What can we learn from this $500M NA Beer company?

In this episode of the Greenbook Podcast, Bill Shufelt, co-founder and CEO of Athletic Brewing, shares the inspiring journey and vision behind his non-alcoholic craft beer company. From a personal lifestyle choice sparking a groundbreaking business idea to the company's swift rise in the non-alcoholic beer market, outpacing industry giants, we delve into how Athletic Brewing is revolutionizing the industry with a focus on health, taste, and innovation. We also explore the strategic use of insights and data in product development, the challenges and rewards of entrepreneurship, and the evolving market trends shaping the future of beverages.

You can reach out to Bill on LinkedIn.

Many thanks to Bill for being our guest. Thanks also to our producer, Natalie Pusch; and our editor, Big Bad Audio.

Transcript

Karen: Hello, everybody. It’s nice to be with you today. This is Karen Lynch, happy to be hosting another episode of the Greenbook Podcast. Today I’m really excited to bring Bill Shufelt to this show. He is the co-founder and CEO of Athletic Brewing. Now, let me tell you a little bit about Athletic Brewing. This is something that, here in Connecticut, we’re quite proud of. Actually, I was introduced to Bill by another insights professional from Connecticut. So, shout out to AJ Keirans, who has started up his own firm, Be A Good Human. And he connected me with Bill and said, “You two should talk.” And I think our hope was to get you to North America, Bill, maybe not this year, but next year. And in the meantime, happy to have you here on the Greenbook Podcast today.

Bill: Oh, thank you so much for having me, and yeah, I’d love to attend a future year, for sure.

Karen: We will get you there. We will get you there. But first, let’s explain to everybody why you’re here. If you don’t know if Athletic Brewing, this is a non-alcoholic beer, almost like craft beer at its roots. So Bill, tell us a little bit about the brand, and then we’ll get into your background and how it even came to be.

Bill: Yeah, our goal at Athletic Brewing is to make great beer that happens to be non-alcoholic beer, but you don’t have to compromise on anything anymore: the taste, the experience. And so yes, six years ago—almost—now, we set up to just revolutionize beer for the modern adult. You know, alcohol fits in certain parts of life, but like, there’s so many other occasions where great beer makes a lot of sense. And so, that’s what we set out to do, is kind of change the way people drink.

Karen: I love it so much. Now, before we get too into that, which I really want to dig into this category because there’s so much fascinating happening, but tell us how you were positioned prior to this.

Bill: Yeah, so I mean, total accidental entrepreneur. I have absolutely no intention whatsoever of ever starting my own business. You know, a lot of people are serial entrepreneurs or love starting business or always dreamed of it. I was not one of those people. I had exactly zero ideas. I was in the finance career that I always envisioned that I’d be in, and I planned on doing it for the rest of my career. But inspiration struck. So, I was working with the world’s biggest hedge funds, just like a normal, busy modern life. I was trying to fit in my exercise, get good sleep, eat healthy, work really hard during the day, and alcohol was kind of getting in the way of all that different ways, you know? I’d have work dinners, we’d have a beer or two, and you can’t work after that. Or, you know, worse night sleep, or you miss your workout, or you have a less productive day at work. And I really wanted to be in all those situations but not drink, and so I stopped drinking a little over ten years ago just for lifestyle and productivity and health reasons, and I immediately found I was, like, sleeping better, eating better, performing better, and there’s kind of this virtuous circle. And so, I stopped drinking for good at that point, but I found myself in all those social situations, and just, I didn’t realize how many life situations I was accustomed to drinking one or two alcoholic drinks. And I still wanted my beers, just not the alcohol in those moments. And so, the need was very clear in my own personal life, and then I started looking around after I stopped drinking, and I was like, “Wow, a lot of adults are not drinking most of the time.” And I actually, like, looked up at some point in this past journey over the last, like, eight years, and it turns out, like, there’s actually stats that people are drinking alcohol less than 1% they’re awake, of the average adult. So like, there’s just this, like, enormous population void out there, and occasion void, that the alcohol industry was missing, and that even before you, like, get into the positive impact of what we could do by, like, providing more moderate options, lower calorie options, all sorts of different things. So, there was, like, a very obvious economic need for—like, in the world, and then, like, the impact opportunity was something I would have never had in finance either. And it was just an idea I couldn’t turn off, and I was off and running. And before I knew it, I was resigning from this job that I would have never expected to leave, and home brewing in an empty warehouse.

