AB InBev backs alcohol-free RTD brand

The venture capital arm of AB InBev has partnered with a South African banking firm to acquire an equity stake in non-alcoholic ready-to-drink brand The Duchess.

Rand Merchant Bank (RMB) and AB InBev’s ZX Ventures subsidiary have invested in South African producer The Duchess, creator of the ‘world’s first’ alcohol-free gin and tonic.

Launched in 2016, The Duchess has sold more than eight million bottles. The brand’s range includes three alcohol-free bottled gin and tonics, with two wine Spritzers added to the portfolio in 2020.

The Duchess is available in seven countries, including South Africa, the Netherlands, Belgium, Australia and the UK. More than 50% of its sales come from export markets.

Founder Johannes le Roux said: “The Duchess is proving to be an international favourite with health and wellness minded people who simply weren’t satisfied with sparkling water or sugary soft drinks as alternatives to alcohol. People have become more conscious about what they put in their bodies. The notion of ‘you are what you eat’ has evolved to ‘you are also what you drink’.”

Le Roux said the no- and low-alcohol category has huge potential. He added: “It’s projected to grow by a 7.6% compound annual growth rate (CAGR) per year to a US$43 billion global market by 2025.

“Alcohol-free drinks are likely to be particularly popular with females in Africa and younger consumers that are ‘sober curious’.”

According to the founder, 82% of female consumers in Africa do not drink alcohol, with the pandemic putting a greater focus on health and wellness.

ZX Ventures first backed The Duchess in 2019. The deal will help The Duchess team benefit from ZX Ventures’ ‘strong networks and deep industry knowledge’. South African firm RMB will bring its financing expertise and access to African networks to the partnership.

Daniel Obaseki, investment partner, ZX Ventures EURAF Beverage Fund, said: “We are excited about the opportunity to partner with RMB and are confident that joining forces will enable us in our mission to empower entrepreneurs to unlock growth in South Africa with both capital and strategic expertise.

“We look forward to our continued work with The Duchess and RMB.”

ZX Ventures acquired the parent company of Master of Malt, Atom Brands and Maverick Drinks in April 2018.

In 2019, AB InBev signed a deal to buy US canned cocktail and spirits producer Cutwater Spirits for an undisclosed sum.

Last month, AB InBev and Keurig Dr Pepper discontinued the production of Drinkworks, their at-home alcohol dispensing system.