Startups are joining the craft mixer party

Rich in flavor and low in calories, artisanal mixers are the new favorite “drinking buddies” for millennials and Gen Z who love throwing home parties in a cocktail bar atmosphere.

Prepared from natural ingredients, while limiting the use of processed sugar and artificial preservatives, they are increasingly found in cocktail glasses instead of sweet soft drinks, juices and carbonated drinks.

Changing consumer behavior is driving demand for cocktail mixers in India, says Vikram Damodaran, chief innovation officer at spirits maker Diageo India.

“Recently, people have become more and more aware of their drinking choices. This has led to a growing demand for high-quality craft spirits and low- or no-alcohol alternatives. “Brands are innovating to deliver more high-quality non-alcoholic options that offer the same complexity and flavor as traditional spirits,” he says.

According to research firm DataM Intelligence, the global cocktail mixer market is projected to grow from $9.1 billion in 2022 to $17 billion by 2030. Research firm Benori Knowledge projected a compound annual growth rate of 15.1% during 2022–2028. global ready-to-drink (RTD) cocktail market and 10.3% during 2021-2026 in the Indian market.

Funds flow

According to market intelligence platform Tracxn, the cocktail mixer manufacturing segment has received almost $13 million in funding since 2018. Funding peaked at $4.9 million in 2019 before declining to $1.5 million in 2023.

Manufacturers of alcoholic beverages, or alcobev, introduced their lines of mixers for cocktails and other carbonated drinks primarily to avoid restrictions related to alcohol advertising.

On the other hand, start-ups such as Jimmy’s Cocktail, Sepoy & Co, Swizzle and Mossant focus on producing high-quality tonics, mocktails and cocktail mixers with unique flavors.

Launched in 2018, Sepoy & Co produces a wide range of tonics, ginger beers and lemonades at its facility in Uttarakhand. It imported equipment from European manufacturers specializing in beverage technology.

“Five years ago, this segment almost did not exist. However, the rise in premium spirits and the availability of high-quality mixers are driving an increase in consumer demand,” says its founder, Angad Soni.

On the other hand, Jimmy’s Cocktail is an early-stage startup that does not commit to any assets. “We have an exclusive agreement with a factory in Nasik where only Jimmy products are manufactured,” says its founder, Ankur Bhatia.

The company plans to expand its operations beyond cocktail mixes to include the production of non-alcoholic beer, zero-sugar carbonated drinks, and ready-made lemonades and fruit juice-based drinks.

Fast delivery

The rapid development of fast trading platforms has expanded the market for mixers, allowing easy access to products, the company’s founders say.

Bootstrapped Sepoy & Co says 40 percent of its sales come from fast trading, 10 percent from online and 50 percent from offline channels.

It also exports mixers to the UK, Singapore, Italy, Dubai, United Arab Emirates and the Maldives.

Jimmy’s Cocktail is available in over 50 cities, in almost 20,000 points of sale; q-comm accounts for 25% of sales.

The Swizzle ready-to-drink smoothie maker is available in over 1,000 outlets, including 750 vending machines in eight tier 1 cities and over 400 hotels and restaurants in Bengaluru.

“A few weeks later, we will also be present on the fast trading platform through Big Basket,” says co-founder Vrinda Singhal.

The company produces its ‘flavor’ – fruit extraction – at its facility in Bengaluru, while the canning and bottling is handled by a third party.

With a daily production capacity of 250-300 liters, it sells almost 30,000 cans a month and plans to expand to Singapore, Malaysia, Indonesia and Vietnam next year.

Mossant Fermentary, which produces tonics and craft kombucha, started by producing around 5,000 bottles a month in a 500-square-foot space in Bengaluru in 2019. “In October 2022, when we moved to a new 3,000 square foot facility, our goal was to multiply the result by 10-15 times. In a way, we have succeeded and we plan to expand to an even larger facility,” says Shishir Sathyan, co-founder of this profitable bootstrapped company.

Tax puzzles

While cocktail mixers may not have the same market reach as alcoholic beverages, they do have several other advantages.

“Brewers envy us because we don’t have to pay excise tax. We make every effort to keep the fermented product content below 0.5% ABV (by volume),” says Sathyan. Agreeing, Swizzle Singhal says the category falls under a more liberal tax structure, devoid of state regulations.

Startups in the mixing industry, however, point to their struggle to achieve profitability.

In a market where consumers are accustomed to drinks priced between £10 and £20, balancing costs while ensuring quality is difficult, says Jimmy’s Cocktail’s Bhatia.

Another challenge is the 40 percent tax levied on ready-to-drink cocktails and mixers combined with soft drinks (carbonated drinks with added sweeteners), says Sepoy & Co.’s Soni.

Despite these drawbacks, Edwin Daniel, founder of Optimistic Capital, remains confident in the sector’s long-term potential.

“As consumers continue to seek healthier alternatives, there is room for growth, particularly for companies that can innovate product offerings, expand distribution networks and increase brand loyalty. Investors may return when companies demonstrate such capabilities,” he says.