Karen: So, from home brewing to a $60 million brand. What’s you’re—

Bill: [laugh].

Karen: That’s one of the stats that I have in front of me. I mean, that’s an amazing story for somebody who didn’t know they wanted to be an entrepreneur.

Bill: Oh, thank you. And that’s actually even a couple years outdated, that revenue number, or sales figure. I’ve been really fortunate by the reception, and the consumers’, like, response to our brand, and the incredible people who have come to work with us. So yeah, after I left the hedge fund, I’d done about two years of business planning, and consumer insights, and I had a 96-page business plan all drawn up. And so, I set out at that point to find a partner to build the business with who was a technical brewer, and really start trialing and iterating, and then also raising money. So, it took me a long time to find John, our co-founder, and his title originally was co-founder and head brewer. John is co-founder and COO, and runs our entire facilities and production and so much more. He’s just so talented. But yeah, we were home brewing in an empty warehouse at that point. We did about 120 investor meetings to raise the money to build the first brewery, then, around it. Like, once the beer started tasting good, we build an actual, like, microbrewery, craft brewery, around it. And since then, we’ve built two more additional, incremental, much bigger breweries since then. But it’s all been, like, a thousand small steps, brick by brick, all along the way.

Karen: I love it. I love that story so much. It’s really quite inspiring. And you know, I’m sure we could spend a lot of time just talking about the lessons you learned as an entrepreneur and how you get started, but this is the Greenbook Podcast and our audience are largely, you know, insights professionals, data and analytics professionals, people who are trying to learn from the consumer, and looking up at the data, whether it’s qualitative or quantitative. So, let’s just take a step back and say, you started to recognize some of the statistics in the industry, you know, you recognized, you know, what percentage of Americans don’t drink at all, what percentage of opportunities there are, based on I think you said, they’re only drinking 1% of their waking hours. I think that’s what you said. How did you start to come across that data? What was your process for finding the data to help you build your business model?

