Diageo, a giant in the beverage sector, revealed in a press conference this week a mixed balance of profits and sales across its vast portfolio of alcoholic beverages, tequilas, and other spirits.
However, one segment stood out in particular: low-alcohol or non-alcoholic beverages (NA, short for “No-Alcohol”), which are gaining popularity and profitability, according to CEO Debra Crew.
Non-alcoholic beverages drive Diageo’s growth
Diageo owns renowned brands such as Lagavulin, Talisker, Dalwhinnie, and Oban in the whisky sector, as well as the iconic Casamigos and Don Julio in the tequila segment. The company also holds the rum brand Captain Morgan, the classic Canadian Crown Royal, and Guinness beer.
In recent years, Diageo has expanded its investments in the non-alcoholic beverage market. Last September, the company completed the full acquisition of the Ritual Zero Proof brand, solidifying its commitment to the sector. According to the Spirits Business portal, the company’s NA beverage portfolio grew by an impressive 56%, far surpassing other categories within the group.
CEO Debra Crew highlighted Ritual Zero Proof as the main driver of this growth, even though Diageo also holds a majority stake in the Seedlip brand.
“Consumers are looking for sophisticated experiences and want to enjoy social moments without compromising balance. The ability to alternate between alcoholic and non-alcoholic drinks has been a key factor in this growth,” Crew explained.
Expanding market for non-alcoholic beverages
The rise of the NA sector follows a global trend toward mindful consumption. Recent data from IWSR indicates a 30% increase in non-alcoholic beverage sales in the U.S. between 2023 and 2024, with even more optimistic projections for the coming years.
Meanwhile, in Diageo’s overall balance, net sales grew by 1%, driven by strong performances from Crown Royal, Don Julio, and Guinness. Tequila, which accounts for 13% of the company’s portfolio, recorded an impressive 20% growth.
On the other hand, the Scotch whisky segment faces challenges, with a 20% drop in sales over the last period. Even Johnnie Walker, one of the company’s strongest brands, saw a 6% decline.
Impact of potential U.S. tariffs
Another factor that could affect the sector is the trade tariffs proposed by former President Donald Trump, particularly for Mexico and Canada. Crew acknowledged the risks and stated that the company is taking measures to mitigate negative impacts.
“We remain in dialogue with the U.S. government to minimize the effects of these tariffs on the entire hospitality industry, including consumers, distributors, bars, and restaurants,” Crew emphasized.
The rapid growth of the non-alcoholic beverage market reinforces a shift in consumer behavior, with a demand for sophisticated alcohol-free alternatives. Diageo, aware of this transformation, is positioning itself at the forefront of the sector with strategic investments that are already generating significant returns.
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Source: Robb Report. This content was created with AI assistance and reviewed by the editorial team.
