Non-alcoholic retail pioneer Sans Drinks enters voluntary administration, as founder Irene Falcone charts new path

Sans Drinks, the pioneering retailer which helped kickstart Australia’s non-alcoholic beverage boom, has collapsed into voluntary administration, owing to what founder Irene Falcone called a brutal environment for discretionary retail and gatecrashing by big business competitors.

Founded in 2020 by Falcone, the entrepreneur behind $20 million online beauty retailer Nourished Life, Sans Drinks was one of the first specialty retailers to offer drinkers high-quality, non-alcoholic alternatives to wine, beer, and spirits.

It emerged during a widespread improvement to the quality of non-alcoholic alternatives, and a growing consumer appetite for booze-free options, spearheaded by the Dry July movement.

In 2021, Sans Drinks expanded its online operations to a brick-and-mortar shop in Sydney’s Freshwater — Australia’s first physical store dedicated to boutique booze alternatives — and later decamped to the Westfield Warringah shopping complex.

By July 2022, it also completed a merger with Craftzero, a digital competitor in the non-alcoholic retail space, with Falcone forecasting as much as $15 million in revenue for the 2023 financial year.

Those projections would not come to pass.

Falcone appointed Andrew John Spring and Peter John Moore of Jirsch Sutherland as joint administrators on Monday after it became clear Sans Drinks sales had stumbled.

The acquisition of Craftzero, which has now been sold on, and attempts to establish Sans Drinks’ in-house brands further reduced the business’ working capital.

The Sans Drinks online store remains online and open for business, as the joint administrators review its financial position and work with Falcone, its primary creditor, on a pathway forward.

Discretionary spending slump hits non-alcoholic options

Speaking to SmartCompany on Thursday, Falcone said Sans Drinks has been affected by the “current economic environment where retail has slumped, particularly in more trendy, niche, discretionary products”.

Sans Drinks let its Westfield Warringah lease expire and terminated its casual staff contracts in June before administrators were appointed.

Falcone described “red flags” in the lead-up to Dry July, traditionally an annual high point for non-alcoholic beverage sales.

In 2022, Sans Drinks saw a four-fold increase in sales between June and July, as shoppers opted for non-alcoholic options to support their month-long abstinence.

But low foot traffic in June this year, combined with slower-than-expected sales through Sans Drinks’ e-commerce channel meant, “the dial did not turn” from sales volumes recorded in April and May, Falcone said.

Andrew Spring, joint administrator and partner at Jirsch Sutherland, acknowledged the cost of living pressures have “impacted consumers’ discretionary spending habits”.

The post-lockdown return to in-person shopping has also contributed to what Spring called a “dramatic decrease in sales” for the business and its core digital operation.

Big players now crowding a niche market

While macroeconomic factors altered shopping habits, rapid changes have also swept through the market for non-alcoholic drinks.

Falcone was an early evangelist for the new wave of high-quality non-alcoholic beverages, and Sans Drinks catered to a small but ascendant market category.

It mirrored Falcone’s earlier success with Nourished Life, which championed natural beauty products, once seen as a niche category, before its acquisition by cosmetics giant BWX in 2017.

“I was incredibly lucky with my first business, as it took a really long time for the majors to follow,” she said.

“In this business, I am shocked how fast the big boys jumped on it, my little idea.”

Grocery giants Woolworths and Coles are now major stockists for leading non-alcoholic brands, while Dan Murphy’s, the nation’s most well-known bottle shop chain, even trialled its own non-alcoholic pop-up shop early last year.

The way bigger competitors have crashed into the market is disappointing, Falcone said, given the way she backed the business with her own capital.

Falcone is Sans Drinks’ largest creditor and is estimated to have injected $1 million into the business.

It is unlikely the business will be sold as a going concern, and Falcone is optimistic it will live on in a new, restructured, and right-sized format.

One potential pathway for Sans Drinks is to downsize while homing in on boutique products unlikely to receive nationwide distribution through the supermarket titans.

As the administrators consider those options, Falcone said Sans Drinks has already proven a point by being first-to-market in a new consumer category.

She also reflected warmly on her own entrepreneurial journey, claiming she was willing to “risk it all” to champion a fresh business idea.

“I started a trend and opened up a category,” Falcone said.

“I’m also proud, really proud of my business, and I’m really proud of what I’ve done,” she added.

The first meeting of creditors will take place July 27, with the second to be held in a month’s time.