Bill: It was actually, like, the most exciting research project I could have ever imagined. Like, I’m an enormous football fan, and I found myself, like, sneaking away from football games to go back up to the home office, and like, work on my Excel model, and like, surveys and everything. I was very lucky, my wife was getting her MBA at the time, too, so I had a really receptive and helpful collaborator in terms of recommending survey technology, all sorts of different things. So, what I did at first was, I wanted to, kind of like, size the need and make sure what I was feeling in my personal life was actually a big unmet need in the world. And it actually turned out to be, like, potentially way bigger. Like, I realized how little occasions people are actually consuming alcohol, where I think if you look back 50, 100, years ago, alcohol was pretty much an everyday occasion in society. And I think that has really been narrowed over the years as, like, people have smartphones in their pockets, like, work kind of follows people home these days, and life is so busy, people are driving cars, people are, you know, a lot of things that people didn’t have to do a hundred years ago. And in that, like, these alcohol and social and relaxing occasions have been defined to, like, one or two days a week. And I saw the opportunity to bring it back to, like, five days, seven days a week as a beer that wouldn’t get in the way of the rest of your life and productivity. So like, there was that expansion occasion that was more intuitive to me. Then I started, like, sizing the potential population. And to me, I always, like—10, 15 years ago, a lot of information was gotten from, like, advertising on TV, or, like, FDA food pyramid. And I always assumed that, like, 95% of people drank alcohol, and when I actually started going to the numbers, it was like, wow, 30-plus percent of people don’t drink alcohol at all, and 60% of people have 0.14 drinks or less per week. And I realized a lot of alcohol consumption is in the upper 40%, and especially the upper 20% of the population. So, I was like, “Wow, there’s a way bigger population not being serviced by the adult beverage industry than I ever thought.” So, that was a really interesting data point, and probably a marketing problem more than necessarily a product problem, helping people feel re-included into adult beverages. So, that was a fun research project, in terms of sizing. But that also was generational, too. So, as I looked at the data, every generation, like, in ten-year cohorts was drinking less than less. And Nielsen actually had really interesting data recently, where two generations ago, 32% of adults didn’t consume alcohol, one generation ago, 36% of adults didn’t consume alcohol, and now with Gen Z legal drinking age, it’s 45% don’t consume alcohol. So like, there’s a big, megatrend coming behind that. So, a lot of this was like, even before I get to, like, willingness to consume alcoholic beer, it was like, sizing the market was a big thing. But also, like, sizing the impact was a big thing for me, too. Like—because I had to make the choice to forego a pretty good economic opportunity working at a hedge fund—like, I was kind of trading one surefire good economic thing in a finance job to a very risky economic outcome in a startup. But if I felt really good about the impact on the world, that would totally override it for me. And I saw the impact on my own life and started to research, like, what is alcohol’s role in society? And I will say, like, we’re not a soapbox company whatsoever at Athletic, and I think there’s a great place for alcohol in society. The world is a stressful place. Alcohol also helps bring people together, or just good food and drink brings people together in general, but there were no options out there, too, for people that didn’t want alcohol, and I thought having options is a great thing for society. And as I looked into the numbers, there’s something like 14.8 million diagnosed alcoholics in the country who suffer from alcohol use disorder, like, 5% of all cancers are caused by alcohol, 70% of incarcerated people were intoxicated when they committed their crimes, 20% of deaths under the age of 50 are attributed to alcohol. There’s untold numbers of motor vehicle accidents and damages associated with that and everything. And like, as I went down—alcohol is the number three all causes killer in the country. And like, as I went down all the stats, I was like, wow, alcohol does have a big societal impact. And I’m not saying I want to obliterate alcohol in any way, but I do want to give people moderation off ramps, and if people don’t want to be drinking for any reason, I want to give them that off-ramp and let them still be included and have those occasions and everything. And so, I thought by giving people great moderation off ramps, providing product availability, making them feel great about making those choices, like, that impact on potentially tens of millions of adults was bigger than anything I could have—like, I never imagined my life having an impact on anyone, really. And I would have loved to, but I didn’t see a path to. And like, for the first time as, like—I will say that’s what, like, really lit the fire for me in the idea was this, like, potential big positive impact. And so, that was really important for me to uncover, and like, actually quantifying the impact Athletic Brewing could have was a big one for me, too.

Karen: There’s so much to unpack with what you just said, and I’m just going to start, like, bit by bit. Those of you who are listening who have started to hear me say this a million times, I love seeing myself in the data, or hearing myself in data that you share. And you know, when you’re talking about the generations, when I was growing up, you know, my family served wine at dinner every single night, and we as children couldn’t wait to be 14 when we could start having sips of wine at family dinnertime. And that was a thing, right? It was almost like this was the rite of passage. And in my children, who are Gen Z, for the most part, I offer, and they’re like, “No, I’m good.” And I’m like, “Fascinating.” Like it’s [laugh] really interesting.

Bill: Well, I will say there is, like, a positive thing to that though, where, like, being introduced to alcohol by your parents as part of a family ritual, I think, is a very positive thing because you’re learning to drink for the occasion, and the flavor and, like, the right reasons. I will say in the country, there’s so much of, like, celebrating 21, and drinking for ABV versus drinking for occasion than, like, flavor and stuff. So.

Karen: Yeah, that was why we didn’t mind that choice at all. But it’s interesting, our daughter is—she’s a science major at school. She’s studying kinesiology, anatomy, and physiology are a big part of her life, and she’s just, like, “I just don’t want to put my body through that metabolic process on a regular basis.” She saves it for very special occasions, which kudos to her. It’s—that’s not a learned behavior. That’s a current behavior. And I have a niece who’s in her 20s planning her wedding, and it’s going to be—they’re going to have an elixir bar, and it’s going to be a dry wedding, and that’s going to be a first for me. I’ve never seen that before. So, I think on some level, you are a classic example of, like, seeing the trend and hitting the timing just right. I mean, ten years ago, this might not have taken off the way it did. Ten years from now, the opportunity might have come and gone, but you’ve hit it at a sweet spot, I think, by being just at the forefront in it. So again, like, kudos to you.

