Non-alcoholic beer fits well ‘in the modern healthy lifestyle’: Athletic Brewing CEO

Athletic Brewing Company Founder and CEO Bill Shufelt joins Yahoo Finance Live to talk about the non-alcoholic beer brand's appeal to health and fitness consumers, the stigma on non-alcoholic beer drinkers, partnerships with Dr. Pepper and athletes, and expansion into retail.

Video transcript

DAVID BRIGGS: Like a beer sitting out for far too long, beer sales are growing relatively flat, declining by 0.4% in 2021. But that is not the case with non-alcoholic beer. Keurig Dr Pepper announcing a $50 million investment in Athletic Brewing. That's part of a $75 million fundraising round.

Let's talk about it with Bill Shufelt. He's the Athletic Brewing Founder and CEO. He joins us now from the brewery out there on the West Coast. Good to see you, sir. How do you quantify how fast non-alcoholic beer is growing? And what do you attribute it to after a couple of very heavy drinking years during COVID?

BILL SHUFELT: For sure. Dave and Rachelle, thank you so much for having me on. I really appreciate the chance to share our news today. Yeah, so our-- what we set out to do at Athletic Brewing was reframe drinking for the modern adult.

I came from a finance background, like yourselves, normal, healthy, modern busy lifestyle. But alcohol fits great in, like, one or two nights a week. We wanted to extend that to seven nights a week and the entire population. And we attribute a lot of that fast growth to non-alcoholic beer actually fitting great in the modern healthy lifestyle.

RACHELLE AKUFFO: So, Bill, what do you plan on doing with this investment? What is the next step here?

BILL SHUFELT: Yeah, so we-- unlike most companies in the category, we set out to totally reimagine what non-alcoholic beer is, both in product quality and in marketing and how the product makes you feel when you hold the can in your hands. And a big part of that was setting up big facilities on both coasts of the country to own every step of the quality.

So we own and operate the two largest non-alcoholic breweries in the world in San Diego, California, and Connecticut. And so we've laid the tracks through investment there. Now it's time to invest in category growth, team growth, and push towards profitability.

DAVID BRIGGS: A lot of different directions you could go with the fund raise. What in particular works about Keurig Dr Pepper?

BILL SHUFELT: Yeah, so exactly that. We thought about a lot of different options, anything from private investment, so family offices, venture capital, private equity, or beverage strategics, even out to the public markets. And some of those future outcomes are still on the table. But in Keurig Dr Pepper, we saw a values-aligned partner who knows what the road ahead looks like, someone who can look over our shoulder, advise us on anything from supply chain, logistics, finance, marketing.

And more than anything, it was about the people. We got to know Bob, Justin, and the team over a multi-year period and loved everything we saw and how they were collaborative, creative, fast-moving. And there's a lot of values and mission statement alignment, too, between the two companies. So it was really a natural partnership that was super exciting.

RACHELLE AKUFFO: And speaking of partnerships, I want to talk about some of the national retailers that you've joined with, Walmart, Target, Publix, Costco, also in the UK expanding with Tesco as well. What do you think is the appeal there? What is the real selling point when you're trying to come to these major retailers?

BILL SHUFELT: For sure. It's just like you touched on out of the gate. So the adult beverage occasion set is pretty set, different generations, different days of the week, things like that. And trends aren't great. Well, non-alcoholic beer fits great in the modern lifestyle and opens up the adult beverage world to any day of the week, any person in the entire population.

And so a lot of retailers have been adapting their non-alcoholic set and seeing great incremental growth, so not cannibalizing overall alcohol, but adding 3%, 5%, 8% of the overall category. So when we started, non-alcoholic beer was about 0.3% of overall beer sales. And some leading retailers, it's 5% or 8% of overall beer sales these days.

DAVID BRIGGS: Want to ask you a couple of questions about what's next in terms of expansion, where do you go from here? Is an IPO in the plan? And what about the possibility of a cannabis beer?

BILL SHUFELT: Yeah, a lot of interesting questions there. So I think at the foundational level, it's more of what we've been doing just on a bigger scale, getting our customers and community the beer they need for the first time. We just got out to a 50 state distribution footprint and have been able to say yes to a lot of those large national retailers for the first time ever now that we have both breweries online.

So capacity leads to more retail opportunity, for sure, and getting the hands and-- beer in the hands of people who want it. But all those future capital structure decisions are potentially still on the table. With this investment, we've just brought on a great partner who can help us think through all those things. And we're really in build-and-learn mode together. You mentioned cannabis. I think that is a tangential opportunity. It's definitely not in conflict with what we're doing, but it's not in any of our plans at this point.

RACHELLE AKUFFO: And obviously with the name Athletic, it's only natural to talk about some of the athletes involved here. You've got JJ Watt, David Chang, several other athletes as well. Talk about the demographics that you're still trying to reach and what you're hoping to gain with some of these partnerships.

BILL SHUFELT: Yeah, so a lot of these partnerships excitedly came through totally organically. These are high-performance individuals who are really excited to participate in the full social elements and relaxation reward moments of drinking without the side effects the next day on their performance or their nutrition. And so JJ's been a huge supporter.

David Chang, as a really highly accredited chef, like, really brings some validation to the quality of the product and how it stacks up versus full-strength alcoholic beers. And we were really excited to welcome Naomi Osaka and Karlie Kloss into the investor team this round as well, two people who just totally got what we were talking about.

DAVID BRIGGS: If you could give us a little bit on the demographics, who in particular are you finding that is providing that growth in the space?

BILL SHUFELT: Yeah, so, I mean, we're trying to not-- like, previously, non-alcoholic beer had been a very penalty box beverage for specific occasions like recovering alcoholics or medical conditions. And we wanted to make non-alcoholic beer aspirational and positive, so any person, anywhere, drinking it with pride. And, yeah, some of those celebrity investors really help knock down those walls.

But the nutritional profile of our beers, the styles, the marketing, everything has really led to us opening the aperture to who craft beer speaks to. And that does include a large female demographic. Where beer tends to slant really heavily towards male drinkers, our population's actually 48% female. So, yeah, we work really hard to open the aperture to who feels comfortable drinking Athletic beers.

DAVID BRIGGS: Bill Shufelt, Athletic Brewing Founder and CEO. Congrats on the raise. Good to see you, sir.