In the fast-paced world of entrepreneurship, true innovation often emerges from overlooked opportunities. Athletic Brewing Co. is a testament to this, showing how a startup can not only identify a niche market but also transform it into a thriving industry. Founded by Bill Shufelt and John Walker, the company has redefined what non-alcoholic (NA) craft beer can be. Let’s dive into how a team of a former hedge fund trader and a craft beer brewer is changing the landscape of the beer industry.

1. Discovering a Gap

Bill Shufelt’s journey began not in a brewery, but in the world of finance. As a hedge fund trader and ultramarathon runner, Shufelt decided to give up alcohol, seeking a lifestyle that aligned with his fitness goals. However, he quickly realized that the market for NA beers was severely lacking; just bland, uninspiring options dominated the shelves. Recognizing that many others were also reducing their alcohol consumption, Shufelt saw a gap in the market: what if someone could create a non-alcoholic beer that didn’t sacrifice flavor or quality?

Having spent a year searching for a partner who shared his passion and commitment, Shufelt found John Walker, an experienced brewer with a deep understanding of the craft. Initially skeptical, Walker was eventually won over by Shufelt’s enthusiasm and the potential to revolutionize the NA beer market. They set out to create a new category of beer, one that could stand proudly beside traditional craft beers.

2. Launching a New Category

From the start, Athletic Brewing chose to focus exclusively on non-alcoholic beer. This was a bold decision, given that NA beers were a tiny, often ignored market segment. In 2019, NA beer sales tallied $151 million—miniscule compared to the $40.5 billion of total beer sales according to the market research company IRI. However, they believed that with the right approach, they could change how consumers viewed NA beer.

The biggest challenges was creating a beer that could match the taste and complexity of traditional craft beers. Walker’s relentless experimentation led to the development of a proprietary brewing process (details further below) that allowed them to fully brew the beer and then carefully remove the alcohol, preserving its original flavor. This innovation was key to its success, but it was only the beginning.

As a brewery is a capital-intensive business, it faced significant financial hurdles in its early days. Convincing investors to back a NA beer company was challenging, given the historically niche nature of the market. Shufelt and Walker spent considerable time pitching their concept, facing numerous rejections before securing the necessary funding.

Consumer perceptions around NA beer was another biggest challenge. NA beer was traditionally seen as a less desirable alternative to alcoholic beer, often associated with poor taste and low quality. Many doubted whether NA beer could ever truly compete with traditional beers. Athletic Brewing had to invest heavily in marketing and education to shift this perception.

3. Finding a Path to Success

Despite the challenges and hardships in the early days, the two founders managed to find solutions to brewing best-in-quality NA beers, marketing to key customers, effectively delivering its products to customers, and coping with growing pains.

(1) Brewing Technologies

After lots of trials and errors, the company has developed a proprietary process that allows them to produce NA beers with the same complexity, flavor, and mouthfeel as traditional craft beers. Unlike typical NA brewing processes in the market, it started with a traditional brewing process and then carefully removed the alcohol while preserving the original taste and flavor. The process begins with a craft beer brewing process, using the same high-quality ingredients just like any other craft brewery. Then it likely employs a method that carefully controls the fermentation process while still allowing the yeast to create the craft beer flavors. After fermentation, its proprietary method is applied to remove alcohol.

While the specifics are not publicly detailed, this process is designed to preserve the beer's flavor, aroma, and mouthfeel, which are often lost in typical NA beers. Throughout this process, Athletic Brewing ensures that its NA beer matches - or even exceeds - regular craft beer. After devising this method, they founded Athletic Brewing and established the first brewing facility dedicated to NA beer.

(2) Like-Minded Investors

As envisioned by the founders, Athletic Brewing found its audience among individuals looking to reduce their alcohol consumption without sacrificing the social experience of drinking beer. The rise of the "sober curious" movement, where people choose to drink less or not at all, also created a timely tailwind for the company's growth.