Bill: Thank you so much. And putting data around what you just said there, too, on timing and trend and stuff, I think I kind of provided a product to a very authentic need in my own life. Like, I wasn’t out there focus-grouping, like, what does the world need. It was, like, a very big need in my life, and then I did put survey data behind that. So, I was like, “Oh, how big is the population of people thinking what I’m thinking right now?” Like, and so I’d ask all sorts of variations of, like, kind of the same question. It was, “Would you drink a great tasting non-alcoholic beer with any sort of frequency?” And mind you, the non-alcoholic beer market at the time was 0.3% of the beer market, so like, a rounding error to zero, and in every survey I ran it was like, with some frequency with ladder up to, like, 55 to 70% of adults would drink it with some frequency. And it was like 30% regular, 70% sometimes, 20% occasionally, depending on the survey. And then I’d ask, so like, the gulf between 55% and 0.3% was enormous. And so, then I started to dig into, like, well, why aren’t these people already drinking adult non-alcoholic beverages? And those results were super interesting. It was like, different answers related to product preferences, but like, most of them were marketing problems. It was like, how the products make you feel when they hold them in your hand? Or how much explaining you have to do to friends on why you’re not drinking alcohol. Like, so I knew we had to change the dialog and permission people not to drink alcohol when they were social or with colleagues or something. So, it was like, yeah, the data and, like, we were, like, digging in before we launch because that was like, so formative in how we constructed the brand itself.

Karen: Yeah. And when you look at the can—you know, shortly after I was introduced to it and to you, I went out, and I got some as well, and yeah, it’s—for those of you who can’t see, it’s really—you kind of have to go to the website. It’s a cool can, if you’ve ever bought it. And it doesn’t look like it’s non-alcoholic. It looks like—it’s a great look. Everything about your branding is spot-on to something that’s really cool, and you know, easy to have now at tailgates and in coolers all the time. Like, it just looks like another craft beer, it’s really well done. So again, kudos. Question I have for you is, you have so much compelling data, but you also did have to meet with a lot of investors. Was it hard shifting the perception that people have about, like, where non-alcoholic beer or beverages fit in people’s minds, you know, eight years ago compared to where they might be shifting to you now? Like, was that a challenge for you?

Bill: For sure. So as, like, compelling as the business plan could be in terms of data and unmet need and everything, so many investors, A, don’t like to invest in pre-revenue, which I totally get, like, people like to see some degree of success and invest in the upswing rather than before—because there’s so much risk between idea and launching, which is unnecessary risk for some people to take. And then the other, which I see all the time is, I know there’s a security measure, especially for institutional investors to invest in an established market. Like, they have a lot of trouble sizing, nonexistent markets in a way. And so, as much as, it’s so hard to point at the opportunity, they’re much more apt to invest in the second, third, or tenth of a concept in an established market than they are in a movement from zero to one. There are often, like, power of law returns where the first one to establish a market is very often by far the biggest of categories also.

Karen: You know, to make sure I give the right information, who was the current kind of category leader that you are quickly coming up on [laugh]?

Bill: So, Heineken 0.0 and Bud were the category leaders going into 2023, and we were actually successful in passing them during ’23. And Athletic is now, as of the end of January ’24, number one in the category by over 5%, or about 5% share. So, it’s been really fun to go at the two biggest beer companies in the world, essentially, and really just show with, like, focus and dedication to this category that we can win over any size company.

Karen: I mean, no small feat, so really, again, kudos to you because I think that’s fantastic. You know, we talked about the data at the start of your organization. Do you have processes in step where you’re still using data and analytics, kind of, on a regular basis, either to keep innovating, or just making different strategic decisions? Tell me how it’s fitting into your current operations.

