Pour It Up: Beverage Brands Cash in on LA's Sobriety Trend

This is the web version of dot.LA’s weekly newsletter. Sign up to get the latest news on Southern California’s tech, startup and venture capital scene.

The drink to impress mentality has permeated tech and startup culture for nearly a decade. But with the rise in popularity of brands like Olipop and Liquid Death, that’s all about to change.

Meagan Loyst, the 26-year-old founder of Gen Z VCs, a global collective of young investors, students, entrepreneurs and founders said there has been a noticeable shift in how she and her peers interact with alcohol, especially in professional settings.

“If you think about Gen Z, we’re max 26 years old,” Loyst said. “Even the people that can drink alcohol are choosing not to.”

To her point, in 2018, Insider reported that Gen Z drink alcohol about 20% less than millennials did at their age, and millennials already less than boomers. According to the BBC, part of the shift in Gen Z’s sober preference is that 41% associate alcohol with anxiety, abuse and vulnerability. But the shift in preference toward non-alcoholic beverages isn’t merely a tendency amongst Gen Z, but large portions of L.A.’s tech scene.

While hosting various events across Los Angeles, Loyst has also noticed an increased demand for non-alcoholic beverage options among attendees.

“I think part of it is wellness, just feeling good,” she explained. “Alcohol doesn’t always make you feel good. And I think for optimal performance — both for your brain and even your gut health — I know that for me to operate on a Thursday night at a happy hour, if I have one or two glasses of champagne I won’t be productive for one or two hours.”

Here are three L.A. startups looking to capitalize on the sober moment in SoCal.

Melati

Upon first glance, Melati’s rustic color palette and elegant branding style are reminiscent of a bottle of high-end booze. That couldn’t be further from the truth. Melati, a non-alcoholic botanical spirit, is a plant-based alternative to alcohol.

“Instead of doing dealcoholizing or extracting an ethanol, I wanted to make something that was super inclusive for everyone who wasn't drinking,” said 30-year-old Melati Founder Lorin Winata. “So I do a cold extraction in water for six weeks.”

Winata is Indonesian and grew up in Singapore. “Throughout Asia, we have tonic drink remedies that have been used for centuries to kind of be more preventative medicine than curative,” she explained. “So Melati drinks are a blend of 20 ingredients for the fresh flavor and then 25 Ingredients for the classic, of these Asian botanicals used in tonic drink remedies.”

Before Melati, Winata worked in venture capital helping startups grow from an early stage, and was constantly attending happy hours, dinners, events — all of which included alcohol.

“I didn't used to drink in work situations, just with traveling one to three times a week, not sleeping much, trying to get my workout in, and also just trying to attend every single work event and happy hour that’s needed in my career,” she said. “Alcohol just didn’t serve that purpose.”

Which is why creating a drink that was both delicious and could fit into the drinking culture of the tech world was important to Winata.

“I wanted something else that still had the complexity of flavor,” she said. “And that still, you know, gave me that same experience and gave me that glass in my hand.”

Leisure Project

Like many people, 29-year-old Steve Michaelsen was sitting at his parents house in the early days of COVID, bored out of his mind and realizing he was having a difficult time focusing on work.

“I mentally just like, wasn't there a lot of the time,” he said. “And I started to realize, ‘Oh, s**t, I haven't had water today.’ I was dehydrated all the time and it was leaving me irritable, constant headaches, and unfocused.”

After discovering his brother had a similar issue, they began to shop around for products to help keep them hydrated.

“There's liquid IPs that are essentially Gatorade, there's Pedialytes, there's electrolytes, there's all these powders, but there isn't a lifestyle hydration drink that just helps you feel good,” he said.

As a former digital brand manager at Nike, it didn’t take long for Michaelsen to form a plan of action. In 2022, with the help of his brother and co-founder Alex, they launched Leisure Project, a non alcoholic, “hydration drink that has a unique electrolyte complex compared to legacy brands that are primarily sugar and sodium," Michaelsen explained. "We over index on electrolytes that have benefits for both mind and body like magnesium, potassium, chlorides and trace minerals, with only a small amount of sodium. We also infuse functional ingredients like L-Theanine and Ashwaganda that are known to help lift your mood."

The brothers positioned Leisure Project to be a modern vitamin enhanced water beverage. But Michaelsen said, “a lot of people during dry January were buying us and putting us in a wine glass and drinking it like an alcohol replacement.”

Michaelsen thinks the success of Leisure Project can be attributed largely to Gen Z’s sobering, but also the cultural shift of there being “less pressure” to drink in public settings.

“Brands that are winning are the ones that are saying, ‘We're here to help you feel good,’” he said.

XICAMA

Mona Sharma was working in luxury cosmetics before two heart surgeries as a result from anxiety and lack of sleep led her to rethink her life. “I could see my heart on the monitor and the doctor said, ‘You might have to wear a pacemaker for the rest of your life,’” the 41-year-old Sharma recounted.

That reality check propelled Sharma back into her Ayurvedic roots — a large part of which included regularly incorporating jicama into her diet.

“The model in my house growing up was food is medicine,” she said. “So knowing this when I started working with my clients, I started using Jicama.”

But it wasn’t until her husband randomly suggested one afternoon that jicama might taste good in a drink that her entrepreneurial journey began.

“By chance we partnered with these world famous mixologists [Barlab] who made us these three flavors— this is not even knowing we were going to start a beverage brand — and a couple weeks later they called us and said, ‘Hey do you guys want to be an official beverage of Coachella?’” she said.

They ended up with record-breaking sales at Coachella in 2019 and would have taken their brand into hospitality if not for COVID.

Despite that hiccup, XICAMA has still found success.

“Especially in California, there is a bigger trend to enjoy a non-alcoholic drink, but something that’s still delicious,” she said. “So you don’t really feel like you’re missing out on the act of fun or enjoyment.”