A spirits group known for its vodka is pouring more money into its adult non-alc (ANA) business.
The Pathfinder, a fermented and distilled non-alcoholic amaro, closed a $3.6 million raise this month led by the Stoli Group, aimed at fueling expanded distribution. The global spirits group made its first foray into the zero-proof space by backing The Pathfinder in May 2023, and subsequently brought the brand into its distribution network in three new states.
This latest investment, most of which arrived at the top of the year, brings The Pathfinder to 41 states and into national retail partnerships for the first time.
“The reason for the raise was we needed to get some really high powered and really high quality people on the team to help us set up for this national expansion, and then, with the help of Stoli, get deep into their distribution network and carve out a national footprint,” said co-founder Chris Abbott.
Stoli Group joins other international spirits companies increasing their bets on ANA as full-proof bottle sales have slowed, with Stoli USA facing particular financial trouble recently. Last week, Rémy Cointreau acquired a minority stake in French NA spirits company JNPR. It followed groups such as Diageo, who last year added non-alc spirit Ritual Zero Proof to its portfolio which already includes ANA leaders Guinness 0.0 and Seedlip.
From The Bar to Retail
The Pathfinder, designed to represent the mid-to-late 1800’s age of apothecaries and homemade remedies in the American West, was founded in 2021 by Guy Escolme, a brand builder with 22 years of experience at Diageo; Abbott, the founder of cannabis mints Mr. Moxey’s; and Steven Grasse, founder of beverage producer Quaker City Mercantile, creator of Hendrick’s Gin and Sailor Jerry Rum, among other labels.
Taking a page out of Grasse’s Hendrick’s Gin playbook, the company initially set out to build its business by slowly taking one SKU wide.
“Spirits is that one place in the world where you can actually have one SKU and it can be incredibly powerful,” said Abbott.
But the ANA space is shaping up to resemble other CPG categories as brands move into grocery, where major retailers need to see multiple SKUs in order to put a brand on the shelf. The team also tracked the emerging number of ANA RTDs and the data showing consumer preference for ANA RTDs over bottled spirits replacements, prompting them to add a ready-to-drink (RTD) 200 ml Spritz and Negroni this year.
There was one channel strategy adopted from its alcoholic counterparts that has proved to be effective: going after bartenders in the hopes that they “will lend their credibility to what you’re doing,” who will lead the consumer to adopt the brand, said Abbott. To-date this year 70% of the accounts purchasing The Pathfinder are on-premise, but that ratio is likely about to change.
After taking a neighborhood-by-neighborhood approach in the Pacific Northwest and New York, the brand’s first transition into a national presence has been via Total Wine & More, where sales have been successful. That early track record has helped the brand move from the Sprouts innovation set into its ANA shelf, and into Whole Foods Market starting September.
The company reported an 181% increase in sales dollars and 82% bump in velocity, in the 13 weeks ending June 14, according to IRI and NIQ data.
Distribution: Getting “The Holy Grail” To Work
To support the transition into Stoli’s network and its new sales initiatives, The Pathfinder brought on executive vice president of sales Jill Sites at the top of the year, whose resume includes roles at Boisson, Betty Buzz, Redwood Brands, and Breakthru Beverage Group.
William Howe, previously CFO of Blue Run Spirits which sold to Molson Coors in 2023, has joined the team to manage the company’s finances, as well as Marilyn Canderloro, a founding partner of Dock Street Spirits, who will manage supply chain and logistics. Additional sales people have joined the team with more likely to follow.
Despite integrating into Stoli’s distributors in Illinois, California, and Florida in 2024, The Pathfinder’s homebase of the Pacific Northwest and New York still make up 55% of business. Transitioning into a network made up of major distributors has proved trickier than the team anticipated, but partially due to wholesale shakeups across the industry. Stoli Group was previously with Republic National Distribution Company (RNDC), which is withdrawing its California operations in September. Stoli USA will now expand its partnership with Breakthru Beverage from 12 states to 13.
“The holy grail is to get the Stoli distribution network to work,” Abbott said. “It’s going to be super clean, focused execution over the next year and a half to two years, to make that work as broadly and as deeply as we possibly can.”