{"id":609184,"date":"2023-02-17T23:48:53","date_gmt":"2023-02-18T05:48:53","guid":{"rendered":"https:\/\/news.sellorbuyhomefast.com\/index.php\/2023\/02\/17\/inside-athletic-brewings-plan-to-make-boozeless-beer-a-billion-dollar-business\/"},"modified":"2023-02-17T23:48:53","modified_gmt":"2023-02-18T05:48:53","slug":"inside-athletic-brewings-plan-to-make-boozeless-beer-a-billion-dollar-business","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2023\/02\/17\/inside-athletic-brewings-plan-to-make-boozeless-beer-a-billion-dollar-business\/","title":{"rendered":"Inside Athletic Brewing\u2019s Plan To Make Boozeless Beer A Billion-Dollar Business"},"content":{"rendered":"
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Bill Shufelt and John Walker are making nonalcoholic beers tasty enough to please the biggest suds snobs. And with a nearly $500 million valuation, investors are intoxicated.<\/h2>\n
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On<\/abbr>a dreary Wed\u00adnesday in January,<\/strong> Bill Shufelt, the cofounder and CEO of Athletic Brewing, grabs a yellow can of golden ale off the humming conveyor belt in his new 150,000-square-foot Milford, Connecti\u00adcut, brewery and cracks it open. It\u2019s 10 a.m.\u2014but there\u2019s no need for an intervention.<\/p>\n

Over the last few years, Shufelt, 39, and his cofounder, John Walker, 42, have created the buzziest beer brand in America by creating craft brews without the buzz. Alcohol-free beer, often bland and thin, has long been seen as the brewer\u2019s equivalent to decaf coffee or tofu turkey. Athletic Brewing is out to eliminate the stigma, making hoppy IPAs, crisp ales and toasty porters with the flavor and feel of a craft beer\u2014but with less alcohol than a slice of rye bread. A six-pack costs about $10. \u201cHumans have been drinking beer for more than 5,000 years,\u201d says Shufelt, a former hedge fund trader who, a decade ago, gave up booze to improve his market focus. \u201cI\u2019m a beer lover and food lover\u2014it blew my mind that there wasn\u2019t a beer for people living modern, healthy lifestyles.\u201d<\/p>\n

Franco Vogt for Forbes<\/small><\/figcaption><\/figure>\n

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Investors are betting big that millions of drinkers feel the same. Since Shufelt and Walker started tinkering with home-brew equipment in 2017, they have raised a dizzying $173.5 million from Alliance Consumer Growth, TRB Advisors and Tastemaker Capital. In the fall of 2022, Keurig Dr Pepper, the $12.7 billion (sales) beverage giant, took a $50 million minority stake at a valuation just under $500 million, according to sources close to the deal. Celebrity investors including Naomi Osaka, J.J. Watt, Karlie Kloss and Toms Shoes founder Blake Mycoskie have also bellied up to the bar. \u201cI\u2019d never been a fan of nonalcoholic beer\u2014not because it didn\u2019t have alcohol, because it didn\u2019t taste good,\u201d says chef and Momo\u00adfuku founder David Chang, who has invested in Athletic and carries its beers in his restaurants. \u201cAthletic is breaking the stereotype\u2014one of food\u2019s taboos\u2014and it\u2019s gaining momentum.\u201d<\/p>\n

While traditional U.S. beer sales have been relatively flat for years, the market for boozeless brews is booming, with total revenue up 20% to $330 million between the summers of 2021 and 2022, according to NielsenIQ. Athletic has outpaced the pack. It says 2022 sales grew almost 70%, topping $60 million, compared to $37 million in 2021. (Heineken 0.0 is the market leader with more than 25% of U.S. sales.) \u201cGrowth is being driven by people who enjoy alcohol and are interested in health, wellness and great taste,\u201d says Keurig Dr Pepper\u2019s head of strategy, Justin Whitmore.<\/p>\n

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Fill ‘er Up: Athletic Brewing’s factory in Milford, Connecticut, can produce 480 beer cans a minute.<\/p>\n

