There are cocktails for people that drink alcohol and there are mocktails for those who don’t. Unless there’s a “third way,” too.
U.K.-based Quarter Proof believes there is.
The low-ABV spirits brand is making its U.S. debut this month by unveiling its latest innovation, a vodka-based Three Grain Spirit which joins a portfolio that includes quarter-strength tequila (Blanco Agave Spirit) and gin (London Dry Spirit).
The spirits maker has changed its name since launching as Quarter in 2021, but its value proposition – a portfolio of 15% ABV spirits — has remained consistent.
“For us, we took the point strategically to rebrand because after two years of learnings in the market,” co-founder Fabian Clark, who developed the Quarter Proof with co-founder Rohan Radhakrishnan. “We wanted to really double down on our consumer, our occasion and the brand world we wanted to build.”
The rebrand was also motivated by pushback from U.K. regulators on the company’s original labeling which had its tequila- and gin-based spirits named T/QUILA and G/N, respectively.
“As we were the first to really innovate in the space, there were no goalposts for us,” Clark said. “We started out with the best intentions and we’ve never tried to dupe the consumer into thinking this is a full strength product.”
With the company’s move to the States, Clark and Radhakrishnan said the rebrand was a “blessing and positive evolution” for Quarter Proof to meet consumers looking to pare back their alcohol intake.
Quarter Proof is starting with its Blanco Agave and Three-Grain Spirit direct-to-consumer shipping to 42 states. Eventually, the plan is to also bring its gin-based London Dry Spirit to the U.S. as well. The products retail on the website for $35 per 750ml bottle.
Dollar sales for non-alcoholic spirits in the U.S. was $23.4 million, a 85% increase from the year-ago period, according to NielsenIQ data. In the same period, volumes were up 107% year-over-year.
According to the Adult Non-Alcoholic Beverage Association data, about 94% of non-alc buyers are also purchasing alcoholic beer, wine and liquor showing that the growth in NA sales is often coming from consumers who still drink adult beverages.
“Third” Times The Charm
Quarter Proof is attempting to thread the needle between the indulging and abstaining by creating a new middle-ground category for lower-ABV liquor, or “Spirits 3.0”, as the brand calls it. Other mid-proof spirits, such as below 30% ABV vodkas BODY, Sommaroy and Rhode Island-based KEEL, have also tried to fill that gap.
Despite the opportunity in low-alc spirits, the category has struggled to grow as quickly as its non-alcoholic counterpart. Part of that might stem from the same issues that Quarter Proof ran into due to the legal complications of calling the spirits by recognizable names (like “vodka” or “gin”) on labels.
A new category “re-engineered for the modern drinker” might be just what sober-curious consumers who are reducing but not removing alcohol completely are looking for.
Consumption of no- and low-alcohol products combined rose 5% in 2023 in the world’s top 10 markets and volumes are expected to rise at a CAGR of +6% between 2023 and 2027, according to a IWSR report.
Radhakrishnan and Clark are not distillers though. They have tapped Anthony Wilson as their formulator and product developer. Wilson is a second generation master distiller and worked in a variety of innovation roles at Diageo for nearly 15 years according to his LinkedIn profile.
Wilson developed a process called Fractionation that starts by fermenting the base alcohol as any other spirit would begin using agave, grain or botanicals. Then the spirit is spun in a centrifuge pulling out the flavor components. The flavored alcohol is then distilled and the resulting 60% ABV spirit is blended and “quartered” to bring the final product down to the 15% ABV.
The company is taking a “test and learn” approach to its U.S. launch, Clark said, because the proposition is relatively new to the American consumer.
The brand estimates about 65% to 70% of its U.K. business is in on-premise locations like cocktail bars and restaurants. Off-premise the brand is in Whole Foods, Planet Organic and a number of premium and independent retailers. One major learning curve that Clark and Radhakrishnan are preparing for in the U.S. is differing states’ liquor laws.
“In the U.K., not only do we not have the three tier system, but it’s also much smaller and therefore we can play across the country relatively quickly,” Clark said.
London tends to be a trendsetter for brands to establish a consumer foothold that can be replicated throughout the island, he added. Thus, the approach in the U.S. is starting in New York City where there is an engrained cocktail culture and an established sober-curious consumer base.
As Clark and Radhakrishnan have familiarized themselves with the New York market they have been enlivened by how specialized the premium bev-alc category is from the retail point of view.
“In the U.K., any shop can sell wine, beer, liquor which means that the majority of spirit purchasing happens within a supermarket or major retail environment,” Clark said. “With New York Laws, you get hugely passionate people in these off premise environments who tend to stock quite a large selection and are also then fully invested in what they are selling.”