nearly every grocery store in the country. “We’re performing well with every demographic, from Gen Z to Baby Boomers,” Sakey adds.

Seedlip is a relative elder statesman among zero-proof spirits, having launched in the U.S. in 2015; Diageo’s Distill Ventures purchased a majority stake in the brand 2019. But Seedlip takes a different approach to non-alcohol spirits, offering a portfolio of products based on natural herbal and botanical ingredients that doesn’t emulate existing spirits options. “Seedlip is a genuinely new-to-world product and flavor profile,” says Nicholas Rowland, Seedlip’s senior marketing manager.

The portfolio includes three labels: the herbal offering Garden 108, the citrus-influenced Grove 42, and the warm and bitter Spice 94 (each $32 a 750-ml.). Rowland estimates that dollar sales for the brand were up by roughly 70% in 2022, noting that Seedlip’s top markets include New York, California, Illinois, Texas, and Florida. “Our consumers are both suburban and urban, but still have a high interaction with the overall spirits category,” Rowland adds. Last year, in NIQ channels, Seedlip’s volume was up 70% to 2,257 cases.

Along with new entrants, established alcohol brands are exploring non-alcohol offshoots in a bid to boost their portfolios. In early 2022, Martini & Rossi, which is owned by Bacardi, launched the alcohol-free aperitivos Floreale and Vibrante (each $20 a 750-ml.) “The non-alcohol and low-abv market has performed extremely well over the past year, largely driven by increased popularity in the overall health and wellness movement,” says North American brand ambassador Fabio Raffaelli.

Spirits industry veteran Jim Clerkin—formerly of Diageo, Moët Hennessy, and Beam Suntory—has also gotten in on the zero-proof beverage trend with his new venture, Demeter & Co., which partnered with U.K.-based CleanCo in 2021. The brand offers four zero-proof spirits labels: the gin alternative Clean G, the Tequila alternative Clean T, the vodka alternative Clean V, and the rum alternative Clean R (each $30 a 750-ml.). The portfolio is sold nationwide and is doing well in major markets like New York City, Los Angeles, and Miami, with volume in NIQ channels of less than 500 cases, up from five the year prior. Market Watch has the full story.

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