Thanks to the clear definition of its target consumers and social trend, Athletic Brewing received investments from professional athletes and individual investors who shared the vision of health and wellness without sacrificing active social experience. The investors include professional football players J. J. Watt and Justin Tuck, Momofuku founder David Chang, cyclist Lance Armstrong, and Toms Shoes founder Blake Mycoskie.

(3) Direct-to-Consumers

One of the strategies that fueled Athletic Brewing’s growth was its direct-to-consumer (DTC) sales model. By selling its products online, the company could directly reach a wider audience and gather valuable data. The DTC model also enabled it to build a community around its brand, offering subscription services that fostered customer loyalty. Here’s a detailed look at how Athletic Brewing has leveraged the DTC model.

• The DTC model was particularly important in the early stages when the company was building its brand. Athletic Brewing invested in an e-commerce platform that allowed customers to purchase their products directly from the company’s website. This online presence became a critical sales channel, especially during the COVID-19 pandemic

• By selling directly to consumers, Athletic Brewing has been able to maintain greater control over the entire customer experience. This includes everything from how products are presented online to the packaging and delivery process. This control ensures that customers receive a consistent and high-quality experience

• The DTC model has provided Athletic Brewing with valuable data on customers. Its data-driven approach allowed the company to make informed decisions about product development, marketing, and inventory management. Understanding which products are most popular with specific demographics helped the company tailor its offerings. It has also enabled the company to focus on customer retention through loyalty programs, special offers, and personalized communications

• The DTC platform has also been used to build a strong community. The company engages with customers through personalized marketing, email newsletters, and social media, fostering a sense of connection and loyalty. This community-building aspect has been effective in creating brand advocates who spread the word about Athletic Brewing products

• The company has the “Athletic Club” subscription service, which allows customers to receive regular shipments of their favorite beers, often with exclusive access to new releases or limited-edition products. Subscribers receive personalized experiences, such as tailored recommendations based on their past purchases and preferences, strengthening a deeper engagement with the company

(4) Timely Scale-Up

After small success, Athletic Brewing faced the challenge of scaling production while maintaining quality. During this critical stage, timely investments from like-minded investors have been instrumental. They enabled Athletic Brewing to resolve the growth challenges by expanding production facilities, increasing marketing efforts, and expanding presence both online and offline.

• 2020 Funding ($17.5 million, October 2020): This funding round was led by a group of investors including TRB Advisors. The funds were used to scale production, increase distribution, and enhance the brand's presence in the market. The company opened a second brewery in San Diego in 2020, not only increasing production capacity but also expanding its presence for both coasts

• 2021 Funding ($50 million, March 2021): Investors, including Blake Mycoskie and several athletes and celebrity investors above-mentioned, were drawn to Athletic Brewing’s mission and vision, aligning with his own values of promoting a healthier and more socially responsible lifestyle

• Keurig Dr Pepper: ($50 million, 2023): The beverage company behind Dr. Peer and Seven Up – took a minority stake of approximately 30% in the company. The investment provided Athletic Brewing with the financial resources and distribution capabilities while KDP gained a foothold in the growing NA craft beer market

4. Proof of Success

(1) Impressive Spurt

Athletic Brewing was launched just with two beers, selling them in seven stores in New England. However, its sales grew to about $15 million in 2020 from $2.5 million in 2019. By 2022, estimates suggest it reached or exceeded $20 million in annual revenue.

In peer rankings, the company was the first NA beer maker to make the list of top 50 craft brewing companies by sales volume in the US in 2022, placing at No. 27. It rose further to No. 13 in 2023. In the NA beer segment, it was the second biggest in the US in 2023 and became No. 1 by early 2024 overtaking Heineken and Budweiser.

According to the Brewers Association, it finished 2023 as the 10th largest craft brewer in the United States and the 20th largest overall brewer. The brand sold over 258,000 barrels in 2023.

(2) Awards and Accolades

Athletic Brewing Company has received numerous awards and accolades for its innovation and excellence in the beer industry. For example, its “Free Wave IPA” won the award as Supreme Champion Beer at the International Beer Challenge in 2020, the first NA beer to win the award. The awards and recognitions not only validated the company’s product quality and innovation but also highlighted its influence in reshaping consumer perceptions of NA beer.

