- Diageo has acquired a "significant majority shareholding" in London-based Seedlip, the world's first distilled nonalcoholic spirits brand, through its Distill Ventures accelerator program. Financial details were not released.
- The British global spirits company initially made a minority investment in Seedlip in 2016, which was the first time it had invested in a nonalcoholic brand of distilled spirits. Seedlip's three varieties — Spice 94, Garden 108 and Grove 42 — are carried by more than 7,500 bars, restaurants, hotels and retailers in more than 25 countries.
- Seedlip Founder Ben Branson will continue to be involved in the company as a shareholder and director and work with both Seedlip and Diageo, according to a press release. Branson, a teetotaler, launched the company in 2015.
The additional Seedlip investment may allow Diageo, which owns the Johnnie Walker, Smirnoff, Baileys and Guinness brands, among others, to draw in new consumers as many are shifting away from alcoholic beverages.
People are drinking less alcohol for a variety of reasons, so a sugar-free, zero-calorie and high-quality beverage that tastes like gin and pairs well with tonic and other cocktail mixers could be appealing to consumers. Gin, with or without alcohol, continues to be popular. Diageo's Gordon’s and Tanqueray gin brands helped the company post a 6.1% jump in organic net sales for the year ending June 30, according to FoodBev.
This is not Diageo's first foray into nonalcoholic beverages. The company launched Guinness Open Gate Pure Brew nonalcoholic beer last year and added Guinness Zero in Indonesia, Guinness Malta in Africa and Orijin Zero in Nigeria to its portfolio. Diageo also introduced two ultra low alcohol pre-mixed drinks in 2018 under its Gordon's label as an option for consumers who choose to moderate their alcohol intake.
Diageo is also not alone in the segment. Other major beverage players have jumped into the mocktail space, with Coca-Cola recently debuting its Bar None lineup of four nonalcoholic cocktail concept drinks. Dutch brewer Heineken also introduced a nonalcoholic beer called Heineken 0.0 in the U.S. earlier this year, which was marketed as a healthier option that can be enjoyed at lunch or after workouts.
The timing of Diageo's larger stake in Seedlip aligns with current trends. While volumes of beer, wine and spirits have recently fallen, an industry tracker predicted that low- and no-alcohol beverages will climb 32.1% by 2022, which would be three times their growth during the past five years.
Since it was established in 2013, Distill Ventures has invested in more than 15 drink brands. Besides Seedlip, they include the Belsazar German aperitif, the Danish brand Stauning Whisky, Australian whisky brand Starward and Oregon's Westward American Single Malt Whiskey.
With Diageo recently shedding its wine brands in a $550-million deal with Sazerac, the company seems to be repositioning itself toward more high-end premium products in its U.S. portfolio. Seedlip, which established an office in Los Angeles last year, could be part of that strategy as Diageo looks to further bolster U.S. sales.