DISTILL VENTURES HAS INVESTED IN OVER 35 AMBITIOUS, FOUNDER-LED BRANDS
Bootstrapping a new brand, especially in the fast-moving consumer goods world of drinks, is not for the faint-hearted. Eventually, angel investors are not enough, and outside sources of funding or experience are required, the kind that Distill Ventures offers.
The ‘independent’ accelerator was set up to do that through a variety of methods. It was born out of a realisation that there were many visionary drinks entrepreneurs, but little access to the required resources to help them build their brands and take them global.
At the time, unlike industries like tech, this kind of support did not exist in the drinks business. Distill Ventures filled the void and after approaching Diageo to be a partner, in 2013 the world’s first accelerator for the spirits industry was born.
Since then, Distill Ventures has invested over £245 million (€287 million) in more than 35 founder-led drinks brands around the world. They include Vascano Tequila, Tanica, Lodestar Whiskey, and Pimentae in their pre-accelerator phase. Some acquisitions by Diageo have also taken place including the no-alcohol Seedlip, Mr Black Coffee Liqueur, and Kikori Whiskey.
Seedlip is probably one of the best-known examples of a non-alcoholic distilled spirits brand that has made waves. Created to solve the dilemma of what to drink when you’re not drinking (alcohol) in a bar, founder Ben Branson developed the spirit in his kitchen in the woods. For there it is now stocked in more than 1,000 locations with a three-flavour line-up.
Looking for ‘great global brands of the future’
Commenting on the Distill Ventures project, Ivan Menezes, the former CEO of Diageo (who sadly died last year), said: “Diageo is built on the shoulders of entrepreneurs like Arthur Guinness, Pierre Smirnoff, the Walkers, James Buchanan, Charles Tanqueray and many more. Innovation is core to our business and through Distill Ventures, we are able to complement our work and support today’s best entrepreneurs to create the great global brands of the future.”
Each deal is unique and tailored, with a focus on developing a plan and working out what the necessary investment might be. According to Distill Ventures, Diageo will remain a minority investor regardless of the investment size, so the founders stay in control as the business scales. However, this does not mean that Diageo can’t exert some influence depending on its stake.
In the case of Pimentae, a premium ready-to-drink tequila cocktail brand, its two female founders decided that after the pre-accelerator partnership which lasted nine months until December 2023, they would go it alone. They are currently closing an investment round and are expected to launch into their first UK supermarket chain in March.
Distill Ventures’ investments are made on the basis that – if all goes well – Diageo continues to meet future funding requirements through to a pre-agreed point where they might be interested in acquiring the business. All deals also include a call option for Diageo to buy the business outright at an agreed future point.
Aligning plans with investment partners
As a global drinks giant and an authority in the market, Diageo is well placed to understand opportunities within the global drinks market. It knows how to build brands and globalise them but startups often have their own ideas about where and how to expand – and the product development they want to achieve.
Distill Ventures, like most companies in the investment arena, looks for rapidly growing, ambitious businesses – not just a great idea or brand as there are lots of the latter. It will then provide funding and mentorship to early-stage businesses whose applications stand out. Depending on how the startup entrepreneurs feel the relationship is going (and on what the contracts they’ve signed say), they can then choose to forge closer ties or part ways and go it alone.
An area that Distill Ventures has identified as a high-growth prospect is ‘New World whisky’, an emerging category where there is an opportunity to merge long-held traditions from regions like Scotland, the United States, and Ireland with more innovative production, flavours, and marketing strategies (see video below).
Old World whisky traditions may be revered, but there are now newcomers from places like Japan, Australia, Denmark, New Zealand, Mexico and even Bolivia that are creating a buzz in the whisky world. There are also opportunities to premiumise these newcomers given that the high-end whisky segment is projected to see a 4% volume CAGR increase from 2022 to 2027. Upscaling is particularly noticeable in India, where premium whisky sales are expected to increase sixfold by 2027, according to IWSR.
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