Diageo buys majority stake in non-alcoholic spirit brand Seedlip

United Kingdom | Non-boozy spirits, though a contradiction in terms, seem to be the next big thing. Hence drinks company Diageo has hiked its stake in Seedlip to a “significant majority shareholding” in early August 2019.

No financial details were disclosed.

The UK brand Seedlip was launched by Ben Branson in late 2015. Seeing Seedlip’s sales volume nearly triple last year, Diageo decided to more or less buy out Mr Branson, although he will remain actively involved as a shareholder and director.

Diageo is not alone in trying to find ways to woo the teetotalling crowd. Rival Pernod Ricard has done a deal to distribute the non-alcoholic spirit, Ceder, in the UK, followed by the July 2019 launch of Celtic Soul, a non-alcoholic blend of dark spirits.

Already two years ago, Italy’s Grupo Campari introduced Crodino into the UK, its non-alcoholic aperitif, which is named after a small town in northwest Italy. The firm says Crodino is the most-consumed drink of its kind in Italy since first being produced 55 years ago.

Diageo set its eyes on Seedlip early on, because in 2016, its Distill Ventures division bought a 20 percent stake in the firm. Independently run, Distill Ventures receives funding from Diageo to support entrepreneurs as they launch and grow innovative drinks brands.

As to Seedlip’s production method, Mr Branson is only prepared to disclose that Seedlip starts out as neutral grain spirit (NGS). Each botanical is macerated in a specific style of NGS, with ABV strengths and base grains differing from one ingredient to another. After maceration, each botanical is distilled twice: once to remove the alcohol through evaporation, and a second time to capture and concentrate the flavour of the plant.

Buoyed by consumer demand, Seedlip is already available in more than 25 countries. Seedlip’s three variants (Spice 94, Garden 108 and Grove 42) are stocked in over 7,500 of the world’s best bars, restaurants, hotels and retailers, including the majority of the world’s 50 best cocktail bars and over 300 Michelin Star restaurants, Diageo boasts.

Seedlip is priced at around USD 37 per bottle in the US, EUR 25 on the Continent, and GBP 27 in the UK, similar to the price of a bottle of gin.

Non-alcoholic beverages are potentially lucrative for drinks companies, as they do not need to pay tax on them in the same way that they do for alcoholic drinks. In the UK, there is no duty on drinks with less than 1.2 percent ABV.

Established in 2013, Distill Ventures is an accelerator firm, whose aim is to support entrepreneurs as they develop, scale and sell the drinks brands of the future. So far, it has invested more than USD 73 million in about 15 drinks brands. Among them are the German aperitif Belsazar, the non-alcoholic spirit Seedlip, the Danish whisky Stauning, the Australian whisky Starward, and Westward, an American Single Malt distilled in Portland.