Bill: For sure. So, as I was like, in the business plan, I was trying to think of, you know, as I read more and more business books, like, everyone talks about, like, it’s important to not only have a great product, but like, have a distribution plan, a data plan, and like, all these things that have to be effective to actually win at scale. And something occurred to me that we could be a totally unique distributor and data collector in the beer industry, due to our non-alcoholic nature. So, most beer companies operate exclusively in the three-tier system, which is, you know, suppliers of beer, send it to distributors who send it to retailers, and then it gets to the end consumer. But there’s usually two layers of the industry between the supplier and their customer, so there’s very little data being exchanged. At Athletic Brewing, we’re the first beer company to launch nationally on e-commerce when we started, which people made fun of me all sorts of—like, they’re all like, it is too heavy to ship; you’re never going to make money on that, but like, what it did was, it allowed us to send our beer anywhere, anyone in the country could buy it, and we were very quickly able to find out, like, where is our beer popular, who likes it, what’s their feedback? So, it was just a treasure trove of first-party data. And the beer industry and alcohol industry really takes a long time to iterate and test innovation and learn about their customers and change things up, and at Athletic, those iteration loops were incredibly short because we’re getting just constant feedback. So, I was the company phone number on my cell phone, I was an email address for customer service, I was answering all our DMs for, like, the first two years on social media. And so, like, I had thousands of customer touch-points almost every day, it seemed like. So, we’re able to have such a good grasp of our customer in our community, and we were able to iterate so fast. And then when we went out to launch distribution then, you know, a big distributor—so no one in the alcohol industry was used to making money off non-alcoholic beer. It was not exciting. They weren’t thinking about it. And they would go to these distributors and say, like, “Would you like to take our beer into your distribution house?” And most would just say no. No, thank you to the meeting. But then I’d say, “You know, I sent eight pallets of beer equivalent into your state this month already via e-commerce, and I can tell you exactly which regions and what kind of retailers, and, like, who’s asking for it at what retailers.” And I had all this data to inform our distribution decisions, but also land distributors, and retailers, and stuff. So, long way of saying that, like, first-party data was a huge driver in our business and continues to be today.

Karen: Yeah, that’s really cool. Super cool to think about how that direct-to-consumer touchpoint is really, really helping, actually, the distributors along the way. So, I love that. Thank you.

Bill: And an extreme example of that is—I promise this example, this answer won’t be as long as the [laugh] last—

Karen: No, these are great. You’re great [laugh].

Bill: So, we had this very small, 8000-square foot brewery in Connecticut, and we planned to invest more in Connecticut, and built there, but our second brewery ended up being 3000 miles away in San Diego because we’re selling so much beer on the West Coast, and there was such product-market fit that it actually made more sense geographically and for logistics and proximity to ingredient suppliers, we built our second brewery in San Diego before we got back to building another one in the northeast.

Karen: That’s so interesting. And it actually makes a lot—like, it—I’m like, yeah, “That checks,” in my head. That actually makes sense thinking about that audience out there. So yeah, kudos to you. What are you doing to kind of stay on top of those sorts of trends? So, you have all this kind of consumer feedback from those channels. Now, you have distributors in the mix; they’re probably giving you shopper insight as well, but are there any other things you’re doing to stay ahead of the current trend, and what’s happening in the marketplace?

Bill: For sure. So, if you take your average big brewer, they probably launch between 25 and 50 products on retailer shelves every year, and a very small percentage of those will hit, and be back for a second or third year. At Athletic, we also launch a lot of innovation, but we launch probably 50 new beers every year on our website, and we re-release the more popular ones, we listen to consumer feedback, and the most popular, highly-awarded beers then make it out to retailer shelves. So, when we go to a retailer and ask for six inches on their shelf, we can tell them with pretty high certainty, like, “This is the best we have. It’s going to be a great seller. We’ve tried and tested this already. Here you go.” And it really derisks our innovation-building [unintelligible 00:23:01] retail in a big way.

Karen: That’s excellent. There’s a lot of companies that don’t have the opportunity to do that because they are not set up the same way you’re set up, right, with that online presence, right? They’re retail-first, and that gives them that disadvantage. They have to go to market with it first, and then watch what happens. So, fascinating way your business model is actually helping you track those kinds of buying trends firsthand. So, I love it. Any emerging trends you’re exploring that you can share with us, kind of, not to take anything proprietary from you, but anything that would be interesting to people what’s coming down the pike?

Bill: For sure. Unsurprisingly, IPAs are very popular. So, we have our most popular IPAs and plan on presenting those in different formats, and draft, and stuff. The younger consumers especially, but also all consumers [who have 00:23:48] different seasons of the year are really into flavored beers, and beverages these days, so we have some, like, really fun flavor coming this year, like, different collaborations that are flavored. So, really excited about that. Yeah, and in terms of data, too, it’s—sorry, to loop back to the other question, but like, it’s not only, like, online innovation, too. I realized we were doing a lot of marketing or sampling or different things in the world, then not tracking how it’s returning and not measuring. And we’ve tried to get every action as a company to have a trackable feature, in a way, whether that’s, like, a trackable discount code, a trackable link. Even at the high level, the harder things to measure, we definitely use different tools and providers to try to triangulate, like, when was that billboard or TV ad running, in what regions was it amplified, and like, was there any sales impact in the region? And so, trying to get more sophisticated throughout our whole data ecosystem.