• Brews Association's Silver and Bronze Medals at the Great American Beer Festival (GABF, 2018): Athletic Brewing won the Silver Medal for its "Upside Dawn Golden Ale" and the Bronze Medal for "Run Wild IPA" in the NA Beer category. These recognitions helped establish Athletic Brewing as a leader in the NA beer market

• Brews Association's Gold Medal at the Great American Beer Festival (GABF, 2020): Athletic Brewing made history by winning the Gold Medal in the NA Beer category for its "Free Wave Hazy IPA." It was a significant achievement, marking the first time a NA beer won in this category.

• World Beer Awards: Athletic Brewing has received multiple awards at the World Beer Awards, including being named ‘World's Best NA Beer’ for some of its products

• The International Beer Challenge: Athletic Brewing has won multiple medals at the International Beer Challenge; including Gold, Silver, and Bronze awards across different categories

• Brewbound’s Craft Brewery of the Year (2020): Athletic Brewing was named Brewbound’s Craft Brewery of the Year, recognizing its innovative approach and significant impact on the craft beer industry

• Craft Beer & Brewing Magazine's ‘Best in Beer Readers' Poll’ (2021): Athletic Brewing's "Run Wild IPA" was named the Best NA Beer, highlighting its popularity among craft beer enthusiasts

• Fast Company's ‘World Changing Ideas Awards’ (2020): Athletic Brewing was honored in the Awards, which recognize products and services that are making a positive impact on the world

• Time Magazine’s ‘100 Most Influential Companies’ (2022): Athletic Brewing was named one of the ‘100 Most Influential Companies’, highlighting its impact and its role in popularizing NA craft beer

• Forbes' ‘Next Billion-Dollar Startups’ (2021): Forbes recognized Athletic Brewing as one of its Next Billion-Dollar Startups, reflecting the company’s rapid growth and potential to become a major player in the beverage industry

(3) Growing Beyond the US

As part of this vision -- to become a global leader in the NA craft beer market -- the company continues to enter new international markets, building on its success in North America and Europe. The company began distributing its products across Canada from 2021, leveraging the similarities between Canadian and US consumer preferences. Canada’s growing interest in NA beverages made it a natural first step for international expansion.

Athletic Brewing has also made significant inroads into the United Kingdom, where Athletic Brewing's high-quality NA options have resonated with consumers seeking alternatives to traditional beers. Beyond the UK, the company has started exploring other European markets, including Germany and Scandinavia.

5. Not Just Profit. Social Responsibility

Athletic Brewing Company has made social responsibility a core component of its business model, integrating it deeply into the company’s mission and operations. One of the standout initiatives of Athletic Brewing is its "Two For The Trails" program. Through this initiative, the company donates 2% of all sales to support the preservation and restoration of trails and parks across the US. This program reflects the company’s dedication to environmental stewardship and its alignment with the values of its target audience—many of whom are outdoor enthusiasts and athletes.

Athletic Brewing is a Certified B Corporation. B Corps are businesses that balance purpose and profit. As a B Corp, Athletic Brewing is committed to considering the impact of its decisions on workers, customers, suppliers, the community, and the environment. Incorporating sustainability into various aspects of its operations, the company uses recyclable cans and packaging materials made from sustainable sources. It has also implemented energy-efficient practices in its brewing facilities and focuses on water conservation to minimize its impact on natural resources.

Beyond environmental initiatives, the company is actively involved in community engagement and philanthropy. Athletic Brewing also encourages its employees to lead healthy, active lifestyles, providing opportunities for physical activity and promoting a work environment that values personal well-being.

6. Ongoing Challenges, but Moving Forward

While Athletic Brewing managed to carve out a surprisingly attractive niche (NA beer) and scale up despite the many difficulties and obstacles, it is constantly faced with ongoing challenges. Let’s have a look what kinds of challenges are constantly facing them and how the company has been dealing with them.

