Athletic Brewing, a non-alcoholic (NA) craft beer maker, raised $50 million in a Series C funding from investors, spearheaded by the Alliance Consumer Growth (ACG) and TRB advisors, which concluded on May 11.
Athletic has been a leader in the non-alcoholic beer segment, which has seen a surge in interest in recent years. Co-founder Bill Shufelt, citing NielsenIQ data, said sales of NA craft beer are up 430% year-over-year, with his company claiming about 50% share of the segment. Between 2019 and 2020, Athletic upped its production by 400%, growing from 7,500 barrels in 2019, to 37,500 barrels last year, according to data published in The New Brewer magazine.
Off-premise sales of non-alcoholic beer continue to grow, up 31.5%, to more than $64 million, year-to-date through April 18, according to market research firm IRI. While growing, the segment holds a 0.52% share of the overall beer category.
“We are marketing to a totally different occasion base and it’s a category that [has] really been in a standstill for a quarter of a century,” Shufelt told Brewbound. “We have a very differentiated product; we make our non-alcoholic beer in a totally different way than anyone has before, and then we also have a very different route to markets.”
Growth equity firm ACG has been a part of Athletic’s board for nearly two years adding the brewery to its list of partners alongside Harry’s, Shake Shack, Pacifica, and more. The partnership is led by ACG CFO Alyssa Ferenz, who discovered Athletic at a farmer’s market in 2019, and has been one of the brewery’s core advisors since the beginning, according to Shufelt.
Joining ACG and TRB in the investment are some of Athletic’s existing investors, including NFL player J.J. Watt, chef and TV personality David Chang, TOMS founder Blake Mycoskie, and Lance Armstrong. Other investors include sports business reporter Darren Rovell and Tastemaker Capital, Benevolent Capital, and Wheelhouse Group. The brewer now has more than 80 investors.
“Series C is really to fund continued growth and meet surging demand for the category,” Shufelt said. “Our biggest problem has always been meeting capacity. We’re really building the infrastructure with this round to continue to invest to meet that demand.”
Athletic is looking at several location options for a second East Coast production facility to open in early 2022, including its home-state of Connecticut, according to Shufelt. One location under consideration is a 19-acre property in the Lordship neighborhood of Stratford, Connecticut, according to the CT Post, which reported that Athletic has $6 million of equipment on order.
With its $17.5 million Series B funding round in 2020, Athletic purchased and expanded a facility in San Diego. The location was chosen after the brewer’s e-commerce data showed almost 10% of sales were coming from California. That facility has the capacity of upwards of 150,000 barrels of production.
“It’s really clear to us that there are these ‘better for you’ surging tailwinds behind non-alcoholic beer where people want to take those great Friday, Saturday night beer occasions and extend it out to the other days of the week and nights of the week,” Shufelt said. “The category is really being validated by the new entrants too, like Boston Beer, Brooklyn, [and] Lagunitas. We’re really excited about some of the new entrants helping us build the category.”
Athletic previously raised about $3 million in a Series A funding round.
Shufelt said Athletic is excited to get moving on all the marketing ideas that were shelved in 2020. The company has signed multiple marketing deals this year, including becoming the official NA beer of Iron Man and the Spartan Race. Athletic beers will be handed out at finish lines at more than 100 races around the world.
Athletic also just announced it is the official beer of the Premier Lacrosse League (PLL).
In January, Athletic launched Daypack, a hoppy sparkling water. Currently available only direct-to-consumers (DTC), Daypack will launch at retail in 2022.
Shufelt said the company is open to exploring other products down the road, but it will be a slow process.
“We’re being really careful with the long lead-time research,” he said. “We would never do anything that’s not true to our mission and [is] a product we’re really proud of the quality of.”
Athletic is also exploring additional ways to give back to community and environmental programs — which it now gives 3% of all sales to — and possibly get into overseas markets.