Greenbar Distillery has been operating out of a brick warehouse in downtown Los Angeles for nearly 19 years, making spirits like gin and rum. But now, the company is pivoting to a slightly different market: non-alcoholic beverages.

“When we look at last year’s sales, almost two-thirds of what we sold were non-alcoholic drinks,” said Litty Mathew, who co-founded Greenbar with her husband, Melkon Khosrovian.

According to a report from NielsenIQ, Americans spent $395 million on non-alcoholic beverages between 2021 and 2022, which was up over 20% year-over-year. Non-alcoholic spirits make up a small portion of those sales, but they were also the fastest-growing category.

And non-alcoholic spirits are exactly what Greenbar Distillery has turned to. Over the past few years, they’ve used a dealcoholized version of their gin and rum to roll out a list of canned cocktails, including an “UN Gin+Tonic,” a non-alcoholic version of a gin and tonic.

For Mathew and Khosrovian, the process is only a slight departure from their usual stilling. “We make a gin and then we boil off the alcohol,” said Khosrovian. “We actually make the gin.”

Jumping without a net

Greenbar’s pivot to non-alcoholics was actually built on a slightly earlier pivot.

“Right before COVID, 80% of our customers were restaurants and bars,” Khosrovian said. “All of which shut down and we had to figure out how to make a living doing something related to stores.”

They decided to start canning some of their cocktails, which they could sell out of markets instead of bars. And that eventually led them to install their own in-house canning line.

“There’s a moment you have to jump without a net,” Mathew said. “This canning line, it’s a $2 million canning line, is a jump without a net.” She added, “Oh, and I think we made the right move.”

They had to take out a loan in order to install the line. But as interest rates have increased over the last year, Greenbar’s loan payments have gone up as well.

“Over the last year, our interest rates right have made the payments, you know, like 50% more,” said Khosrovian.

Yet Mathew and Khosrovian are confident the line investment will pay off, even in the next 18 months.

“I think we double our non-alcoholic sales,” said Khosrovian. “Because the demand is crazy. This is now edging into the world of soda pop.”

When asked if there was a degree of sadness to transition to non-alcoholics after nearly two decades of making spirits, Mathews said no.

“What’s so interesting about that the non-alcoholics is that it’s the same customer who buys our alcoholic items,” said Mathew. “There’s just more stuff that we’re providing this person and those customers are people like ourselves. We, too, are drinking non-alcoholics.”