The Supply Side: Athletic Brewing brings popular NA beer to Walmart

Bill Shufelt, CEO and co-founder of Athletic Brewing Co., insists he’s not an entrepreneur as much as a dreamer. Shufelt was with a Connecticut-based hedge fund and didn’t want to launch a business.

But that changed in 2015 when he sought out non-alcoholic beer only to find dismal choices and dusty bottles.

Shufelt said he quit drinking beer several years ago for health and lifestyle reasons, but he missed the taste of beer. The non-alcoholic beer he could find was a poor substitute for what he wanted. He began researching the market and developed a business plan. Shufelt said he pitched his idea to dozens of brewers around the country, but there was only one taker. John Walker was an experienced, award-winning craft beer brewer in Sante Fe, N.M., who agreed to partner with Shufelt. Walker relocated to Connecticut, where the duo began brewing in a home garage.

“The traditional methods of brewing beer burn off all the ethanol and the flavor. We worked to refine the processes and come up with the right flavor profiles that appeal to consumers living active lives,” he said.

They sourced local ingredients and set out to build a brand of flavorful NA beer. Athletic Brewing built its first small brewery in Stratford, Conn., which opened in 2018. They launched two beers and began selling them in the New England area.

The NA beer market had about 0.8% of the beer market share in 2017. Athletic Brewing is responsible for growing that share to more than 2% this year. By 2019, Shufelt said the company had revenue of $2.5 million, but that grew to $15 million by 2020.

PITCHING TO WALMART
Shufelt was in Bentonville recently at the retail giant’s Open Call event. He said that was at least his fourth visit since he pitched the Athletic Brewing NA beer in October 2020.

Craft beer without alcohol was seen as a tired category in need of new and better products, according to Jason Fremstad, who was the beverage buyer at Walmart in 2020. Fremstad is now senior vice president over sourcing at Walmart.

“There had been little to no innovation in this category in 50 years. We sought to flip it on its head,” Shufelt said.

Fremstad said Walmart loved the product in 2020 and was eager to get it into 1,000 stores before they discovered Athletic Brewing had just one brewery in the Northeast with limited distribution. The retailer scaled it back to 120 stores to start, knowing that if the product did as well as they believed it would, they could always scale up.

“We serviced those 120 stores well and worked to build the exposure as a lifestyle brand,” Shufelt said.

Athletic Brewing had 25 employees and one 5,000-square-foot brewery in Connecticut when it first pitched to Walmart. The first summer product was in the market, Shufelt worked dozens of races, handing out hundreds of beers at the finish line of the races. He worked 5Ks, marathons, triathlons, and Ironman events, trying to draw athletes to the Athletic Brewing non-alcoholic products.

“I just wanted to put a cold, tasty beer in the hands of happy, sweaty and thirsty people. They began to email us and share their testimonials after the first couple of races,” he said.

Fremstad said that Walmart added more stores over the next three years as Athletic Brewing was able to invest and grow its distribution.

Shufelt said the growth of Athletic Brewing has invested in two more breweries — one in San Diego in late 2020, and a 15,000 square-foot facility in Milford, Conn., in 2022 with 6 million barrels of capacity per year. Athletic Brewing NA beer is now sold in 2,700 Walmart stores. The company will report revenue of $100 million this year, up from $90 million in 2023.

Inc. magazine named Athletic Brewing the second-fastest growing food and beverage company in 2022. It was also named the best-selling NA beer brand by sales in U.S. grocery stores earlier this year.

NEW EMPLOYEES, INVESTORS
Fremstad said Athletic Brewing is a great example of a small niche company that grows over time, adding more U.S. manufacturing jobs, a major reason for Walmart’s Open Call event each year. Shufelt said since meeting with Walmart in 2020, the company has added 200 jobs. He said each employee is an equity owner in the company with full benefits paid by the company.

“We don’t want to hire someone for three months, but we want them for 20 years or more. So, we fashioned our benefits packages accordingly,” he said.

Expanding Athletic Brewing in the past four years required a lot of capital. Athletic Brewing brought on investors to fund the rapid growth. In 2022, Keurig Dr Pepper invested $50 million in the company and took a minority stake. Earlier this year, General Atlantic led a $50 million equity funding round.

Other famous investors have also signed on, including former professional football players J.J. Watt and Justin Tuck, cyclist Lance Armstrong, and Tom’s Shoes founder Blake Mycoskie.

Shufelt said Athletic Brewing has invested $100 million in the business since its inception.
Given the rapid growth of Athletic Brewing, the rankings continue to improve. In 2022, the company was the first non-alcoholic beer maker to make the list of top 50 craft brewing companies by sales volume at No. 27. That improved to No. 13 in 2023. Athletic Brewing became the No. 1 non-alcoholic beer brand by sales earlier this year, moving ahead of Heineken and Budweiser.

Shufelt said the company has supported the maintenance and new construction of outdoor trails with its Two for the Trails nonprofit. Since 2018, the company has donated more than $4.3 million to the Two for the Trails initiative. He said this year 276 trails will share $2 million of grant funding.

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics, and is sponsored by Firebend.