Oceano Founder on Moderating Not Eliminating Alcohol

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This is Bloomberg Business Week with Carol Messer and Tim Steneveek on Bloomberg Radio.

Big Joe, Okay, I don't need to tell you this, but if you've recently looked at the drinks menu in a bar restaurant, then you know that one of the fastest growing parts of the overall alcoholic drinks market is non.

Alcoholic I know this is because of you.

Yeah, I can't, still being quite honest, but BCG.

Has the numbers. Are you ready for him?

Yeah?

Okay, seven percent. It's the expected compound annual growth rate of non alcoholic drinks globally through twenty twenty seven. That's when the drinks will comprise close to four percent of the overall market. Surprising to me that it's not higher, but it's a big market.

It's surprising to you.

Well, I thought it was growing to grow bigger. It's a huge market and it's still a tiny part of the market, but it's growing extremely quickly. Again, data from ida WS are cited by BCG.

Now, the rise of non alcoholic beer is something we've spoken about quite a bit, with smaller players such as athletic brewing so small anymore, know exactly? And you are a fan fan big time. Yeah, and even the global behemoths, including Anheuser Busch in bab Listen, people are looking at what's going on in the marketplace.

Okay, we've never actually had one a guest to talk about non alcoholic wines artill today. Rachel Martin is a winemaker. She's the founder of Oceano Wines. She joins us here in the Bloomberg Interactive Broker's studio.

How are you?

I'm great, Tim, Thank you.

Thanks for joining us.

Okay, So, I think the joke that everybody would say when you talk about non alcal wine is like, okay, is it just grape juice?

It's definitely not just grape juice, because we ferment the grapes to wine and then we remove the alcohol.

How do you do that removing the alcohol?

It's a spinning cone column. It's a form of vacuum distillation.

So why do you think that non alcoholic beer has seen this rise? But it's like much harder to find non alcohol wine. Is it harder to create a good non alcoholic wine than it is non alcoholic beer?

I think it's more difficult because with wine you're starting out with a fresh ingredient grapes, and with beer they're dried ingredient. So I think from out the gate it's a more difficult process. And yeah, the non alcoholic wine market is growing, but the quality has been low to begin with, and you know now we're seeing more high quality. Oceano zero was the first ultra premium non alcoholic wine to hit the market.

So talk to us a little bit about how you got here, right, because you've been in the industry for a long time doing I'm assuming alcoholic wine, yes, yes.

And I still do alcoholic wine. I got into the industry my family owns a vineyard and winery, and I went to the University of Bordeaux School of Anology to prepare myself to run their business. And then I fell in love with a particular vineyard in San Luis Obispo, California called Spanish Springs, and I founded ocean All based

Alcohol I love that you went there.

I was just I think this week and I think I was reading through the New York Times app and reading a bunch of stories at all. Something something kept popping up, and it was a wine, but it was less alcohol and less sugars and organic. And I was kind of interested in thinking about kind of my own world and not that I'm Everybody thinks I'm a whino because I talk about it so much, but I'm really not.

But it's not a promo and it's really hard to a.

Work week to kind of so I'm beginning to think more about this or something that's not alcohol, you know, no alcohol, because I like the taste.

Well, wine is an integral part of our lives and socializing, but alcohol maybe isn't the right choice for particular moments. And that's why non alcoholic wine is so great because you can have it at brunch, or you could you know, or you can moderate so you could have you know, traditional wines and then at the end of the night, you know, moved to non alcoholic.

Are you trying to replicate the taste of a wine that has alcohol in it with these varieties.

Well, the great thing is that I don't have to do that because I'm starting with a traditional wine. So in our non alcoholic wines, it's wine and that and a little bit of sugar to balance in the absence of alcohol, a little bit of tassium carbonate to lower the acidity, but everything else is natural to the wine. So you're you're smelling charnay and you're smelling peanut and.

Wine, and you're actually allowed to call it wine, right, yes, because it is wine. Okay, Because I've noticed that some of the beers that I buy that don't have alcohol in them, they don't actually say beer on them. What they say they say brew. Oh interesting, And I don't know if there's some like type of law that they're not allowed to say beer.

I don't know the answer to that question. But for non alcoholic wine, some brands they're adding back juice or water or adding flavors. But we don't have to do that because the quality of our wines are so high to begin with.

So go back to how you make it so because we have we as.

