Distill Ventures Study Shows Zero-proof is Here to Stay

If done right, zero-proof drinks should look no different than full-proof cocktails. Image: Maksym Fesenko / Shutterstock

Global drinks startup accelerator Distill Ventures has kept an eye on the zero-proof movement for several years.

In 2014, Seedlip founder Ben Branson met Distill Ventures (DV) co-founder Shilen Patel. Impressed by Branson’s vision and drive, Patel and the DV team shared examples of business plans so he could create one that would attract investors.

Diageo, which funds DV, reviewed the business plan and made a minority investment in Seedlip. By 2016, the zero-proof spirits brand entered the market and helped create a seismic shift in the industry.

According to a DV case study focused on the relationship between the accelerator and Seedlip, consumers embraced the concept of a zero-proof immediately. The overwhelming sentiment from DV encountered regarding the zero-proof spirit was one they describe as, “What took you so long?” Great feedback, but that meant Seedlip and DV had to learn how to scale a groundbreaking product not just quickly but efficiently, a major challenge.

When a brand is groundbreaking and explodes in popularity, it’s tempting to refer to it as “an overnight success.” Suddenly, as far as consumers are concerned, this amazing product is everywhere. DV and Seedlip can attest to the faultiness of that thinking.

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Because Seedlip “looked like a spirit, was served like a spirit, priced like a spirit” but contained zero alcohol, every element of support had to be invented, from production to shelf stability to legally compliant labeling.

Three years after the drinks giant acquired a minority stake, Diageo bought a majority stake in Seedlip. The concept had been proven, DV had helped develop the brand, and Diageo’s foresight in the viability of a sophisticated zero-proof spirit had paid off.

Toward the end of 2019, Diageo bought into Ritual Zero Proof, acquiring a minority stake. The new brand now has the full support of DV. A quarter of the drinks brands being developed by DV fall within the zero-proof category.

The success of Seedlip, the expected success of Ritual, and the interest in similar brands by DV has placed the accelerator in an excellent position to study the zero-proof phenomenon. In May of last year, DV released a white paper entitled “Non-Alcoholic Drinks: A Growth Study.”

DV tapped the IWSR and CGA to focus on three major markets, London, Los Angeles and New York City, commissioning a unique study. CGA conducted the research on London, the IWSR studied LA and NYC. DV used Google Trends to gather insight into search trends.

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When asked about the zero-proof and low-ABV trend, the majority (55 percent) of notable London bartenders responded that they expected the trend to grow “in the next 12 months.” Given that the study was published in May of last year, we can extrapolate that the London bartenders expect that growth by Q2 of 2020. According to the study, 55 percent of London restaurants offered “sophisticated” zero-proof drinks on their menus.

The percentage of restaurants in LA offering zero-proof option on their menus was 40 percent at the time the study was published. It’s more than fair to assume that number has grown by now. Not surprisingly, 83 percent of bar managers in LA indicated they expected the zero-proof trend to grow. A third of restaurants in NYC at the time offered zero-proof menus.

As far as Google Trends data, searches for the term “mocktail” had increased 42 percent at the time the study was conducted. Online conversations nearly doubled that percentage: there was an 81 percent increase in online mentions of the term “non-alcoholic” when compared to 2018. People aged 35 to 44 years old made up 17 percent of zero-proof-focused conversations online.

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Two of the most important revelations from the DV white paper centers around the guest experience:

  1. Not all guests choosing to consume zero-proof cocktails are drinking them exclusively. A significant portion are—59 percent for the UK—consume both zero-proof cocktails and drinks with alcohol in them during the same night out.
  2. Operators and bar teams should strive to achieve equivalency in terms of the full-, low- and zero-proof drink experience. DV suggests taking care to ensure zero-proof cocktails fit in with their alcohol-imbued counterparts. They should be authentic to the venue, made with complex/sophisticated techniques and offer complex/sophisticated flavors.

Bar and restaurant operators should look beyond Dry January, aiming to offer and succeed with zero-proof cocktails. Guests should be presented with dedicated, standalone zero-proof menus or a dedicated menu section. It’s clear this is no longer a trend, it’s a movement.

Resources

Non-alcoholic Drinks: A Growth Study.” Distill Ventures. May 2019.

Sewing the Seeds for Non-Alcoholic: Distill Ventures and Seedlip.” Distill Ventures.

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