To hear Bill Shufelt tell the origin story of Athletic Brewing, the company basically started because the non-drinker just wanted a non-alcoholic beer he could toss back with friends and clients that tasted good. From all appearances, he succeeded.

As he explained to John Battelle on the Signal Stage in Cincinnati in 2024, Shufelt and his co-founder John Walker created a series of beers that not only tasted good — they sated consumers who were thirsty for something new.

“We saw beer having [the] potential of seven days a week, multiple different times during the day as a meal pairing of any meal you’re having all week,” he said. 

How did Athletic Brewing do it? You can hear the details from this lively conversation (with a bit of beer drinking thrown in) or read our lightly edited conversation below.

 

TRANSCRIPT:

John Battelle

I’ve been looking forward to this particular conversation for a very long time. About a year, year and a half ago, I started drinking Athletic Brewing. And then I read up about the company, and it’s just such a great story, and it is so perfect for this stage. So please join me in welcoming the co founder and CEO of athletic brewing, Bill Shufelt, and he’s got a beer. I love it. And we have beer here as well. We’re going to drink a beer and talk about beer, because these are actually good. Sorry. Heineken.

Bill Shubert

I think that’s because, for the first time, non alcoholic beer emerged from a love of beer, yeah, not as a like, much lesser than substitute,

Exactly. We can kind of start at that. At the beginning, you had a successful career in finance. Why did you decide all of a sudden I’m just going to leave that, and enter one of the hardest parts of the hardest markets, which is non alcoholic beer.

I definitely got those warnings, especially from my father, that the second we have an inkling of success, that it will be so competitive, right? We won’t be able to break through, which was probably very good advice, and we were 100% delusional.I guess, back to my financial career. It was like it was a great career on paper. I thought I was gonna do it the next 25 years, and I was off and running. It was just a very normal, modern adult experience. I was very busy. I always had work in my pocket on my phone, worked dinners during the week, social things on the weekends, all sorts of family stuff and everything was kind of a drinking occasion. As I was about to turn 30, I was looking at all the variables in my life, and I wanted to sleep a little better, eat a little better. Be a little more present with my family. I was about to get married, be better at my job, really focusing on my career, be a little healthier.They’re all such normal things. And I was like, this is probably a very normal adult experience, but alcohol was a ceiling on all those variables in a way, and it took me a long time to realize that.

So I stopped drinking about 11 years ago, and all those important variables in my life got better without alcohol, except when I was like, standing in a bar, standing at a restaurant, and I generally just love beer and food too, and it was such a gaping hole, and I was like, Well, this is probably a very common thing. I mentioned it to my wife, and my wife was like, You should fix that. And so I started to look into it, and the snowball really started to roll from there.

It’s just a nice a nice accent to the conversation. If I go out and I’ll drink a couple of these, and maybe everyone else I’m with are there drinking, I start to feel buzzed, just because, by habit, like, wait a minute, I’m drinking non alcoholic beer. But it’s well, it’s almost there’s a mental block that I think your brand addresses, which is that, okay, I’m drinking whatever, what, O’Doul’s so I’m supposed to have a shitty time, and everyone else is having fun, right? But that doesn’t happen with this brand. How did you think about crafting that brand? You named it Athletic, right? Give us a little bit about that.

There’s the after you crack the beer moment, where, like you said, there’s a placebo effect, and I think that’s ingrained in us. Humans have been drinking beer for 5000 years when they’re relaxing, when they’re with friends, when they’re with family, when they’re winding down, when they’re celebrating, and so when you smell the malt and the hops and you have it in your hand and you’re socializing or you’re just relaxing at home, I think there’s some innate placebo effects that take over, which is great. But the product itself and the marketing have to deliver on that to have it carry through and be a repeatable habit too, where, after you open the can, it actually has to taste delicious. It can’t just say it’s gonna taste delicious and fall flat. But then on marketing too, previously, like you referenced, none.

Alcoholic beer, and the occasions you drank it were highly stigmatized occasions, and for whatever reason, medical or recovery or anything we wanted, and here I was a normal, busy, modern adult who just wanted to be a little bit better and a little more productive and a little healthier, and so I wanted to tell that story of my life in the can and the marketing. We did that through the outdoors, through aspirational, positive marketing and our co-founder so I definitely don’t want this to be like I am Athletic Brewing.

I have my co founder, John is one of the most talented people I’ve ever met, and he’s kind of the technical brewmaster of the founding pair. And then we have an amazing team of 250 people who are all incredible. When we started, John was like, “If we nail the beer, we’re going to be good.” And I told him, 50% if not more, of our success needs to be the marketing and our messaging and the education. I think it was the founder of Sony who said, more important than the product innovation themselves is the education of the entire category for people to permission them to use the products. And that is so much of what we had to do is, get beer into people’s hands to let them enjoy it and be socially permission to do so.