If you if you're driving on uh, if you're if you're if you're driving out to Pismo Beach, Okay. On Price Canyon Road. All you do is take a right turn and then you find yourself at the I know this really well. Yeah, I actually visited the vineyard unknowing, no, not even knowing that it was your vineyard.

Gosh, probably back in December.

Yes, Well, I fell in love with the vineyard, as I said, because of its proximity to the ocean, which you can actually taste in the wines. And we'll get into that. But it's such a unique place that I knew I can make wines that, you know, we had a sense of place, which is why wine lovers, you know, go to wines for that. You know, it's just it's more than beer, It's more than other you know, beverages. Wine is something that we know is the greatest beverage you know, ever made.

Well, there's nuances to it, right and as you say, like I think about that too, like near the ocean, like you pick up those elements.

So is it okay?

So go back to the We do have a lot of folks on who own vineyards around around the world, and we love to get into kind of the nitty gritty and there's a lot more of an environmental component we've talked with organic wines, is it made exactly the same way it is?

So our grapes are sustainably certified, so they're grown without herbicides or pesticides, and all the water is naturally available on the site. But we as far as like other vineyard owners, it's a great opportunity. You know, if you have excess grapes or your winery and you're looking to appeal to more customers, then non alcoholic wines is a

But so how does it become non no alcohol? Like, that's why I wud.

Understand that you made when you explained it, you made it sound very easy, but like or something, Yeah, what's.

The difference in the speak?

Could like where does all of a sudden, like the alcohol gets sucked out or whatever.

Okay, so you take the wine and you put it into a machine. It's called a spinning cone column. So that's a stainless steel column with a series of cones that spin. And what that does is it spreads the wine onto a into a thin layer, so making it easier to extract through vacuum distillation the alcohol. So first the aroma compounds sit on top of the alcohol. They're removed, the alcohol is removed, the aromas are added back into it.

What do you then do with the alcohol that you remove?

Yes?

Can you make hand sanitizer? Like, what can you do with it?

You can clean your tanks with it. You could also use it as an alcoholic beverage.

Like a little moonshine or something something like that.

You could, you know, I more interesting, honestly, Pour it on ice, put on put a little tonic, put a wedge of orange or something, and I think we have a new product.

Okay, there you have it.

Making non alcoholic red white is it as easy?

Is one harder?

People say that a great non alcoholic red wine is the holy grail, so it is more difficult to make better red non alcoholic wines. However, both of ours are really great. But but that's what consumers are looking for, is that really super high quality red non alcoholic wine. Because it's very hard to come by.

And you think you've pulled it off.

I do believe I've pulled out. And it's not only me that feels that way.

We have a big waiting list for the next release of our Pino noir. So what we're be tasting today is our last vintage and it sold out super fast at the highest price.

Non alcoholic wine in the market, and it is relatively expensive. I would say for a bottle of wine, forty fifty.

Five for our Pino noir, forty five for our Shardenay. Now, when you remove the alcohol, you're seeing a thirty percent reduction of volumes.

Okay, okay to make that.

So your costs go up and then the cost of removing the alcohol.

We're gonna continue this conversation. We're gonna sample actually these wines in just a moment.

I want to get right back to Rachel Martin, winemaker and founder of Oceana Wine. She's here in our Bloomberg Interactive Broker studio. We've been talking about non alcoholic wines.

We stop talking and try it.

That's what they've been Well, I was gonna say, she doesn't just produce non alcoholic wines, even though that's what we're talking about. Right, what before we try the wine? Okay, Carol's like, really wants to try it, and I do too. Clock somewhere what portion of your sales now are the non alcoholic versus alcoholic?

Well, we're growing the non alcoholic, but it's you know, it's more wines with alcohol than without. But that's just because we are, you know, the amount that we're producing. You know, we're selling out basically of the non alcoholic wine fast.

Do you think, like, do you anticipate that you might give up on the alcoholic wine and just go non alcoholic behind.

Well, I don't need to do that because we have customers for our traditional wines and that's how it all starts. Our Charnay one domestic wine of the year. Our Pino Noir is ninety three plus points. So we're making great wines with alcohol. But you know, we're looking to meet the consumer where they are because they want lower alcohol wines. Which is so exciting because I'm just announcing it that

To what like a twelve percent that so are usually.

When the Sarrah originally is thirteen percent, So we brought it down to three and a half percent because not some consumers aren't looking to eliminate, they're looking to moderate, and this is a great option for them tweak it down.