Franco Vogt for Forbes<\/small><\/figcaption><\/figure>\n

Still, that\u2019s a heady valuation of about eight times revenue in an industry where low single digits are the norm. Although the sober sector is small beer, accounting for just 0.33% of the $100 billion U.S. suds market, industry bigwigs think that share could grow fast. Anheuser-Busch InBev, the $57.3 billion (sales) brewing behemoth, has stated it aims for nonalcoholic and low-alcohol beer to be at least 20% of its global beer sales by 2025. \u201cApply that to the craft beer market\u2014that\u2019s tens of billions of dollars in the United States,\u201d says Andrew Dickow, the head of the food-and-beverage investment banking team at Greenwich Capital Group. \u201cI can\u2019t see how it doesn\u2019t get there, and it can be even bigger.\u201d<\/p>\n

The pandemic and the rise of social media have only increased America\u2019s obsession with health and fitness. McKinsey estimates that wellness products and services have become a $450 billion industry as customers clamor for clean products, nutritious food, improved sleep and better physical and mental health. Growing up with legal marijuana, Gen-Z is drinking less than older generations. In 2022, more than a third of U.S. drinkers attempted the Dry January trend, according to beverage research firm CGA. Companies are rushing to offer alternatives like mocktails, alcohol-free wine and CBD seltzers. Still, nonalcoholic beer accounts for 85% of the growing market of \u201cuntoxicating\u201d beverages. \u201cI don\u2019t have to compromise on taste, get to enjoy the social scene and hit that craving,\u201d says Karlie Kloss, the supermodel and entrepreneur, who first tried Athletic beer while pregnant and later invested in the company. \u201cThere\u2019s so much room for growth, especially with women\u2014not just those pregnant or nursing, but those looking for healthy alternatives.\u201d<\/p>\n

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Shufelt is not out to bring back Prohibition\u2014some 80% of his customers drink alcohol. Instead, he sees an opportunity to insert beer into settings where you\u2019d typically have water, soda or iced tea: the weekday lunch, post-workout drink, your next road trip. Many customers use Athletic to moderate their alcohol consumption, alternating between standard drinks and Athletic brews to have a fun night without binging. And without packing on extra pounds. While a craft brew can top 200 calories per 12-ounce bottle, Athletic\u2019s Run Wild IPA has 65. (Michelob Ultra, Anheuser-Busch\u2019s 4.2% alcohol beer marketed to health nuts, has 95 calories.) \u201cPeople make fun of me to my face. They say, \u2018It\u2019s not for me, I\u2019m not sober,\u2019\u2009\u201d Shufelt says. \u201cI tell them, \u2018You don\u2019t have to be\u2014this is your new weeknight beer. You can make fun of me all you want, if you just try it.\u2019\u201d<\/p>\n

Shufelt grew up in the Wall Street stronghold of Darien, Connecticut, and played football at Middlebury College. \u201cI sleepwalked my way into a financial career,\u201d he says. \u201cI never intended to be an entrepreneur.\u201d In 2005, he graduated with an economics degree and traded health care stocks at Knight Capital in Jersey City. He later became a Chartered Financial Analyst and scored a job at billionaire Steve Cohen\u2019s hedge fund, Point72. It was both stressful and social. Shufelt attended work dinners four nights a week, plus barbecues, bachelor parties and weddings on weekends. \u201cI stopped drinking for lifestyle reasons. I loved fitness and wanted to perform better at work,\u201d he says. \u201cBut the second I stopped, I felt like a total outsider because I had nothing in my hands\u2014having a drink in your hand is part of the social fabric of society.\u201d In 2015, while out to dinner with his wife, Jackie, he lamented the lack of nonalcoholic craft beer. \u201cShe grabbed my shoulder and said, \u2018You should do it.\u2019\u201d<\/p>\n