It’s sort of a chicken and the egg kind of a thing, right? If you’re at that moment where things seem to turn that quickly, the idea of ordering a non-alcoholic beer five years ago had that stigma. You couldn’t even necessarily get one, and if you did, it was terrible. So you focused, and this is something we’ve heard all morning, focused on a superior product. It took a while for you to get that, I imagine?

Yeah, basically a year of home brewing on Gatorade jugs, nine months in an empty warehouse with John, like literal Gatorade jugs stacked three in a row. And then when the beer started to taste good, we moved that to his garage, where two 30-something-year-old adults home brewing in the parents garage, which is like the dream of everyone.

I can imagine your parents going, so how long is this gonna when you going back to your job in finance?

He had two kids, yeah, but the beer started to taste really good, and we built the first non-alcoholic beer brewery in the country. Since then, we’ve built three more. And it’s it is kind of delivering on that quality to such a degree there.

I should give you a chance to tell everybody here how, how large the company has gotten from your beginnings to now, how much have you grown?

Six years ago, we were basically the smallest of the nation’s 10,000 breweries. There were 7000 breweries at the time. Now there are 10,000 we are in the top 10 of all craft brewers and top 20 breweries overall in the country. And so it’s happened pretty fast.

That is market growth that’s growing a category. But beyond that, as I understand it, and from our earlier conversations, you’ve brought new consumers in who were never in the adult beverage market. Is that right?

Exactly. So we’ve always approached this from a growth mindset positive, some mindset where the world’s busy alcohol, like we’re not out to make a judgment on alcohol or its health. We want people to make their own choices. We just want to give people options that they’re excited about. But alcohol, in today’s modern, busy world, very often, is defined to very limited occasions, like one day a week, certain hours of that one day a week even. We saw beer having potential of seven days a week, multiple different times during the day as a meal pairing of any meal you’re having all week. So there was an opportunity to have enormous occasion, explosion, but also population.

Sixty percent of US adults have .1 drinks or less per week. So it is an enormously underserved adult beverage market that it was so simple and hiding in plain sight, because the alcohol industry was thinking alcohol only and not being and so they were focused on the 40% of people, or really, like 60% of people, with some regularity, but we saw the days of the week and the additional 60% of the people coming in, and that’s what we hear over and over again, is we hear 30% of our volumes coming from totally outside the beverage alcohol world, and which is a huge additive also, but 85% of our consumers still drink alcohol at their other occasions. It’s just whole new occasions.

That is really thinking outside the box, but you had to operate inside the box of the beverage industry. You had to get retailers, you had to get distributors. You had to do all that, that stuff that you just have to do. What was the go to market there? How did you get them to get on board with distributing. Now you have a direct to consumer business model as well. I’m one of them. Thank you. My next case comes on July 21. But how did you get the rest of the market to say, “Yeah, we’ll give you a shot.”

It was really brick by brick and authentic to make the first breakthrough. So in meeting our co founder, John, I talked to hundreds of people to convince one brewer to come online. Then in our angel round to build that first brewery in the country, it was 120 investor meetings to get our first distributor to agree to carry us. I had to go out and get 300 Connecticut retailers basically to commit to ordering the beer before it could get on the trucks of the distributor. It’s very labor intensive to get just from zero to one. But then once we launched with the distributors, we found that there was a population of people just kind of circling, waiting for that area to change. The data was there basically right from the start. I supported our initial launch with hundreds of samplings and 1000s of cans and hands that first summer, just putting beer in people’s hands and telling them about the brand and kind of like oozing with authenticity. But from there, the data started to speak for itself, and so that the second through 240th distributor got increasingly easy. Every investment round has gotten increasingly easy.

Hiring in the beginning was impossible for me and John. Literally nobody wanted to work with us or had any excitement in the industry. We’d go to beer conferences with like, 10,000 people and try to talk to people and walk away with no warm leads, and which is unbelievable. But the ball got rolling, and I think there’s such disbelief, and non-belief in the industry that that gave us a lot of cover fire and head start to build from very small scale, and get to a really good base before the competition really started to come in. And as you referenced, there were really only about five brands in the US, from 1990 to 2016 with Athletic launching. Then there’s now about 150 brands in the US.

Growing the market right there. But before we go on, because I was gonna ask you about that competition, I want to call the video, if we’ve got it, which kind of gives a little bit of overview of your story, because you’ve been talking about those early days. But I think this video kind of gives everyone an idea of where you are now. So there’s Athletic you’re not going to get numbers like that, and as you mentioned earlier, and not pull competitors into the market. Almost everybody woke up and said, “Oh, wait, people want this. I guess we’ll make some.” So how do you respond to  that?