(1) More Competitors

While NA beer was once considered a niche, it has seen significant growth in recent years. Major beer producers like Anheuser-Busch and Heineken have entered the market, bringing significant resources and brand recognition. Other craft breweries are also exploring NA space.

However, most of these companies offer NA beers as part of a broader portfolio, whereas Athletic Brewing is solely focused on this category. This singular focus allows Athletic Brewing to innovate more aggressively and build a brand identity closely aligned with the NA lifestyle.

(2) Regulatory Hurdles

Navigating the regulatory landscape is still another challenge because NA beers are still subject to many of the same regulations as alcoholic beverages. For instance, in the US, Athletic Brewing must regularly test its products to verify that the alcohol content does not exceed the 0.5% alcohol by volume (ABV) threshold. This involves rigorous quality control measures during and after production to comply with federal regulations. Despite these hurdles in and outside the US, the company has successfully managed to grow and thrive by maintaining rigorous quality control, adhering to labeling and advertising standards, and staying informed about regulatory changes in each country. For those interested in details, here is an overview of the US regulations of NA beers.

(3) Scale & Quality

While scaling up, maintaining the same level of quality across increased production volumes remains a significant challenge. Athletic Brewing has navigated these successfully through a combination of strategic investments, technological innovation, and a commitment to quality.

• Since opening a second brewery in San Diego, Athletic Brewing implemented standardized brewing processes and stringent quality control measures to maintain quality across production sites. This includes rigorous training for staff at both locations and the use of identical brewing equipment and raw materials. The company has cross-facility quality control teams that frequently monitor batches produced at different sites

• The company has invested in refining its proprietary technology to maintain the quality and flavor of its beers even at higher production volumes. It has incorporated automation in key areas of production, which helps in maintaining consistency, reducing human error, and ensuring that each step of the brewing process is executed with precision

• Athletic Brewing has always prioritized sourcing the highest quality ingredients. It developed relationships with reliable suppliers who could provide the volume needed without compromising quality. Commitment to ingredient integrity has been a cornerstone to its growth without sacrificing quality

• Beyond direct-to-consumer distribution, it formed strategic partnerships with distributors across the US and internationally. These partnerships helped them expand its reach while ensuring that its products are stored and transported under conditions that preserve freshness and quality

• Internally, the company has made strategic hires of experienced brewers and quality control experts to manage the increased production. It has invested in comprehensive training programs to ensure all employees are well-versed in the company’s processes and quality standards

• Regardless of the business scale, the company remains committed to sustainability. It implemented environmentally friendly practices in production facilities, such as water conservation and energy efficiency measures. It also has scaled up its use of eco-friendly packaging materials

• Athletic Brewing maintains a strong feedback loop with its customers, using insights from its growing consumer base. By staying attuned to customer feedback, Athletic Brewing can make iterative improvements to its products and processes, ensuring that quality remains a top priority even as production volumes increase

7. Key Success Factors

Athletic Brewing Company’s story is a powerful example of how a clear vision, combined with dedication and execution, can lead to impressive success in a undiscovered niche. For those with dreams and ambitions for his/her own business to launch, here are the key success factors of Athletic Brewing that could also help you along the journey.

(1) Proprietary Brewing Technology

The company's brewing technology is at the heart of its success. This technological edge has helped them carve out a leading position in the NA craft beer market while making it possible to retain the taste and complexity that craft beer drinkers love.

(2) Quality Commitment and Versatility

Athletic Brewing’s commitment to producing high-quality, great-tasting beer is another critical factor. By using high-quality malt, diverse hop varieties, and carefully selected yeast strains, the company ensures that its base product is as close to a full-strength beer as possible. Its continuous investment in research and development allows them to expand its range of products, with versatility to cater to different taste preferences.

(3) Strong Brand Identity

Athletic Brewing positions itself as more than just a beer company. The brand aligns closely with the health and wellness movement, marketing its products as a lifestyle choice for active, mindful individuals. This strong brand identity has helped Athletic Brewing cultivate a loyal customer base and differentiate itself in a crowded market.

