July 11, 2016

Distill Ventures, the accelerator launched three years ago by the world’s largest distiller, Diageo, has made its first non-alcoholic investment in Seedlip, a UK-based distilled non-alcoholic spirit brand.

This investment is indicative of Diageo’s notice of the potential within the non-alcoholic sector and adds to the company’s portfolio that includes Guinness Zero in Indonesia, Guinness Malta in Africa, and Orijin Zero in Nigeria, according to The Drinks Business.

Created by entrepreneur Ben Branson, Seedlip was launched to answer the question of “what to drink when you’re not drinking.” Seedlip now offers two drinks – Seedlip 94 is a blend of copper-pot distillates of two barks, two spices, and two citrus peels, and Seedlip Garden 108 is a “green and floral blend” of copper-pot distillates of peas, hay from Branson’s family farm, and herbs including spearmint, rosemary, and thyme. Both work well served with tonic or with a brine to make a non-alcoholic martini, and contain no sugar, sweeteners, or artificial colors in order to cater to health-conscious drinkers.

Behind this investment is the realization that alcoholic consumption is showing signs of decline in some mature markets in Western Europe and in regions of North America. Between 2004 and 2013, total alcoholic consumption in the UK fell from 11.6 liters per person ages 15 years and older to 9.4 liters per person according to the latest data from the Institute of Alcohol Studies (IAS).

“We recognise [sic] the opportunity of non-alcoholic drinks,” said Helen Michels, director of global innovation, Futures Team at Diageo. “We continue to explore and invest in this area.”

Indeed, while non-alcoholic beers account for 0.6% of global consumption, in some regions such as North Africa and the Middle East, non-alcoholic beers account for as much as 6.6% of the market. while the non-alcoholic category saw a CAGR of 2.54% last year compared to a CAGR of 1.57% for the overall beer market, reports Forbes.

These facts are not lost on Diageo’s rivals either. Anheuser-Busch InBev states that it has seen 5% growth for its non-alcoholic brand, Beck’s Blue with a 10% year on year growth in retail sites selling the drink.

Since its launch last year, Seedlip has had several stock sell-outs and has had to quadruple production to keep pace with demand. Currently, only available in the UK, Seedlip’s drinks are available at top restaurants and hotels, and have garnered the attention of chefs including Gordon Ramsey and Heston Blumenthal.

Having Diageo’s support was “a huge statement of credibility for us”, said Mr. Branson, and will help support the company in its plans to expand its reach outside the UK to markets in Western Europe and the U.S. later this year.

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Lynda Kiernan