When a major global spirits company, Diageo India (USL), acquires a 15% stake in a startup focused on non-alcoholic beverages, and subsequently raises its investment to 25% within a year and a half, it draws significant attention. In June 2024, Diageo India invested in V9 Beverages, the producer of the alcohol-free brand Sober, increasing its stake in January of this year.
The alcohol market in India is valued at approximately $39.7 billion, with a steady compound annual growth rate (CAGR) of 3-4%, particularly buoyed by the growth of premium products. While Diageo has been emphasizing premiumization, its interest in non-alcoholic options raises questions.
Praveen Someshwar, Managing Director and CEO of Diageo India, explained, “As consumer preferences evolve, demand for moderation-led choices and premium zero-proof experiences continues to grow. This fast-growing category complements our core business, and our increased investment in Sober reflects our confidence in its future potential.”
On a warm summer evening, Vansh Pahuja, the 32-year-old founder of Sober, hosted an interview at his bar, Somewhere Nowhere, located in Delhi’s GK2 market. Modeled as a speakeasy, the bar features a hidden entrance and a vibrant atmosphere. Pahuja expressed enthusiasm over launching a ready-to-drink canned non-alcoholic version of the Picante cocktail. “It’s zero-sugar, zero-calories, zero-alcohol — globally, people have made non-alcoholic Picante, but with sugar. This is the first without sugar,” he noted, emphasizing that it is labeled “mindful” rather than healthy.
Pahuja acknowledged potential market concerns, asking whether there is enough demand for non-alcoholic spirits. “Many enjoy a drink but cannot due to medical conditions,” he said, referencing a family member and a pregnant friend as examples that motivated him to explore this segment.
Originally from Delhi, Pahuja studied marketing innovation at Northeastern University in Boston and returned home following the death of his maternal grandfather. Eager to venture into the restaurant scene, he began with a pizza chain called Baked, allowing customers to customize their orders. However, the pandemic disrupted this initiative, leading to its closure. During this time, he met Aditya Aggarwal, a craft gin entrepreneur, who discussed various regulatory challenges in the beverage industry. Jokingly proposing a non-alcoholic alternative, Pahuja soon recognized its market viability. Aggarwal took a 10% stake in Sober and joined as a manufacturing partner, leading to a trial launch with 600 bottles of zero-alcohol gin, which sold out within a month.
Pahuja explained the production methods for creating gin-like flavors without alcohol: one involves using traditional gin botanicals with water instead of ethanol, while the other entails distilling regular gin and removing the alcohol—an expensive process that has hindered the success of imported non-alcoholic brands in India.
Currently, Sober’s product lineup includes non-alcoholic whiskey, gin, pink gin, rum, red and white wine, in addition to sodas and tonic water. Contrary to popular belief, Pahuja found that it is not primarily Gen Z that consumes non-alcoholic beverages; rather, it is an older demographic that appreciates moderation.
With the backing from Diageo, Pahuja has outlined plans for expansion. “We want to be a household name for all things non-alcoholic. We aim to offer sparkling water at ₹60, and then move customers to premium options like gin and tonic,” he indicated. Sober products are already available in the top 100 bars across India, signaling a commitment to reshape drinking habits in the country.
