Diageo has purchased leading non-alc spirit Ritual Zero Proof, the company announced today.
The spirit giant’s investment arm, Distill Ventures, acquired a minority stake in the brand in 2020. Ritual will now join Diageo’s growing NA portfolio, including major players Guinness 0.0 and Seedlip, which was also incubated through Distill Ventures.
“When we first invested in Ritual, the non-alcoholic landscape in the U.S. was nascent, but our insights told us the consumer was there and ready,” said Heidi Dillon, CEO of Distill Ventures in a release. “Our belief in the category, the vision of innovative founders, and our world class venture partnership with Diageo has helped position Ritual to become the no. 1 non-alc spirit brand in the U.S.”
Headquartered in Chicago, Ritual Beverage Company was founded by three friends: Marcus Sakey, David Crooch and GG Sakey. The company launched September 2019 with two flagship products, a gin alternative and whiskey alternative. Since then the lineup has grown to include alternatives to tequila, rum and aperitif, which can all be substituted one-to-one with traditional spirits.
The brand was early to NA trends, and prioritized earning a footprint at national chains both on- and off-premise. In 2022 – the year it was named by Nielsen as the fastest growing NA brand – the company hired an industry veteran as national sales director to boost brand awareness and advance NA education. Globally, Ritual is now the sixth largest non-alc brand by value according to Diageo, and U.S. off-premise dollar sales are up +86.2% in the 52 weeks prior to September 7, according to NIQ.
Crooch will remain actively involved with the brand, and will be expanding Diageo’s zero-proof ambitions as general manager of Diageo North America’s NA business unit.
With a market value exceeding a half a billion dollars ($740 million) in off-premise channels and a 31% growth rate, the NA category is set up to double in size in the next five years, according to the latest NIQ report. Within the realm of NA, each category is experiencing varied upward trends, with spirits surpassing wine and beer in terms of growth rate.
“This acquisition is proof of the mainstream potential of the category, and our shared ambition to make sure a non-alc cocktail is available on every menu and on every grocery and liquor store shelf, providing sophisticated choices to today’s consumer,” said Sakey in a release.
This acquisition is in line with “Diageo’s strategy to acquire high growth brands in exciting categories,” according to the release. At BevNET Live in June, Sallie Jian, head of North America Ventures for Diageo, said the spirits giant is paying attention to the NA category as younger generations moderate and abstain from bev-alc.
Non-alcohol beer sales have been a bright spot for Diageo’s challenging year, with Guinness 0.0 net sales and volumes more than doubling in the fiscal year, according to the last earnings report. Meanwhile, Seedlip has been down off-premise 3% in value and 1.2% in volume in the 52 weeks prior to September 7, according to NIQ.
The acquisition was funded through existing cash resources. Terms of the deal were not disclosed.