As another Dry January comes to a close, non-alc online retailer and importer The Zero Proof is taking a bigger step into the rising category with funding from Asahi Group Beverages & Innovation, the U.S.-based venture arm of Asahi Group Holdings.
The company announced today the closing of its Series A funding round, led by the Asahi investment fund, with participation from the company’s previous lead investor, Overline, along with Springdale Ventures.
The Zero Proof is one of a handful of new retailers that have capitalized on the double-digit growth of the adult non-alc category, now a $510 million business in off-premise sales according to NIQ data. Like competitor Boisson, which recently received funding from the VC arm of Pernod Ricard, The Zero Proof is now leveraging a partnership with a BevAlc giant to expand its wholesale model and portfolio.
Launched in 2019, The Zero Proof began as a blog by co-founders Trevor Wolfe and Sean Goldsmith but has bloomed into a venture capital-backed startup servicing the alcohol-free community by selling NA wines, spirits, RTD cocktails and bar accessories.
Using a background in financial data analysis, Goldsmith has led The Zero Proof’s expansion and widened the business into wholesale by bringing new NA brands to market and helping retailers understand how to take advantage of consumers’ growing demand for alcohol-free adult beverages. The Zero Proof experienced 300% revenue growth in Q4 from 2022 to 2023, according to the company.
“We’re seeing tremendous growth across our e-commerce business and our wholesale business, but 2024 seems to be the year where retail and the traditional distribution channels are going to really open up for the adult NA space,” said Goldsmith in an interview with BevNet.
The company plans to use the funding to hire salespeople in key markets, expand its distribution network nationwide, grow its base of key retail accounts, and broaden its wholesale portfolio. There are also further plans to increase its suite of proprietary adult non-alc spirits and wine, building on the launch of its new non-alc wine label, Saint Viviana.
With larger retailers beginning to sort out how to standardize non-alc merchandising, Goldsmith is confident 2024 will be a big year for the category, in which conversations with chain retailers will make it “much easier to get these premium products through the proper channels to the end consumer,” he said.
The Zero Proof sells a more curated selection of its e-commerce offerings through distribution partners like KeHE and LibDib, and retailers nationwide. They’ve also found inroads into travel and hospitality channels like Delta Airlines.
Building an exclusive portfolio has been part of the founders’ strategy: The Zero Proof is the exclusive importer of European non-alc brands such as Gnista, ISH, and Oddbird and is building an expanding suite of company-owned brands including Saint Viviana and Lapo’s, its line of Italian aperitivos and digestivos.
“We’ve closely studied the market and believe The Zero Proof is best positioned to be the long-term category winner, with unparalleled distribution and an ever-expanding product offering,” said Kristen Bareuther, president and head of investment at Asahi Group Beverages & Innovation.
Launched in 2023, San Francisco-based Asahi Group Beverages & Innovation provides funding to U.S. startups that have “attractive” brands with significant future growth potential in the low-alcohol beverages, non-alc beer-taste beverages, and adult soft drink categories. The fund also invests in startups with technology that will lead to new sales and manufacturing methods. Total investment is expected to reach approximately $70 million by the end of 2025.
The fund will also provide the Asahi Group’s regional headquarters in Japan, Europe, Oceania, and Southeast Asia with information on startup initiatives and trends in the U.S. market.
The investment is likely a step towards Asahi Europe & International’s ambition for 20% of their portfolio to consist of alcohol-free products by the end of the decade. In the U.S., the company has released alcohol-free versions of its flagship Asahi Super Dry and Peroni Nastro Azzurro.
The Japanese brewing giant also struck a deal earlier this month to acquire Wisconsin-based contract brewer Octopi Brewing to help bolster Asahi Super Dry in the U.S. and Canada.