Connecticut-based craft non-alcoholic beer maker Athletic Brewing Company announced today the acquisition of the assets of the former Ballast Point “Trade Street” facility, as well as the close of a $17.5 million Series B funding round.
Athletic Brewing co-founder Bill Shufelt declined to disclose how much the company paid for the assets but said it will lease the 80,000 sq. ft. production facility, which does not have a taproom.
The news was first reported by Forbes.
The close of Athletic’s $17.5 million Series B funding round brings its total capital raised to around a little more than $20 million, from more than 60 angel investors.
In addition to the asset purchase, the latest round will go toward expanding Athletic’s team, adding a new high-speed canning line, paying for marketing expenses and expanding its distribution footprint into 10 states, including California, via Craft San Diego in June, and Texas.
The Series B funding round included “mission-oriented investors, experienced CPG operators, well-known entrepreneurs, major athletes, and other talented private individuals,” according to a press release. Leaders in the round included Timothy Barakett’s family office, TOMS Shoes founder Blake Mycoskie, sports business reporter Darren Rovell’s Tastemaker Capital, and Wheelhouse Entertainment.
— Darren Rovell (@darrenrovell) March 10, 2020
For all you bros dumping on non-alcoholic beer, Michelob Ultra has been the top selling beer in this country for the past decade. Not many people getting slammed off that.
— Darren Rovell (@darrenrovell) March 10, 2020
“We’re just setting up Athletic for a long, stable flight path,” Shufelt said. “Our biggest priority has always been a stable career for our teammates and work life balance for our team, and then letting demand pull as hard as it wants. We do everything debt free so that we don’t have to grow 20% year over year in any year. We just do want to grow like to where the market pulls us and is sustainable for our company.”
Athletic’s Stratford, Connecticut-based facility produced 10,000 barrels in 2019, but the company was hampered by production constraints since last May, Shufelt said. The California production facility will increase the company’s capacity “tenfold” to meet growing demand.
“Right now, we’re up over 500% tracking where we were last year, but a lot of last year was dictated by really tight capacity, unfortunately,” Shufelt said of sales through the first two months of 2020. “So we’re super thankful for really good distribution and retail partners who’ve been such patient supporters while we make these investments and build out to get on track.”
Shufelt expects the facility to be online by April 1 and pushing non-alc beer out the door by mid-May. He added that the latest funding round will help Athletic make around $5 million in upgrades to the facility, including the new canning line from Germany.
According to market research firm IRI, off-premise dollar sales of non-alcoholic beer offerings have increased 43%, to $21.9 million, year-to-date through February 23. Over the last 52 weeks, dollar sales of those offerings are up 28%, to $138.5 million, in multi-outlet and convenience stores tracked by the firm.
Constellation Brands shuttered the Trade Street facility, as well as a Temecula brewpub, last April as part of what the company called an effort to right-size its “cost structure based on recent craft trends.” Last week, the beer, spirits and wine company completed its sale of the Ballast Point brand to an investor group fronted by little-known Chicago upstart beer company Kings and Convicts.
Shufelt, who co-founded Athletic with John Walker and launched the brand in 2018, will be moving to San Diego to lead the company’s California operations. Walker will remain in Connecticut.
Athletic hopes to hire a dozen employees for the California facility and some team members will also be making the move.
Shufelt shared his journey to launching the non-alcoholic craft beer brand during an interview on the Brewbound Podcast last year. He also discussed Athletic’s approach in which the company produces fully fermented beers at under 0.5 percent ABV rather than requiring dealcoholization equipment.
Athletic is among a handful of independent brands producing non-alcoholic beers, including Ceria Brewing (Arvada, Colorado),Wellbeing Brewing (St. Louis, Missouri), Surreal Brewing (Campbell, California), Hairless Dog Brewing (Minneapolis, Minnesota), and Partake Brewing (Canada), among others
Larger craft brewers have also gotten into the non-alc trend. Brooklyn Brewery made its Special Effects offering a priority brand this year, and featured it during the 2019 Great American Beer Festival. Salt Lake City’s Uinta Brewing is considering its own non-alcoholic beer.
Meanwhile, Heineken is doubling down on its 0.0 brand with another $50 million investment this year.