Karen: Yeah, neat. Very neat. And again, this whole conversation is just showing me, like, the business savvy that you had grown, right, through all your work through the hedge fund, also, to this point that brought you here, all that business savvy is translating into very strategic thinking. Again, I am just—I’m excited for you and for your success, and can’t wait to get there on site, from one person in Connecticut to the next. So, you know, we’ve been talking quite a bit. Is there anything that I didn’t get to ask you that you were, like, I really hope she asks me this question? Anything you wish we had talked about?

Bill: Not really. You know, we are always just, like, trying to, like, not only innovate, but be really consistent, and like, we’ve always tried to be a force for good with our business. And one of the more innovative marketing, but also charitable things we’ve done at Athletic is our Two For The Trails program where we make local donations in almost every state we do business, every year through our Two For The Trails grant program. But this past year, it ended up being almost $2 million and 210 donations. But it is also an interesting way to get, like, consumer insights and opt-in from communities and [feel that 00:25:48] ownership from those communities and stuff. So.

Karen: What’s the nuance of that Two For The Trails program? Like, what exactly is it?

Bill: So, we open it as a grant window, essentially, every year, and we got hundreds of applications. And then we have a committee that grades the need of the applications, but with the ultimate aim of helping [unintelligible 00:26:06] outdoor access for generations to come, so whether it’s, like, urban outdoor access, or like, very remote trail systems. So, it’s all, like, micro-grants. Some are as small as $1,000, some are as big as, like, $50,000. And I think we’ve probably donated to upwards of, like, 350, 400 trail and park systems and different outdoor things across the country now. But it definitely kind of feeds back up into our broader organization in terms of, like, just relating to every community we do business and reinvesting in them.

Karen: Now, was that your passion that led to that, or was it your collective team’s decision to kind of go for that together, protecting parks and trails and local?

Bill: Yeah, it was definitely, like, a triple-bottom-line element of, like, very early business plan iterations for me. So, it was probably, like, a 2014 idea for me for—and we didn’t launch until 2018. So.

Karen: Yeah, I mean, you launched it 2018, and here we are six years—I mean, really. Six years? So—

Bill: It’s been interesting. Yeah, five years since—

Karen: [laugh] Nothing big happening between then and now.

Bill: Yeah [laugh]. We actually signed our—so the San Diego brewery I referenced earlier, we signed in March 2020, which was like—it was, like, by far the biggest financial investment and bet we’ve ever made as a company. And 3000 miles away; we had no one out there. And then, like, the world shut down. So, it was definitely interesting.

Karen: [laugh] Gosh, I can just imagine. No stress in your house that month. None at all. Not at all.

Bill: Yeah. Covid in general was just, like, so weird and stressful on the business that, like, it was kind of lost on me till much later, like, how big of that we made in that month.

Karen: So, cool. Well again, kudos to you in all you’re doing. I’m happy to be watching your brand as you continue. And we will get you on stage at North America, maybe next year.

Bill: Thank you so much. I’ve love to.

Karen: Anything—you know, final words? Anything you want to tease the audience with for what’s coming soon at Athletic?

Bill: No. Yeah, the best way to keep in touch is just our emails on our website. We have all our most popular beers out in the world, on our store finder. But we do launch about 50 new beers a year on our website also. So.

Karen: That’s awesome. I’m sure we’ll include all that information in our [show notes 00:28:16]. So, thank you so much for joining me today. It was a pleasure talking to you, Bill.

Bill: Thanks so much, Karen. Really appreciate it.

Karen: Absolutely. Absolutely. And many thanks again to our producer, Natalie Pusch. Thank you, Nat, for all you do. Our editor Big Bad Audio, and of course, to our listeners, thank you for listening, for tuning in, and for always checking out the people that we have on, like, Bill and Athletic Brewing. So, thank you all, have a great day, and we’ll talk to you soon. Bye-bye.