Drink Monday looks to crowdfunding to fuel retail expansion, as non-alcoholic category evolves
"I joined the business with the goal of expanding the brand into retail. But first, we needed to fundraise," said Young, adding: "When we started talking about our options, there were basically two we could go out for institutional round series A with venture capitalists, and/or we could crowdfund ... I decided to do both but to start with crowdfunding because it's faster, it's easier, and it's more comfortable and known to us."
From sober curious to alcohol moderation: Consumers are looking for alternatives
Consumers are turning to the non-alcoholic space for a variety of reasons — whether it’s for Dry or Damp January, sobriety, or just alcohol moderation — which is growing the overall market. For the 52 weeks ending Sept. 20, 2022, retail non-alcohol sales were up to $395m from $178.7m three years ago, according to NielsenIQ.
When it comes to who’s drinking non-alcoholic beverages, "82% of non-alcoholic buyers also purchase alcohol in households," according to Nielsen data, Young shared.
Of the consumers who were drinking less alcohol year-over-year, 36% lost interest in drinking, 34% said they were opting for a healthier lifestyle, and 14% said they were drinking more non-alcoholic beverages.
Additionally, younger consumers are more likely to abstain from alcohol than older cohorts, Young noted. When asked how often do you consume alcohol, 44% of Gen Zers, who were born after 1997, said never, which was the highest response among the options, according to Nielsen.
Building out the retail shelf set for non-alcoholic beverage
As the non-alcoholic space continues to grow, retailers will need to pay closer attention to where these products are placed on the shelf, so consumers can easily find them, Young said. Right now, "the shelf set for non-alcoholic products ... hasn't been built yet," he added.
"Where should a consumer go to find non-alcoholic products? On the one hand, you could say it should belong in more of the health and wellness water sort of aisle, alongside waters, sodas, and things like that. On the other hand, if someone's coming in to purchase alcohol, or if they're coming in to purchase non-alcohol, they might go to the alcohol set."
And Young sees the potential for non-alcoholic products to take a similar trajectory to how vegetarian and vegan options entered the grocery store, Young explained. First, these products “started out in a relegated corner” before going mainstreaming and finding their way “next to its equivalent,” he said.
Using funding to shift from DTC to retail
As it looks to grow its business, Drink Monday is navigating the challenges of raising capital in a tighter market, which started in early Q2 of last year, Young explained.
"Early-stage brands, especially in the CPG space, need capital to move their products forward in the value chain. You have to go through distributors. You have to pay retailers to be on shelf. You have to pay salespeople and brokers. There's a lot of expense that goes into building a brand, and until you reach scale, most of those companies are burning cash."
At the same time, many brands have begun to shift their focus to retail operations and away from direct-to-consumer offerings, "which for most brands is a profit loss," he said. "You're not making money when you're investing to acquire customers and serve them through direct to consumer, so I think all that kind of came to a head," he added.
Drink Monday has a two-prong approach to funding this retail push through crowdfunding and a round of venture capital funding planned for later this year, Young said. The crowdfunding is "going to help [Drink Monday] put a few feet on the street so that we can get bottles on shelves around the country," while supporting its over 700 current retail locations, he added.
The second prong of investing in this retail push will come from another round of funding, which will go to further scale up its business, Young said.
"Coming out of this and headed back half of this year, my plan is also to launch that institutional round series A. We're already talking to a number of venture capital firms. People have expressed interest, and we're going to continue to do that. But inevitably, that's going to take time, especially in this market. It's going to take extra time."