Counter intuitively. I think it’s incredible, and I’m excited about it. And when Heineken launched theirs in 2019 I was super excited about and we’re friends with them in the industry and collaboratively building. We’ve actually formed a trade guild, the Adult Non-alcoholic Beverage Association, where we share learnings and thinking about it.

But not recipes, I imagine.

Not our proprietary process, that’s kind of where we stop short. But we do share a ton of food safety and quality information, but we’re really trying to foster this industry in a great way and the others now, 150 brands, and it’s non alcoholic. Beer has gone from basically 0% of beer to about 1.5% nationally. It’s 3% of grocery sales. It’s up to 15 to 20% of certain national retailers beer sales. So there’s these green shoots of a very big, mega trend, which we believe in, and we’re thinking about. Because we do think non-alcoholic beer is going to 10-20% plus of overall beer, and not cannibalizing alcohol as much as just growing the pie, right? We’re approaching everything in our business with that growth mindset and not competing laterally when the category is in its infancy.

You mentioned a phrase when we spoke that I want you to unpack here, which relates to what you just said. You said that when it comes to business, you’re a positive thumb thinker. You unpack what that means.

I think it’s part delusion, for sure. I think my mom raised me very optimistically, but I think that’s certainly

Where was that?

Connecticut, but I think as a pessimist, you can only be right once, essentially, and an optimist, you can be right many multiples of that, and I think anything from investing to real world that can play out. And soin terms of our category, me as a consumer, in 2014 when or 2013 when I stopped drinking, I would go out and open a menu and look at the menu and be so disappointed, and know that the beverage side of my meal is going to ruin the food side of my meal and the experience I’m having and everything.

Now I think of that where in so many places, you can open a menu and not only do you have Athletic beers, but you can get any of the name brand major beers, usually any non-alcoholic cocktail you want of any variety. That has happened so fast and is so exciting. And now we have about five years of legal drinking age consumers who have come to essentially the adult beverage market now with those options.

You see in all the headlines that the choice of not drinking and being moderate is the stigmatization is being blown out of the water. As a positive some thinker, I just have such confidence we’re on the front edge of a durable, mega trend here that I think the tide is going to be coming in for 10-20, plus years, and I want to make sure to grow the category and not kill it early on. But I think that unflapping optimism has always, like people have always asked John, like what we’re worried about, or what are we worried about in the moment? And it’s honestly just exciting. It’s challenging, it’s intellectually stimulating.

Are there places you want to go next in the market with this brand where you feel either you have permission or I think it was Tim who said earlier, you want to confirm the brand’s values, but then provoke into a new part of the market.

I think both geographic and styles and different occasions potentially. I think there’s innovation around all those types in terms of how to get there. I’d want to be really confident that it’s a true consumer insight, and I tend to underweight surveys and focus groups, unless I’m trying to like size the market, and then really overweight what I hear one on one. So I spend a ton of time in the market, talking to retailers, just talking to people in stores about what they drink and why. Our team does a ton of sampling, talking to customers and getting that feedback right away. When we hear anecdotes, one thing we heard over and over again was people rotating our beers in the same occasions, which was shocking to me. So one alcoholic drink, one Athletic, one alcoholic drink, one Athletic, or some mix thereof. We can lean into all those things. Then I ask consumers what kind of flavors they’d like to see, and then I take that back to our brewing team, and we release on e-commerce and see how it does, and we get that around it, and then blow it up at retail if it works.

Might you ever go outside of beer?

Potentially.

I mean, you started in a Gatorade jug. Maybe you have a sports drink.

As someone who’s a tinker at heart, and I love beverages, my ideal brunch has like six different kinds of functional beverages around the plate of food. I would love to say yes, but then, as a business person who knows that any dollar or minute taken away from our core is taken away from the opportunity at hand. And if we have such confidence that this is a durable mega trend, I think we should be 100% invested in it. I think of great companies that have had like, I there’s all sorts of examples of like, single product companies that have focused relentlessly on that.I go both ways. If I could kind of give myself a ton of way more room in that answer.

I’m not gonna pin you down. Just keep making good stuff. And unfortunately, we’re almost out of time. By the way, congratulations, I think was just last week you announced that you doubled your valuation and raised $50 million.

Yeah, something like that.

I didn’t want to put you on the spot.

Fifty, definitely. And we bought another brewery in San Diego, also that we plan to double the capacity of as well. It’s definitely building the foundation for the future ahead moment, and we keep looking very far down the road and are excited about it.

As am I, and I’m sure all of us. Bill, thank you so much for joining us at Signal and telling us your story.

Oh, thank you so much.