Constellation Brands has acquired a minority stake in TÖST, an alcohol-free sparkling beverage brand, the company announced yesterday.
Founded in 2017, TÖST produces beverages made from an all-natural blend of white tea, white cranberry and ginger. It launched TÖST rose in 2021. The champagne alternative is a “never alcohol” product, meaning there is no alcoholic fermentation at any point in the production process.
“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,” said Mallika Monteiro, executive vice president and chief growth, strategy, and digital officer at Constellation Brands.
The investment, made through Constellation’s venture capital group, gives the company another position in the fast-growing non-alc segment. It also comes at the heels of another non-alc addition to Constellation’s portfolio, Corona Non-Alcoholic, which launched last week. In 2021 the company acquired a minority stake in HOP WTR, a non-alcoholic, calorie-free sparkling water infused with adaptogens and nootropics.
Constellation Brands’ beer business topped $7.456 billion in net sales, an +11% year-over-year increase (YoY), during its 2023 fiscal year, which ended February 28, the company reported today during its full-year and fourth-quarter earnings report. However, net sales of Constellation’s wine and spirits sales declined -4%, to more than $1.987 billion.
In a statement, Constellation Brands highlighted that 82% of non-alcoholic drink buyers are also still purchasing drinks that contain alcohol, according to data from Nielsen IQ, “meaning TÖST extends the options and opportunity for participation on traditional beer, wine, and spirits occasions, making it a strong complement to Constellation’s current portfolio.”
Between August 2021 and August 2022, total dollar sales of non-alcoholic drinks in the U.S. stood at $395 million, showing a YoY growth of +20.6%, according to Nielsen IQ.
TÖST is currently sold online and in more than 40 states. Last September, TÖST CEO Brooks Addington said the brand found traction by being positioned as an affordable luxury for sophisticated drinking occasions and as a gift. The company offers two bottle sizes: 750 ml and 250 ml, and is working on a canned format.
Two years after entering the market, the product was distributed across over 1,300 different accounts domestically with 18 distributors in 24 states. In October of 2021, after revenue reached over $1 million during the prior ten months, the company raised $360,000 of equity crowdfunding in the form of SAFE notes via Republic.
“We are excited and humbled to have Constellation Brands as a partner in our mission to bring TÖST beverages to even more consumers,” said Addington. “We believe our mutual consumer-centric focus and desire to deliver premium product experiences positions TÖST for exponential growth in the coming years.”