Pernod Ricard is expanding its non-alcoholic interests by investing in New Zealand-based brand AF Drinks through its venture arm, Convivialité Ventures.
Launched in the U.S. in February under the brand Free AF, the alcohol-free cocktail comes in four SKUs in the U.S. including a paloma, apero spritz, cuba libre and a zero-sugar vodka spritz. The cocktail is also made with “afterglow,” a natural botanical extract said to mimic the warming sensation of drinking alcohol. After two years in New Zealand, the company made its U.S. debut online and on Amazon, and launched in Sprouts Farmers Market stores nationwide in April.
The brand will use the new growth capital to fuel its U.S. expansion and further domestic distribution and production. In its home country, AF’s 10-plus SKUs can be found at 300 different outlets.
“It’s a fast emerging category in the U.S. and we hope to capitalize on that as we have done in New Zealand with a differentiated brand, great products and strong sales and marketing, said founder Lisa King.
AF Drinks was founded by King, a New Zealand entrepreneur who conceived the business when she realized she was suffering from vertigo from drinking cocktails, but couldn’t find a good non-alcoholic alternative. King also hosts a podcast aimed at the sober-curious listeners called Drunk AF.
The investment gives Convivialité Ventures another position in the fast-growing non-alc segment: its portfolio already includes Ghia and non-alc retail chain Boisson.
“AF Drinks has an exciting value proposition and great line of products in the emerging ready-to-drink non-alcoholic beverage category,” said Brandon Yahn, Convivialité Ventures partner. “We are excited to partner with the company as they build their brand in the U.S. market and beyond.”
The global investment firm goes beyond Pernod Ricard’s traditional wine and spirits offerings: its portfolio of 45 companies includes names like Liquid Death, plus technology platforms like wedding planner Zola and ordering system ChowNow.
Pernod Ricard itself has several non-alc options in its portfolio including Ceder’s non-alcoholic spirits, which it invested in two years ago, and zero-proof versions of its aperitif and wine-based products. Other strategics have made plays in the segment in recent years, following the lead of Diageo-backed incubator Distill Ventures, which invested in pioneering NA spirits brands like Seedlip and Ritual Zero Proof. Last month Constellation Brands acquired a minority stake in TÖST, an alcohol-free sparkling beverage brand, and Stoli invested in The Pathfinder Hemp and Root, a fermented and distilled non-alcoholic amaro.
The no- and low-alcohol category grew 8% in 2022, surpassing $11 billion in value, and is expected to continue at 7% growth annually until 2027, according to The IWSR.