Noah Sanborn Friedman on Why the Best Time to Invest in Alcohol is Now
The co-founder of Top Shelf Ventures explains his thinking
Alcohol stocks tumbled last week, almost the minute the US Surgeon General announced that alcohol causes cancer — a dismal start to the alcohol sector’s 2025.
Somebody who will keep investing in booze is Noah Sanborn Friedman, the 29-year-old Co-Founder and Managing Partner of Top Shelf Ventures:
It’s a “venture fund focused on finding, funding, and accelerating the best opportunities in the broader beverage alcohol space”
Co-founded with Jason Sherman in November 2021
Their first deal was the boxed wine Gratsi
Their first fund did six deals, and Noah predicts their second fund will do another 20 to 25.
Noah Sanborn Friedman
Noah came on the podcast in late November 2024, and explained why he’s so positive about the alcohol business, at a time when so many others are not.
The alcohol sector remains a big opportunity
Noah says that not only is the alcohol industry “massive” but it’s still lucrative.
“It has had 50 years of straight growth, which is very rare for any American industry,” he explains, adding that it grew year-on-year right up until Covid ended, when it came in for a re-set.
Noah said he realised alcohol offered a major investment opportunity after he watched so many alcohol brands having “success out of the gates in being competitive… There are billion-dollar acquisitions and certainly nine-figure acquisitions, all the time.”
Yet “unlike the tech ecosystem or AI or even climate, that have very active startup environments,” there is much less investment available for alcohol startups, partly because alcohol is seen as a vice stock.
In Noah’s opinion, this means the investment sector is overlooking a major opportunity.
But what about the health warnings?
“As I understand it — granted, I was not alive at this time — there was a massive drop-off in drinking in the ‘80s, too, when the health movement and the Jane Fonda movement and Mothers Against Drunk Driving hit the industry,” says Noah.
He says one distributor told him sales plummeted 20% to 30% in a relatively short time.
“And then in the 1990s it was back to all-time highs,” Noah continues.
“My fundamental belief is that humans are going to crave escapism and they’re going to crave human connection forever. And alcohol is the one vice business that has stood the test of time for hundreds of years — humans have proven they will continue to go back to it.”
Here are 5 of Noah’s insights:
1. Brands need velocity and retention
Noah says successful brands have a few things in common, from a great-tasting product to a great package. But behind that stands a team that “execute relentlessly a playbook that’s all aimed at finding efficiencies in the system.”
He adds that the way to “longevity in the alcohol space and CPG in general largely stems from your ability to find efficiencies in how you get to market and how you keep consumers buying your product”.
“If the product is moving quickly through a channel, it’s indicative of the fact that customers love the product and want to continue to buy it.”
2. Get rid of inefficiencies
When Noah talks about “efficiency,” he means focusing on moving the product off the shelf.
If people aren’t buying the product fast enough, “you’re spending a whole bunch of money to run the business. You’re spending money on overhead. You’re spending money to make the thing. You’re spending money to market it online.”
He says the best brands in the world are “relentless” at zeroing in on what works and cutting the things that don’t.
3. Top Shelf uses AI to find new products
“We have three sources of deal flow,” says Noah.
The first is an AI web scraper that tracks what’s happening in the alcohol space, from sales sites to social media discussions to product announcements.
“We look at how new is the product, and how long has it been on the market?”
If the product is interesting, a member of the team will contact the company for a further conversation.
The second source of information is a network of advisers, who keep an eye on the market and make recommendations.
The third is from people who contact them and pitch their brand.
Noah now has an overflowing bar in his apartment, though he tells people not to send samples until the conversation has progressed. Still, the sample route sometimes works. It’s how they came across Gratsi.
4. It’s about the numbers, not the taste
But Noah says that while Gratsi tasted good, that’s not why they did the deal.
“The metrics that got us the most excited early on were their online retention numbers, which meant that the people who tried the product were coming back and buying the product again and again and again,” he says.
When the team projected future sales, they realised that Gratsi only had to keep “up a small fraction of the success they were having early on,” to become a big business.
“Our projections ended up being way more conservative than they should have been, because the brand has just blown it out of the water since we invested.”
By the end of 2024, Gratsi had revenue of $20 million, although sold in only five states.
5. Revenue isn’t the only number that counts
Even the biggest numbers have to be seen in context. The fact that a product generates a million dollars’ worth of revenue doesn’t make it a success.
“There’s a very big difference between doing a million dollars in revenue concentrated in New York and New Jersey, versus doing a million dollars of revenue in 14 states,” says Noah.
In fact, companies that are paying to maintain dozens of accounts may actually be dead in the water, because it’s difficult and costly to ignite growth in many places at once.
Noah talks fast, so those are only a fraction of the insights he packed in to the conversation. You can find the rest of them here.
Final thoughts
“There’s a lot of excitement about saunas and run clubs and cold plunges and measuring your sleep. I honestly think it’s just a trend that will fall back to some level of normalcy.
Drinking and connecting over a beverage is the thing that has been around for hundreds, if not thousands, of years.
Most of my friends that a year ago said ‘we’re going to stop drinking forever’ have now come back to what I believe is the right amount of drinking. Socially, on occasion, a couple of times as a week, as a mechanism to connect with friends and enjoy life.”
Noah Sanborn Friedman