CPG Playbook   //   April 18, 2024

What the future of non-alcoholic beverage retail looks like after Boisson’s bankruptcy

The rise of non-alcoholic beverage startups like Ghia and Kin have also led to the creation of another set of businesses: non-alcoholic beverage retail shops.

Over the last couple of years, a number of startups retail startups from Boisson to Spirited Away to Sèchey launched with the express purpose of being a place where sober or sober-curious shoppers could discover the latest and greatest non-alcoholic wines, beers and mixers. These retailers even started to attract interest from big alcohol, with Boisson announcing in September that it had secured $5 million in VC funding from Pernod Ricard’s VC arm.

But recently, questions have been raised about the long-term staying power of the NA beverage shop after Boisson filed for Chapter 11 bankruptcy earlier this month and closed all eight of its locations.

In a LinkedIn post, Boisson founder Nicolas Bodkins seemed to implore others to not draw any conclusions between Boisson’s struggles and the broader NA movement. He wrote: “No one should consider this anything other than what it is: a failed venture-backed startup that grew too quickly, made mistakes, and wasn’t able to find capital fast enough to continue to build three businesses at the same time — bricks-and-mortar retail, e-commerce, and wholesale import/distribution — which in hindsight proved to be impossibly hard to execute.”

It points to a growing issue: the NA sector continues to face challenges in retail. Much of the issues are due to uncertainty over where this category is placed and what type of retailer can sell these products. The quick growth of the category in retail means emerging companies have to secure retail partnerships based on state-by-state laws that dictate how these products are merchandised. At the same time, retailers like Target and Whole Foods continue to build out their non-alcoholic and low-ABV assortments, signaling that the future of NA retail may lie in making the category more prominent at national retailers.

A murky set of regulations 

The label “non-alcoholic” can cause some confusion. Many people would think dealcoholized wine and beer can be carried anywhere soft drinks are sold. However, these products still usually have up to 0.5% ABV. As such, regulations and retailers’ merchandising strategies are still taking shape over how non-alcoholic drinks – which range from beer to ready-to-drink cocktails – can be sold. 

Jocelyn Florence, a partner at the talent partnership studio and strategic investor Parallel, which has invested in nonalcoholic beverage brands like Hop Wtr, said there are currently a few brick-and-mortar obstacles that NA beverage companies have to navigate.

For instance, many retailers across a number of states still require I.D. to sell NA beer, wine and spirits. That’s because many non-alcoholic products still contain a small percentage of alcohol, and are regulated under the Federal Alcohol Administration (FAA) Act, which oversees all malt beverages regardless of their content. Moreover, individual states also have their own rules on where and how NA products are sold.

“Here in L.A. for example you can’t buy NA beer at self-checkout, they still require carding,” Florence said. Major retailers like Walmart and Target do card customers buying non-alcoholic products at some store locations. 

At the same time, Florence said, the non-alcoholic beverage category has quickly become saturated, with dozens of brands vying to get on shelves. Because it’s getting harder to penetrate retail, Florence said she considers a brand’s on-premise presence just as important as its retail presence. That means targeting bars, restaurants and entertainment venues to drive trials. “I’m also seeing brands experimenting with retail packaging,” she said, pointing to De Soi as an example. “They’re [De Soi] testing some interesting strategies, like offering single to-go cans and not just multi-packs.”

Room for specialty shops

Despite the growth of nonalcoholic offerings at national retailers, category experts believe that “destination” shops where people can try different products are important in expanding. 

The core NA customer tends to also drink alcohol, said Emily Heintz, founder of NA bottle shop Sèchey. The retailer opened in 2021 and currently has one location in Charleston.

“It’s about education, awareness and convenience, and the best place to get that is at a specialty destination.” However, Heintz said, mass distribution is important if non-alcoholic beverages want to expand their customer base nationally.

Sèchey is approaching brick-and-mortar through big-box partnerships rather than rapidly opening stores. In early April, Sèchey announced an expansion of its curated collection of non-alcoholic brands at Target. The company began piloting the program with Target in early 2024, in time for Dry January. She said that Sèchey was connected with Target to help the retailer curate the NA section of its adult beverage assortment. Sèchey already has established relationships with dozens of brands, allowing it to create exclusive packs and kits for the retailer.  

The new expanded assortment is launching at 700 Target locations and features 10 brands, including Kin, Ghia, De Soi, and Sèchey’s private label dealcoholized wine. The Sèchey offerings can be found in Target’s adult beverage aisle, requiring adult beverage licenses to cover locations nationwide. 

Heintz said this shop-within-shop strategy helps bring national awareness to both Sèchey and its brand partners. “The partnership shows the guests are demanding alternatives to alcohol,” she said.

Partnering with Target is also important to growing Séchey’s brand awareness. While Séchey has raised from angel investors, it hasn’t taken on any venture capital funding. Heintz said having come from a physical retail background, she knew opening a bunch of locations in high-cost cities would be too expensive and require a lot of institutional capital.

“In the absence of us being able to support a store in every market around the country, we’re partnering with Target to expand availability,” she said. She added that the multi-brand strategy also helps the emerging bands together and share the marketing costs, as opposed to just Sèchey promoting its own brand. 

Séchey is also testing limited-time pop-ups, such as New York City in September 2022. “We have plans to open more locations, but when the time is right,” Heintz said. “We’re using our flagship to understand the category, like how the customer likes to shop, and whether we need to have a full bar for tastings.”

Parallel’s Florence said while it’s important to win in big chains like Target and Costco, “I’ve also talked to founders about liquor store availability being important.” This point of sale helps cater to people who want to pick up a bottle on their way to a party or gathering. “But these products do need retail distribution,” Florence said. “Ease of availability is important for customers trying to find a brand.”  

Heintz said she also foresees more strategic partnerships with national retailers for Sèchey, but will focus on premium retail given the products’ higher price points. “We are looking to raise more capital given the scale we want to achieve,” she said. “But we’re looking for our wholesale channel to support the scale of the owned retail.” 

Heintz said the partnership with Target signals a move toward making this category more prominent at national retailers.“I think there is room for both mass and specialty retailers when it comes to this category,” Heintz said.