Okay, Carol's like enough talking time for drinking.

You're done? Yeah, okay, So tell us about what you brought. We've got a charay and a pino.

Absolutely and our wines. All of our wines can be found on our website and more information about them at Oceanawines dot com. But this is our Shardenay. No, remember, this is our award winning.

Smells like a Shardenay Domestic Wine of the Year Shardenay, just with the alcohol removed. So if you look at it's got a beautiful color, it looks you know, it's it is wine.

It looks just like wine. It's crystal clear, it's you know, it's got this gold flex and then if you swirl it around in your glass, it's.

How you This is a tough job, but somebody has to do it like we have.

We have to drink wine.

And you you have the notes of green apple, citrus, jasmine, a little bit of green melon and on the palate when you taste it. It has a good mouth feel, which is missing in a lot of non alcoholic wines. But the way that we make our wines, it has body and volume independent of the alcohol, and there's something that stays that wine that after feel.

It has length, so the wine and flavors stay in your mouth after you've swallowed, and that is supported by the acidity and the wine go to the red.

Because that I'm curious.

Now, this is our Peano noir. This is our first ever vintage of non alcoholic wine. This is the twenty twenty two Ohano zero non alcoholic Pino noir from Spanish Springs Vineyard. So we you know, this again is our ninety three point you know, uh pino noir just simply with the alcohol remove right, So it's you know, it's got a gorgeous color, lots of aromas coming off of that plum, nice rosberry, a little bit of BlackBerry and kind of someone like this.

I like this.

So in terms of the market, you said you're sold out already, is that correct?

For the non o For.

The Pino noir, we're completely sold out. We have a lady waiting list for the next vintage. The Chardonnay is currently on the market. We just released it May first, and we're selling through quickly. What are you hearing from like restaurants and bars and like, I'm a mean, that's the holy grail at this.

Point, definitely.

And I've been in conversations with masters of wine about our non alcoholic wines and what's exciting is they already know about Oceano zero and because the market is booming, restaurants are looking for not just any non alcoholic wine, but these quality non alcoholic wines fine for fine dining.

You see that on menus now it's wild. There's an entirely new section right that you hadn't you wouldn't see a year ago. I'm wondering about distribution because you keep talking about that it's for sale online. Are you sold at brick and mortar at all?

We are sold at brick and mortar, for example, in New York City Spirited Away, which is in Soho, you could find our wines there. But we have distributors, so we're distributed in the mid Atlantic, Northeast, in Missouri as well as California for both our traditional and our non alcoholic wines. But to keep up with the market could demand not only for our wines, but the growth of the category. We're looking for investors, yes, so that we can meet the demand. Interesting continue, Yes.

What do you think is going to be the real big growth area? Is it the alcohol removed or alcohol alcohol lowered?

Kind of?

I believe it's low alcohol because that's what most of the market is looking for, and that's to reduce their consumption and not completely eliminated. But non alcoholic wine is great for whatever your reasons that you choose not to drink alcohol, but you could have traditional wine and then switch to non alcoholic wine. In the UK, I think it's really cute. They call it zebra striping.

Yeah, yeah, those Brits, those Brits.

But there's enormous you know, opportunity and both know what they call no and low alcohol wine and low.

Yeah, we're Bloomberg. We love numbers. We talk about money all the time. How much do you need to raise? Like, what's target here?

One point five is my target? Yes, and that's for you know, building out the program of wines and then also having a more robust direct consumer experience, getting you know, our own tasting room. We don't have one of those at this time, and then expanding beyond our borders.

You know who loves wine, Silicon value billionaires. It's amazing anyway, and now that they.

Could get into non alcoholic wine or low alcohol with Oceano. Listen, it's very fascinating to see how the beverage market, the alcohol no or low alcohol like, how it continues to evolve. It's really fascinating, Richard, Thank you so much. Yes, I was going to say, and you can follow us on our socials to see what we have.

We've got lots.

Going on this summer Oceano dot zero and Oceano Wines on Instagram.

All right, well, looking forward to come back again and we'll hear how things are going. Rachel Martin, she's wine maker and founder of Oceano Wines, joining us here in our studio.

Thank you so much.

Thank you for having me a lot of fun.

And it's not even a Friday. How did this happen?

And he excuse to talk about California.

That what Tim has been in his glory.

It's like going back home kind of almost all right, this is Bloomberg