Spirits Giant Diageo Invests in Ritual Zero Proof, Maker of No-Alcohol Whiskey, Gin

When Marcus Sakey launched his line of no-alcohol whiskey and gin alternatives five months ago, he figured demand would be reasonable. After all, the beer industry is seeing a big push for nonalcoholic beers these days, and millennials are expressing a strong desire for lower carb and lower calorie beverages.

But he had no idea the demand would be like this.

Ritual Zero Proof launched last September. It had, at the time, a six-month surplus of its product ready to roll out. That inventory sold out in six weeks. The company quickly ramped up production by 400% to keep up with demand. And by the end of the year, that stockpile had been largely exhausted.

Booze-free spirits, to put it in a pop culture context, are apparently the Popeye’s Chicken Sandwich of the beverage world.

That demand has drawn the attention of spirits giant Diageo, whose brands include Johnnie Walker, Crown Royal, Smirnoff, and Don Julio. The company has made a “major cash investment” in Ritual Zero Proof, taking a minority ownership stake that will allow Ritual to dramatically expand its business.

“It’s going to let us take Ritual out as swiftly as we need to,” says Sakey, Ritual’s chief brand officer and cofounder. “We’re using that investment to grow our national footprint. My goal is, within a year and a half, you’re going to see Ritual on the back shelf of every bar and on the shelf of every grocery store in the country.”

Ritual Zero Proof’s cofounders, from left to right: David Crooch, Marcus Sakey, and GG Sakey

Ritual is the first American-made spirit alternative, says Sakey. It was designed to offer the same taste, smell, and burn of a traditional liquor and specifically designed for use in cocktails. (It’s not a beverage you’d sip neat or on the rocks, though, as the taste differences then become exceptionally clear.)

The company’s products are not meant as a liquor replacement. Instead, they’re intended to give people an option to enjoy a gin and tonic or another Old-Fashioned without feeling the aftereffects the next morning.

“In no way are we anti-alcohol,” says Sakey. “It’s more about adding another tool to the cocktail kit. It’s the opportunity to make the perfect third drink on a Tuesday night, or it’s something you can have when you’re training for a marathon or making a baby.”

If the first few months have been busy ones for Ritual, January could be off the charts. An estimated one in five Americans participated in “Dry January” last year, an offshoot of a New Year’s resolution in which casual drinkers give up alcohol for the month of January. And with the growing interest in “mocktails,” the number of people participating is likely to increase this year. There are even a growing number of alcohol-free bars.

Sakey says Ritual wasn’t born from trying to ride that wave. But rather, when he took a conscious break from spirits in 2018, Sakey found he missed the ritual of having a drink when he read a book. He went to the kitchen and began playing with ingredients, later roping in help from various distillers. Some 500 iterations later, the whiskey and gin alternatives were finalized.

“Ritual wasn’t trying to chase any particular moment, but I do think there is a real movement happening now,” Sakey says. “There’s a choice to drink better, rather than more.”

For Diageo, this isn’t the company’s first step into nonalcoholic beverages. Last summer the company bought a majority stake in Seedlip, another booze-free spirits manufacturer, this one founded in the U.K. That brand, when it was purchased, was sold in over 7,500 bars, restaurants, hotels, and retailers across 25 countries.

Both Seedlip and Ritual participated in Diageo’s accelerator program called Distill Ventures. “We are excited to support such an interesting new brand in the vibrant nonalcoholic space,” says Eugene Khabensky, ventures director at Diageo, about the Ritual news. “Ritual Zero Proof is a fantastic offering that provides consumers with more choices of the highest quality.”

Bars and retailers are just one advantage of no-alcohol investments for Diageo, though. Because the beverages don’t contain any regulated materials, they can be sold anywhere—even online. And for Ritual, that has been a huge market, with sales coming from both its website and Amazon.

“Direct-to-consumer sales have been through the roof,” Sakey says. “We’ve been able to reach a lot of places that traditionally don’t necessarily have easy access to these trends.”