Non-alcoholic (NA) beer maker Athletic Brewing Company produced 170,000 barrels of beer in 2022, which would place it just within the Brewers Association’s (BA) top 20 craft breweries by volume. By the end of 2023, the Stratford, Connecticut-based brewery is expected to be in the top 15.
The NA beer segment has grown “over 5X” since Athletic launched in 2017, and its growth has yet to slow down, co-founder and CEO Bill Shufelt told Brewbound. The segment has recorded incremental year-over-year (YoY) growth every month for more than nine months, Shufelt said.
“[NA beer] adoption is still happening everywhere,” Shufelt said. “That’s why you see the growth rate pretty durable as people are just discovering all these new occasions. There’s new populations coming into the beer category.”
This Dry January, Athletic recorded its “biggest January ever,” increasing dollar sales +140% versus January 2022. During the month, the company claimed a 17.2% share of total NA beer sales in off-premise retailers tracked by NielsenIQ (xAOC + liquor and convenience), Athletic communications manager Chris Furnari told Brewbound.
In September, Athletic became a nationally distributed brand, with more than 160,000 effective placements – more than double what the company had in 2021, according to Furnari. The expansion was made possible by a new 150,000 sq. ft. brewery in Milford, Connecticut, which opened in June.
In the last four weeks, Athletic is now the No. 6 BA-defined independent craft brewery by volume in NielsenIQ-tracked channels, after Sierra Nevada, Samuel Adams, Firestone Walker Brewing Co., Shiner and Stone Brewing. Including all NielsenIQ-defined craft brands, Athletic ranks No. 15.
Athletic is also a top 25 beer vendor in Circana-tracked off-premise channels (multi-outlet plus convenience). The brewery’s’s flagship Run Wild IPA is the No. 5 growth brand year-to-date in Circana-tracked channels, while its Free Wave Hazy IPA is the No. 2 growth Hazy IPA, according to Furnari.
Athletic’s 2022 innovation, Athletic Lite – a 25-calorie light beer offering – was the No. 2 NA beer innovation in 2022 in NielsenIQ-tracked xAOC plus liquor and convenience channels. While the offering’s March rollout was “kind of off-sync with chain resets last year,” it has still had a “very strong” performance so far, Shufelt said.
As Athletic begins to fill out its 50-state footprint, it started to see more openness among retailers to adopt the NA beer segment, Shufelt said.
“It’s a really exciting moment; we’re seeing a real change in retailer mindset,” Shufelt said. “The major retailers are really objectively looking at data and it’s starting to include non-alcoholic beer in their cold boxes. They’re making space in their highest velocity spaces for some of the biggest growth drivers.”
Athletic is now the No. 2 overall NA beer brand in NielsenIQ-tracked off-premise channels through February 25, behind Heineken 0.0. The brewery may be nipping at the heels of the No. 1 brand soon, as Shufelt said retailers have shown a preference for more local NA beer producers.
“A lot of non-alcoholic beers are imports,” Shufelt said. “People really like that Athletic is a domestically produced non-alcoholic beer.
“A lot of non-alcoholic beer is contract manufactured,” Shufelt continued. “Athletic has hundreds of manufacturing jobs in the U.S. and retailers are loving that these days.”
Athletic has also “pushed back” on pressures to increase price, providing a competitive edge on the shelf, with many beer brands (alcoholic and non-alcoholic) dishing out multiple price increases in 2022. The company “do[es] not anticipate taking price this year” either, Shufelt said.
“We held price when a lot went up in the second half of last year, so our retailers have really appreciated that,” Shufelt said. “We’re just trying to be really respectful of the consumer.”
On-Premise Now +10% of Overall Sales; E-Commerce Still ‘Very Substantial’ Part of Business
Athletic’s on-premise volume increased +145% in 2022 versus 2021, with the channel now making up more than 10% of the company’s total volume. The brewery’s offerings are now available at more than 10,000 on-premise retailers.
This month, the company began rolling out its first draft offerings. The program is being piloted in select markets now, including San Diego, New York and Connecticut, starting with Run Wild IPA. Athletic has been working on getting a draft option out for two years, making sure food safety and quality were up to snuff, but the company doesn’t “know what that demand profile is” yet, Shufelt said.
The grocery channel is one of Athletic’s strongest channels, “better developed than others” due to early adoption of the NA segment by major natural grocery retailers such as Whole Foods, Sprouts and Trader Joe’s, Shufelt said. At some of those retailers, NA beer accounts for 8-10% of total beer sales. The segment now accounts for about 2% of overall grocery beer sales, up from about 0.5% about five years ago, according to Shufelt.
Even now with Athletic’s national distribution footprint, e-commerce is also “still a very substantial part” of the company’s business, Shufelt said.
“We try to meet customers where they are – it’s a very omni-channel world – and e-commerce is still one of our main retail drivers and ways to meet customers,” Shufelt said.
The channel is more of a “innovation testing ground these days,” giving Athletic the ability to try out new offerings with some of its most loyal consumers.
“A lot of suppliers unfortunately have to test like 30, 40 SKUs of innovation on retailer shelves and I think our distributors and retailers love that we test all the noise over here in small quantities, and then we bring them a really focused lineup that we can scale with them and execute at retail,” Shufelt said.
“We sort of look at e-commerce perhaps a little bit differently now than when we first launched,” Furnari added. “We have to consider that e-commerce is more of a virtual taproom where we can experiment, have innovative offerings, really offer our diehard customers something unique.”
Entry into Canada and the UK Going Smoothly
The two international regions Athletic is the most focused on this year are Canada and the United Kingdom, Shufelt said.
“Between the food safety lab, compliance [and] regulatory [teams], we’ve really over invested in those departments in our team,” Shufelt said. “And it’s not easy to get beer out of the country, but they make it fairly seamless between our operations and compliance teams.”
The NA beer segment in Canada is “more underdeveloped than the U.S. market at this time,” Shufelt said. The company launched in Canada in early 2021, and announced several new retail partnerships this month – including Sobeys, Safeway, Loblaws and Real Canadian Superstore – which will expand the company’s retail presence in the country to more than 800 locations, according to a press release.
Athletic launched in the UK in the fall with Run Wild IPA and Upside Dawn Golden Ale. In the six months since, the brand has grown to now account for 10% of total NA craft beer sales in Tesco stores, Shufelt said.
Company Commits Up to $2 Million Through Two for the Trails Program
Athletic’s Two for the Trails program raised $1.3 million in 2022, which was spread across 106 organizations supporting outdoor parks and trail restoration projects. The program promises to donate 2% of Athletic sales to related organizations.
This year, Athletic is changing the messaging of Two for the Trails to better communicate how big of an impact it has, Shufelt and Furnari said.
“Candidly, I would ask family members how big they thought Two for the Trails were, and they’d be at like 2% of the total size of the program,” Shufelt said. “We’re trying to really highlight how big that program is. And doing that every year will really compound in impact on the outdoor world and outdoor access in this country.”
Athletic is now committing to donate “up to $2 million” for outdoor conservation groups, which would be the company’s “largest single year donation” to date, Furnari said.