Diageo expands leading position in non-alc spirits with acquisition of Ritual Zero Proof

Diageo North America announces that it has acquired Ritual Zero Proof Non-Alcoholic Spirits (Ritual). Since its launch in Chicago, Illinois in 2019, Ritual has grown rapidly and is now the number one non-alc spirit brand in the United States. This transaction is in line with Diageo’s Growth Ambition to deliver the company’s next phase of sustainable growth.

Ritual was created with a vision to give consumers a simple and accessible way to enjoy their favorite cocktails, from an Old Fashioned to a Negroni or Margarita, without alcohol. Ritual’s founders - David Crooch, Marcus Sakey, and GG Sakey - experimented with hundreds of recipes and consulted with bartenders, chefs and beverage professionals to recreate the flavor, aroma and complexity of spirits. Today, the brand’s award-winning portfolio contains alternatives to whiskey, tequila, gin, rum and aperitif, which can all be substituted one-to-one with traditional spirits to create non-alc versions of well-known recipes, enabling the brand to participate credibly in top cocktail serves and occasions.

In the United States, the non-alc category has grown retail sales value +31% CAGR over the past five years, with non-alc spirits as the fastest growing segment within adult beverages over that time.1 Ninety-four percent of non-alc buyers also purchase beer, wine, or spirits containing alcohol, and annually U.S. households (21+) purchasing non-alc beverages spend $292 more than households exclusively purchasing alcohol-containing beer, wine or spirits,2 demonstrating the incrementality of the category to beverage alcohol.

Diageo is well positioned to build on Ritual’s already strong position with its significant presence in the non-alc category. As the number one non-alc spirits player globally, Diageo holds the leading market share position in the three largest non-alc markets globally, including the United States, and owns three of the five largest non-alc brands globally by value.1

In fiscal year 2020, Diageo acquired a minority stake in Ritual through Distill Ventures. Distill Ventures, the world’s first accelerator for founder-led drinks brands, receives funding from Diageo and works in partnership with the company to support founders as they launch, grow and scale the iconic drinks brands of the future.

Sally Grimes, chief executive officer, Diageo North America, said, “Ritual Zero Proof is the number one brand in the fastest growing adult beverage category, and meets growing consumer demand for a flavorful and sophisticated, yet accessible spirits alternative. We are delighted to welcome it into our broader portfolio, where it will beautifully complement both our non-alc offerings, as well as those with alcohol, and serve to present consumers with even more choice and variety.”

David Crooch, co-founder, Ritual Zero Proof, said, “From day one, we’ve set out to create an iconic brand in the drinks industry, specifically designed to meet the needs of the modern consumer. Ritual brings this mission to life, and Diageo understood that from the get-go. With the continued and widespread growth of the category, there is significant market presence and consumer demand. Ritual has the ability to meet consumer desires and tastes, seamlessly offering traditional spirit alternatives ounce-for-ounce.”

Marcus Sakey, co-founder, Ritual Zero Proof, said, “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.”

Heidi Dillon, chief executive officer, Distill Ventures, said, “When we first invested in Ritual, the non-alcoholic landscape in the US was nascent, but our insights told us the consumer was there and ready. 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 #1 non-alc spirit brand in the U.S."

Co-founder David Crooch will remain actively involved with the brand, working with the Diageo team to build on Ritual’s success. David has been named General Manager, Diageo Non Alcohol, to lead the expansion of Diageo North America’s non-alc business unit.

In addition to traditional retail outlets, U.S. consumers can also purchase Ritual products via a robust eCommerce network, which includes RitualZeroProof.com.

This acquisition is in line with Diageo’s strategy to acquire high growth brands in exciting categories. It has been funded through existing cash resources.