🔒With $50M fundraise, Stratford brewer taking non-alcoholic beer industry by storm

Bill Shufelt considers himself an accidental entrepreneur.

He had a stable career in finance, was getting married and committed to a healthy lifestyle and had every intention to stay on that path.

“Every element of my life was performance related between waking up early to work out, being intellectually sharp at work, and eating organic plant-based food,” he said. “It was really about what inputs would make me the most productive on the outside.”

But he noticed that his social life in his late 20s — which predominantly involved alcohol — was inconsistent with his performance-related ideals.

By 2013, he had largely stopped drinking, but felt like a social outcast with friends at sports bars, restaurants, weddings and barbecues without a beer in hand — and yet was underwhelmed by the taste and lack of choice in the non-alcoholic market, which, he says, had remained largely unchanged for 25 years.

So, over the next two years, Shufelt researched the brewing industry, discovered how largely untapped the non-alcoholic beer market was, and built a business plan to address it.

In 2017, Shufelt, with no business or brewing experience — but backed by $3 million from 80 angel investors he had solicited — quit his job and along with co-founder John Walker launched Athletic Brewing Co. in a 10,000-square-foot facility in Stratford.

Walker, a Madison native, was the only brewer out of more than 200 nationwide Shufelt approached willing to join his non-alcoholic venture. Over nine months, Shufelt and Walker, an award-winning brew master in Santa Fe, New Mexico, started testing recipes to create Athletic’s inaugural beer, including early versions in Gatorade jugs.

When the company released its first official beer — a Golden Ale — in 2018, sales exceeded all expectations.

“We outgrew our [Stratford] brewery, which we had built for a five-year run rate, in about 10 months,” Shufelt recalled.

He says the company sold about 5,000 barrels — roughly 1.6 million cans — in year one. That drew the attention of more investors who helped fund a second, 80,000-square-foot production facility in San Diego last year, which helped Athletic Brewing produce more than 40,000 barrels — roughly 13 million cans, an 800 percent increase in production over two years.

Last month, the company announced it had secured its latest round of investment – a $50 million infusion that will be used to build a second, Connecticut-based production facility in the 200,000-square-foot range to keep pace with anticipated demand.

The 150-employee company’s brand and product have also attracted high-profile athletes as investors, including cyclist Lance Armstrong, Arizona Cardinals NFL player J.J. Watt, and former New York Giant Justin Tuck.

Growing craft beer segment

In part, Athletic’s growth is fueled by shifting consumer preferences for more health-conscious alternatives and Millennials’ affinity with craft beers. A 2020 survey from Heineken USA, for instance, found that more than 61 percent of Millennials started drinking non-alcoholic beer during COVID to cut down on their alcohol intake, and 41% tried an alcohol-free beer for the first time.

In a year when overall U.S. beer volume sales dropped 3 percent and craft beer volume sales decreased 9 percent, according to the national Brewers Association, the sale of all no- and low- alcohol beverages grew more than 30 percent in the U.S. in 2020 with the non-alcoholic beer segment alone growing by nearly 35 percent.

While non-alcoholic beer accounts for less than 2 percent of the estimated $94 billion annual U.S. beer market, ISWR, which tracks global alcohol sales, forecasts the segment will achieve compound annual growth of 9.7% in America through 2024.

Athletic Brewing is poised to capture its share of that growth. In fact, in its first three years, the company has gained about 10 percent of the overall U.S. non-alcoholic beer market, which includes macro brands like Heineken 0.0, but more than 50 percent of the non-alcoholic craft beer segment specifically, according to Shufelt.

One factor aiding Athletic’s growth has been the availability of non-alcoholic sales online, including Amazon, which was particularly helpful during the pandemic. The company’s omnichannel e-commerce and shipping network allowed Athletic Brewing to sell nationwide, which has helped increase revenue by more than 500 percent each of the past two years.

And it’s not just consumers taking notice. Over the past two years, Athletic-manufactured beers, which include its flagship Upside Dawn Golden Ale and Run Wild IPA, have won critical-acclaim, taking home awards in the U.S. Open Beer championship, World Beer Awards, International Beer Challenge and last year, winning gold, silver, and bronze for its brews at the Best Craft Beer Awards.

Not your typical beer

That recognition does not surprise Phil Pappas, executive director of the Connecticut Brewers Guild (CBG), a trade association of the state’s craft breweries.

Despite the six-fold growth of craft breweries in Connecticut — from 21 in 2012 to more than 120 today — Athletic Brewing remains the state’s only non-alcoholic brewery.

“We’re extremely proud of what [Athletic] has accomplished in such a short amount of time,” Pappas said. He also noted that the process of creating non-alcoholic brews is different from typical beer and requires special equipment that can make production more costly.

“It’s almost like a different industry in some ways versus traditional beer,” Shufelt said.

It requires special food safety and processing equipment and because it doesn’t have ethanol as a preservative, it requires a special pasteurization process.

And Shufelt wants to make the science and business of brewing more widely known, especially among minorities and women who are largely underrepresented in the state’s craft beer industry. So, Athletic Brewing Co. is funding a scholarship to support a new brewing science certificate program launched last year by the Connecticut Brewers Guild and Sacred Heart University.

The goal of the flexible program, which can be completed in as few as 11 months, is to provide hands-on skills development to grow the workforce for the state’s craft beer industry, which generated more than $753 million in economic activity in Connecticut last year, according to the CBG.

Meantime the company is also building its brand footprint and partnerships with sporting events starting in 2021.

Athletic Brewing is now the official non-alcoholic beer of the Spartan Race Series and is also partnering with the Premier Lacrosse League, Columbia University, Harvard and the University of Southern California.

It’s been a whirlwind four years for Shufelt and Walker who now oversee one of the fastest-growing breweries in the region and a growing market and consumer demand they are poised to meet. But for Shufelt, Athletic Brewing Co.’s success is about more than volume sales, athlete endorsements or brand-building.

“I knew that by producing more moderate [beer] options, I could have a positive impact on people’s health and lifestyle,” he said. “That’s what we’re all about.”