It’s a weekday at 11:30 a.m. at the Blue Hill restaurant in Manhattan, and a group of alcohol writers are milling around with cocktails in their hands. The drinks are an off-yellow mix of Meyer lemon, honey, and a base product called Seedlip, and they’re all mixed and shaken by a bartender. Cocktails at 11:30 a.m. on a workday are, in any circle, a questionable choice. But these cocktails are different, because Seedlip is the first non-alcoholic distilled spirit, and the lunch is trying to prove to a bunch of alcohol writers that the next biggest thing in the beverage world has nothing to do with alcohol — it has to do with the “non-alc” space.
The lunch was hosted by Distill Ventures, a drinks accelerator that invests in new alcohol companies. It’s invested more than $61 million with 15 brands, and Seedlip is the only non-alcohol brand in the portfolio. Distill Ventures invested because non-alc is what they believe is the next big drinks opportunity — drinks as in cocktails, not drinks as in Juicero pouches and soda — and they’re billing Seedlip as “better drinks when you’re not drinking.”
Blue Hill’s welcome cocktail for the event (as well as the three other non-alcoholic cocktails that were paired with food) were as complex as something you’d get from a mustached man wearing suspenders in a “speakeasy.” The drinks were salty, tart, savory, and had texture. To be honest, it wouldn’t have taken much for someone to convince me that I was drinking a craft cocktail with alcohol. It’s not about deception, though. Apparently, non-alcoholic cocktails are something people want now more than ever.
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A white paper written by Distill Ventures states that the most exciting trend in the drinks industry is the emergence of drinks that don’t contain alcohol, but that play a “much different role than a traditional soft drink.” There are three societal trends Distill Ventures gives for investing in the non-alcoholic drinks space: well-being, experience, and curiosity and choice.
Well-being is obvious. It’s hard to miss the increased importance Americans are putting on their health, whether it’s dieting, Crossfit, or goat yoga. But as Distill Ventures’ white paper notes, “this doesn’t mean people want to miss out on dinner at restaurants or drinks after work.”
The need people feel to show their day-to-day experiences in their Instagram feeds is also just as obvious. The generation that grew up with social media needs beautiful things to take pictures of, and people “expect the same qualities in non-alc drinks as they would in a cocktail, craft beer, or spirit: a sense of occasion, complex flavors, and considered presentation.”
Finally, there’s the curiosity and choice of consumers. We all just want something new to try.
“The demand for complex, more challenging options is growing fast,” the white paper states. “There are more people who are drinking either less or no alcohol, and they aren’t satisfied with options that would fit better on a children’s drinks menu.”
Distill Ventures, and therefore Seedlip, is backed by Diageo, the world’s largest spirits company (Diageo is also an investor in VinePair). Diageo invests in companies through Distill Ventures and takes a minority stake in the companies. If the company is successful over the course of five to six years, the intention is that Diageo will buy the company, Dan Gasper, the chief operating officer of Distill Ventures, tells me.
It’s not just the world’s largest spirits company that’s interested in non-alcoholic beverages, either. AB InBev, the world’s largest beer company, released an alcohol-free Budweiser in 2016 and committed to moving at least 20 percent of its global beer volume to low-alcohol and non-alcoholic beers by 2025. Heineken, the second-largest brewer in the world, launched a 0.0 percent alcohol beer in May 2017 with the goal of making Heineken “the leading global beer brand in 0.0,” a senior Heineken brand director told Reuters.
On July 31, it appeared that Heineken’s focus on the non-alcoholic drink space was already paying off. No- and low-alcohol drinks in Europe saw double-digit sales growth in the first half of 2017, according to MarketWatch. Heineken’s incentive on the trend is clear. First off, they want to capitalize on a growing market trend. Second, Heineken sees a higher profit from non-alcoholic beer because alcohol taxes cut into profit margins for traditional beer.
In Europe, the market for non-alcoholic beer grew 5 percent from 2010 to 2015 while the beer market in general shrank. Of course, non-alcoholic beer is still only 0.6 percent of global beer consumption, according to the research group Canadean, so it’s far from taking over. The idea behind it is a pleasant one, though, exemplified by Heineken’s 0.0 commercial. The commercial’s theme is “Openness for all,” whether you’re a designated driver, man, woman, or alien (maybe they took the theme a little too far on that one).
As much as people care about marketing, experiences, and well-being, though, in the end it all comes down to taste. There’s a reason why O’Doul’s hasn’t become a powerhouse despite increased interest in non-alcoholic beverages. Macro distillers seem to be missing this point as they continue to push out non-alcoholic beer that tastes exactly like their full-alcohol macro beer. But craft distillers like Seedlip and craft brewers — ever the proponents of good flavor — are picking up the mantle.
Jeff Josenhans, lead mixologist, certified cicerone, and level two sommelier working at The US Grant Hotel in San Diego, makes non-alcoholic craft beer for the hotel bar (he also serves Seedlip non-alcoholic cocktails). To make non-alcoholic beer, he starts with a regular cask ale and heats the beer at around 175 degrees Fahrenheit for about 30 minutes using an immersion circulator.
“What happens is the malt and the hops get amplified,” Josenhans tells me over the phone. You can’t take the alcohol out of dry-hopped beers with this method because the hops go from aromatic to extremely bitter, but nearly all other beer styles are fair game.
The Office IPA, which started out as a pale ale, is one of the most popular options at the Grant Hotel. His beer is not, Josenhans says, going to take a huge chunk out of the beer industry — and neither will any other non-alcoholic beer. But it will catch the eye of people who don’t drink or aren’t drinking at the time, whether they are designated drivers, pregnant women, people who don’t drink for religious reasons, or people who want the taste of a well-made beer without the intoxicating effects of a well-made beer.
“It just made sense to do something on the beer front,” Josenhans says. “Just seeing as how we’re in this mecca of craft beer here (in San Diego) and there’s not even a dot on the map in this big beer city we’re in.” Josenhans also adds that he’s gotten calls from people who are interested in the beers, and he’s been open about the process.
“I say, ‘Listen, shame on you for not thinking of this yourselves,’” Josenhans says. “It’s a very cool way for someone to experience your beers without having to drink and leveling the playing field for people who don’t drink. It gives them an opportunity to taste craft beer, which is pretty cool.”
As a beer and spirits writer, I’m of the strong opinion that anything that opens up craft beer to a wider audience is a good thing. Drinking can be about intoxicating effects, but it’s not always. It’s about experience and sharing a moment with people. It’s about taste. The rise of full-flavor session beers and low-alcohol pilsners is just one example of this. Non-alcoholic beer and non-alcoholic distilled spirits offer an alternative for when even the slightest amount of alcohol isn’t an option.
At Blue Hill with Distill Ventures, I was able to taste the highest echelon of non-alcoholic cocktails. Just because a bar has Seedlip in stock doesn’t mean it’ll be able to make drinks like Blue Hill’s almond basil matcha cocktail or its cherry shrub and pink peppercorn cocktail, though. It ultimately depends on bartenders across the country meeting a demand for non- alcoholic drinks and improving the craft.
A splash of gin (in my opinion) could’ve done wonders for the Seedlip cocktails at Blue Hill. The world’s biggest alcohol companies with their market research and trend data see something different, though. What to drink when you’re not drinking is a real question, and premium non-alcoholic beverages are an answer we’re likely to see more of in the future.