For the next two years, Shufelt spent his nights researching brewing, writing business plans and searching for a brewmaster to join him. \u201cPeople said I was absolutely crazy to build a brewery for nonalcoholic beer.\u201d He met future cofounder John Walker on an online brewing forum. \u201cBill put a not totally transparent help-wanted ad on the site for \u2018the most innovative sector in craft beer,\u2019\u201d says Walker, who also grew up in Connecticut, where he had worked for his family\u2019s restaurant business in Madison before becoming the head brewer at Second Street Brewery in Santa Fe, New Mexico. \u201cWhen I called, he said, \u2018Don\u2019t hang up. Just hear me out. It\u2019s nonalcoholic beer.\u2019\u201d<\/p>\n

Intrigued by the challenge, and the chance to return to Connecticut, Walker packed up his young family and drove east. With Shufelt\u2019s Wall Street connections, they raised $3 million from friends and angels, built a small 10,000-square-foot brewery in Stratford, Connecticut, and began experimenting.<\/p>\n

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ILLUSTRATION BY PATRICK WELSH FOR FORBES<\/small><\/figcaption><\/figure>\n

HOW TO PLAY IT<\/strong><\/h3>\n

By Taesik Yoon <\/em><\/p>\n

Investors looking to profit from the healthy-living movement should consider supplement seller Thorne HealthTech<\/strong>, a fast-growing microcap that uses its proprietary health database and artificial intelligence to personalize supplement regimens for an increasingly health-obsessed populace. Many of its supplements contain nicotina\u00admide riboside, a form of vitamin B3 that Thorne believes supports healthy aging. Sound like junk science? Maybe, but it\u2019s a great business. More than 5 million customers, thousands of professional athletes and over 100 professional sports and U.S. National Teams have used its supplements.<\/h4>\n

The stock sells for a bargain seven times 2023 earnings estimate and has far more cash on hand than debt.<\/h4>\n

Taesik Yoon is editor of <\/em>Forbes Special Situations <\/em>Survey and <\/em>Forbes Investor. <\/sub><\/h4>\n
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Brewers traditionally make nonalcoholic beer by cooking or filtering standard brews, a process that removes the alcohol\u2014and most of the flavor. Shufelt and Walker had a different idea: Tweak the grains, sugars, temperature and pH levels to brew a beer with big flavor and little alcohol from the start. After six months and more than 60 batches, Walker made what would become Athletic\u2019s Upside Dawn golden ale. By 2018, they were pitching local retailers and scored an early deal with several Whole Foods locations in <\/strong>Connecticut. On weekends, Shufelt would wake up as early as 3 a.m. and trek to triathlons and half-marathons to hand out samples. \u201cOur go-to marketing strategy was bringing coolers to race finish lines, anything from a local 5K to an Ironman, and handing out hundreds of samples,\u201d he says. \u201cWe probably sampled almost 10,000 people that first summer and built a huge community of direct fans.\u201d<\/p>\n

The startup hasn\u2019t been without its share of hangovers. In late 2018, Shufelt and Walker, having scored their first national order with retailer TotalWine, filled a truck with $50,000 worth of beer and then panicked that some cans might have been skunked. Because Athletic\u2019s brew is low in alcohol, a natural preservative, it takes only a single rogue microbe to taint the taste. \u201cWe were going out to a national chain. If we messed it up, it could destroy us forever. It could destroy the category,\u201d Walker says. Ultimately, they tossed the beer, hit up investors for more cash and spent more than $1 million on a tunnel pasteurizing machine for quality control.<\/p>\n

Traditional craft brands including Samuel Adams, Lagunitas and Brooklyn Brewery have since jumped on the alcohol-free wagon. But Athletic has held firm, accounting for roughly 20% of all U.S. nonalcoholic beer sales in 2022. Previously unable to make enough beer to meet demand, Shufelt has poured his venture cash into two breweries (one in San Diego and the new facility in Connecticut) that will soon be able to make 650,000 barrels (about 215 million cans of beer) a year. Most revenue comes from grocery and liquor stores, including megachains Whole Foods and TotalWine. Athletic\u2019s beer is also sold in more than 10,000 restaurants and bars.<\/p>\n

