Dive Brief:
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Constellation Brands has acquired a minority stake in Töst, an alcohol-free sparkling beverage brand, the company said in a statement. The investment was made through Constellation’s venture capital group.
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Töst is a “never alcohol” product, meaning there is no alcoholic fermentation at any point in the production process, expanding the opportunity to reach a wider variety of occasions, the Mexican beer maker said.
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Once looked down upon in the beverage category, nonalcoholic drinks are quickly growing in popularity with consumers focusing more on their health or interested in getting the taste without the associated buzz. This has prompted the alcohol giants to prioritize adding them to their portfolios.
Dive Insight:
According to a Gallup poll conducted in 2022, 40% of U.S adults say they do not consume alcoholic beverages, a 5% increase since 2019. And for many that continue to consume booze, they are partaking less often. Global sales of no- and low-alcohol category value topped $11 billion in 2022, with growth expected to accelerate in the coming years, according to data from IWSR.
To be sure, nonalcoholic offerings remain small compared to the $250 million in alcohol sales posted annually in the U.S. But beverage giants such as Constellation, AB InBev and Molson Coors have no choice but to have a meaningful presence in nonalcohol or lose out on sales to a competitor.
Töst comes in two varieties — Töst and Töst Rose. Töst has notes of sparkling white tea, cranberry, and ginger, while Töst Rose has notes of sparkling white tea, ginger and elderberry. The fact that the beverage is in the “never alcohol” category should appeal to consumers who are forgoing alcohol completely as many nonalcoholic offerings have a small percentage of it.
For Constellation, the drink complements other nonalcoholic offerings in its portfolio like the recently launched Corona Non-Alcoholic while expanding its presence in the fast-growing premium space. If Töst continues to grow, Constellation could decide to invest further in the upstart or acquire it.
“Our investment in TÖST allows us to continue to optimize our higher-end portfolio by providing an alcohol-free beverage with a complex flavor profile for consumers that complements their lifestyle across a variety of occasions,” Mallika Monteiro, an executive vice president at Constellation Brands, said in a statement.
Constellation is the latest beverage giant to invest in nonalcoholic companies. Keurig Dr Pepper purchased a minority stake in Athletic Brewing through a $50 million investment in the nonalcoholic craft beer maker last November, a few months after purchasing ready-to-drink cocktail brand Atypique. And in 2019, Diageo acquired a majority stake in London-based Seedlip, the world’s first distilled nonalcoholic spirits brand.