(4) Strategic Funding and Partnerships

Athletic Brewing successfully attracted investors who believed in its mission, raising over $100 million to fuel its growth, including the recent $50m investment from General Atlantic. Key investors include the individuals who align with the brand’s values. These strategic investments and partnerships not only provided capital but also amplified the brand’s reach and credibility.

(5) Direct-to-Consumers

Athletic Brewing Company’s Direct-to-Consumer (DTC) model has been a crucial component of its success, enabling the company to build a strong brand and maintain close relationships with its customers. The DTC approach has allowed it to differentiate in the competitive beer market.

(6) Social Commitment

Athletic Brewing’s social commitment is a central part of its identity, as shown in the initiatives like the 'Two For The Trails' program and and 'IMPACT Brew Series', part of which profits are donated to designated causes. This commitment not only strengthens the brand’s connection with its customers but also sets a powerful example for how businesses can contribute to the world while achieving commercial success.

(7) Personal Values Aligned with Business

Bill Shufelt is still a dedicated athlete, often participating in endurance sports such as ultramarathons and triathlons. His personal commitment to fitness and wellness is reflected in the brand and he continues to be an advocate for a balanced, active lifestyle.

John Walker is also passionate about activities that align with the brand’s values, such as hiking, cycling, and other forms of physical fitness. His personal commitment to a healthy, active lifestyle resonates with the ethos of Athletic Brewing and is a key part of the company’s identity.

8. Conclusion & Lessons

The success of Athletic Brewing Company serves as an inspiration and a guide on how to navigate the challenges of building a brand from the ground up. The company’s journey from a niche idea to a market leader offers several valuable lessons for entrepreneurs and startups.

• Identify a Market Gap: Athletic Brewing’s success underscores the importance of identifying an underserved market and developing a product that meets a sharply defined need

• Stay Committed to Quality: The company’s focus on quality and its willingness to invest in innovation was critical to overcoming consumer skepticism and standing out in a competitive market

• Build a Strong Brand Identity: By aligning the brand with the values of its target audience, Athletic Brewing was able to build a loyal customer base and create a strong market presence

• Leverage Strategic Funding: Securing investment from partners who align with the brand’s mission helped Athletic Brewing scale effectively and maintain its growth trajectory

• Directly Engage with Customers: By selling directly to consumers, the company could build deeper relationships with its customers and quickly adapt to market changes

• Commit to Social Responsibility: Athletic Brewing’s focus on environmental and social initiatives has enhanced its brand image and fostered greater consumer loyalty

P.S.

Thank you for reading.

If you want new stories of entrepreneurs' brands directly and promptly into your email inbox, you can subscribe here. For those who want to try Athletic Brewing beers, below is the list of online shops in US, UK, Canada, and EU.

Athletic Brewing online shops

• US: https://athleticbrewing.com/collections/shop-all

• United Kingdom: https://uk.athleticbrewing.com/collections/all-beer

• Canada: https://athleticbrewing.ca/products/paceline-pedal

• Europe (non-UK): https://eu.athleticbrewing.com/collections/beer

Amazon

• UK: https://www.amazon.co.uk/stores/AthleticBrewing/Homepage/page/E0F54510-CDD4-4918-A4AC-2B607CBCED18?ref_=cm_sw_r_ud_ast_store_T4S747A7CZBX84M72J3A

• Canada: https://www.amazon.ca/stores/AthleticBrewing/Homepage/page/74518C89-C570-494D-B271-55CA01B3BB63?ref_=cm_sw_r_ud_ast_store_E8WSJDJBRMDQV7APWCTQ&store_ref=bl_ast_dp_brandLogo_sto

Online sellers dedicated to no/low-alcohol beverages

• Better Rhodes (US): https://www.betterrhodes.com/search?type=product%2Carticle&q=athletic*

• DryDrinker (UK): https://drydrinker.com/collections/athletic-brewing?srsltid=AfmBOoobHowcDvpNuyohPlEzE0Sk7RiIBjiiKmVMza3gUTEQ7xS8Z-8I