Digital retail is big, too. Because the beers have less than 0.5% alcohol by volume, Athletic doesn\u2019t need to stress about complicated liquor and tax laws and can sell directly to consumers online. \u201cThe e-commerce business has taken on a life of its own,\u201d Shufelt says. \u201cWe\u2019ve built a real community with hundreds of thousands of consumers and a huge data set.\u201d With that information trove, Athletic can email customers about new beers, special sales and exclusive flavors, and share company initiatives. (Athletic, a certified B Corp, donates 2% of sales to maintaining hiking trails.)<\/p>\n

Data also informs strategy: In 2020 Athletic bought a San Diego brewery from Ballast Point, in part because of statistics showing a high concentration of customers on the West Coast. E-commerce also gives Athletic a cheap and easy way to try out new beers (such as its blueberry IPA and an extra-special bitter) to identify winning flavors before undertaking a larger production run. Says Shufelt, \u201cWe get feedback straight from our customers and can test and improve new products before sending them to retailers.\u201d<\/p>\n

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With its two new breweries now fully operational, Athletic is rushing to get shelf space in more national grocers, big-box stores and liquor chains. There\u2019s room to grow. Shufelt says Athletic is now in just 15% of U.S. retailers licensed to sell beer. \u201cHis competitive advantage is his war chest of capital,\u201d says Greenwich Capital\u2019s Andrew Dickow. \u201cThere\u2019s no one else in the craft industry doing nonalcoholic beers that can match his marketing and advertising.\u201d Athletic is also looking to spots that historically haven\u2019t slung suds: convenience stores, coffee shops, delis, pharmacies\u2014even vending machines. Says Shufelt: \u201cThere\u2019s a huge opportunity to go where beer has never gone before.\u201d<\/p>\n

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D\u00e9j\u00e0 View<\/em><\/p>\n

VICE BREAKERS<\/strong><\/h3>\n

There has long been demand for guilt-free guilty pleasures. Here\u2019s a brief history of goods without the good stuff.<\/h4>\n

1896<\/strong><\/sub><\/h3>\n

Cereal magnate John Kellogg creates America\u2019s first commercial meat alternative, Nuttose, out of peanuts.<\/h4>\n
Alamy<\/small><\/figcaption><\/figure>\n

1905<\/strong><\/sub><\/h3>\n

German Ludwig Roselius treats coffee beans with benzene to create the first instant decaf, Sanka. By 1993, Sanka ranked fifth among instant coffees in the U.S., with $45 million in supermarket sales.<\/h4>\n
Alamy<\/small><\/figcaption><\/figure>\n

1952<\/strong><\/sub><\/h3>\n

No-Cal, America\u2019s first sugar-free, zero-calorie soda, hits shelves. Marketed to diabetics and housewives, the brand is a hit but eventually goes flat amid competition from Diet Pepsi and Coke\u2019s Tab.<\/h4>\n

1989<\/strong><\/sub><\/h3>\n

Philip Morris debuts Next (\u201cnicotine extracted\u201d) ciga\u00adrettes. The smokes, which had some<\/em> nicotine, were discontinued soon after.<\/h4>\n
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MORE FROM FORBES<\/strong><\/h4>\n

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\n Steven Bertoni<\/p>\n","protected":false},"excerpt":{"rendered":"

Bill Shufelt and John Walker are making nonalcoholic beers tasty enough to please the biggest suds snobs. And with a nearly $500 million valuation, investors are intoxicated. Ona dreary Wed\u00adnesday in January, Bill Shufelt, the cofounder and CEO of Athletic Brewing, grabs a yellow can of golden ale off the humming conveyor belt in his<\/p>\n","protected":false},"author":1,"featured_media":609185,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30608,118],"tags":[],"class_list":{"0":"post-609184","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-athletic","8":"category-inside"},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/609184","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/comments?post=609184"}],"version-history":[{"count":0,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/posts\/609184\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media\/609185"}],"wp:attachment":[{"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/media?parent=609184"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/categories?post=609184"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/newsycanuse.com\/index.php\/wp-json\/wp\/v2\/tags?post=609184"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}