March 20, 2020

By Lynda Kiernan

Connecticut-based Athletic Brewing Company has closed on a $17.5 million Series B backed by a collection of high-profile investors including Tastemaker Capital Partners, Wheelhouse Partners, Blake Mycoskie, the founder of TOMS Shoes, the family office of Timothy Barakett, and three well-known, but unnamed athletes.

This round, together with previous capital commitments from approximately 60 angel investors, brings the startup’s total funding to more than $20 million. 

While traditional craft brewers are flatlining, with 300 of the 8,000 craft breweries in the U.S. closing in 2019, Athletic Brewing Company has seen meteoric growth in its short life since Bill Shufelt and John Walker launched the company in 2018. 

After 10 years working in hedge funds, Shufelt learned how to brew non-alcoholic beer after deciding to cut it out of his diet for health reasons. After conducting his own research, he realized that he would need to partner with a professional brewer, and after 200 rejections he partnered with co-founder and head brewer Walker, winner of two Great American Beer Festival medals and one World Beer Cup medal. 

Together, after two years of work, they re-created the non-alcoholic brewing process, establishing an all-natural and novel approach.

“Everyone looks for a single step answer,” Shufelt told Fast Company. “It’s really like 12 to 15 changes versus traditional brewing. We only use traditional beer ingredients, water, hops, yeast, and barley, and we just control natural variables at different times.”

One month after launching, Athletic partnered with Star Distributors to distribute its two certified organic flagship non-alcoholic offerings – Upside Dawn Golden Ale, and Run Wild IPA – statewide across Connecticut.

Within its first year in business the startup was on pace to reach output of 10,000 barrels – a benchmark that 95 percent of U.S. breweries don’t achieve, Bart Watson, chief economist with the Brewers Association, told Fast Company. 

“There are some breweries that have been around that mark in the first year,” said Watson, “but it’s extremely rare and requires a unique combination of being well-capitalized, organized, and really resonating in the marketplace.”

Battling a long-held reputation for being low-quality, non-alcoholic beer has had a rough-go. However, Nielsen data finds that Athletic Brewing has resonated with consumers, with off-premise retail sales exceeded $1.3 million for the year ending February 29, 2020.

And Shufelt holds that non-alcoholic beer, which accounts for only 1 percent of the total U.S. beer market today, has the potential to equal the IPA market share, which accounts for 6 percent of all beer sales.

Consumption shifts support this premise as consumers look to cut carbs and calories, resulting in beer seeing four years of volume declines, falling by 2.3 percent last year alone, according to IWSR. Meanwhile, non-and low-alcohol content beer outpaced both craft and imported beers with growth of 6.6 percent.

The capital from this round will be used by Athletic to expand its team, add a new high-speed canning line, fund marketing overhead, and to expand distribution across 10 U.S. states including California and Texas.

The funding also will be used to lease an 80,000 square-foot brewery in San Diego once owned by Ballast Point Brewing Company, which the company plans to upgrade to bring capacity to 100,000 barrels. 

Production is expected to begin on-site in May of this year, and once online, the company foresees shipments doubling to 20,000 barrels.

“Athletic Brewing is on a mission to make the beers that we, as craft beer lovers, want to drink, offering quality and innovation in our non-alcoholic craft beers to meet the demands of modern life,” Athletic co-founder and head brewer John Walker said in a press release. “We are thrilled to be able to make beer on both coasts to better reach our growing community.”

– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.