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Constellation Brands has announced its recent acquisition of a minority stake in Töst, a brand that specializes in alcohol-free sparkling beverages. The investment was facilitated through Constellation’s venture capital group.
Töst stands out as a unique product in the market as it falls under the category of “never alcohol,” ensuring that there is no alcoholic fermentation involved during the production process. This distinction opens up new avenues for the brand to cater to a wider range of occasions and consumer preferences, according to the Mexican beer manufacturer.
The landscape of nonalcoholic beverages has undergone a significant transformation in recent years. Previously overlooked in the beverage industry, nonalcoholic drinks are now experiencing a surge in popularity. This shift can be attributed to consumers’ increasing focus on their overall health and well-being, as well as their desire to enjoy flavorsome beverages without the accompanying alcohol-induced effects. Recognizing this trend, major players in the alcohol industry are prioritizing the inclusion of nonalcoholic options within their portfolios.
According to a 2022 Gallup poll, there has been a 5% increase since 2019 in the number of U.S. adults who do not consume alcoholic beverages, with 40% of respondents reporting abstinence. Additionally, global sales of no- and low-alcohol beverages exceeded $11 billion in 2022, and further growth is expected, as per data from IWSR.While nonalcoholic offerings currently represent a smaller portion compared to the $250 million in annual alcohol sales in the U.S., major beverage companies like Constellation, AB InBev, and Molson Coors recognize the importance of having a significant presence in the nonalcoholic market to avoid losing sales to competitors.
Töst, the alcohol-free sparkling beverage brand, offers two varieties:
- Töst features sparkling white tea, cranberry, and ginger notes
- Töst Rose offers sparkling white tea, ginger, and elderberry flavors.
The “never alcohol” categorization of Töst appeals to consumers who completely avoid alcohol, as many nonalcoholic beverages still contain small alcohol percentages. For Constellation Brands, the addition of Töst to its portfolio complements other nonalcoholic offerings such as the recently launched Corona Non-Alcoholic. It also expands the company’s presence in the rapidly growing premium nonalcoholic segment. If Töst continues to thrive, Constellation may consider further investment in the brand or even an acquisition.
Mallika Monteiro, an executive vice president at Constellation Brands, expressed that the investment in Töst allows them to enhance their higher-end portfolio by offering consumers an alcohol-free beverage with a complex flavor profile that suits various occasions and lifestyles.
Constellation Brands is joining other beverage industry giants in investing in nonalcoholic companies. Keurig Dr. Pepper acquired a minority stake in nonalcoholic craft beer maker Athletic Brewing with a $50 million investment in 2021, and they also purchased the ready-to-drink cocktail brand Atypique. In 2019, Diageo acquired a majority stake in Seedlip, a London-based brand known for producing the world’s first distilled nonalcoholic spirits.