March 25, 2025 • 35 mins
In this episode, we discuss the tribulations of selling distributors and retailers on a new category, the value of having a co-founder with opposite talents, and the advantage of investors with long horizons.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_01 (00:05):
The main reason I did jump careers to do this
full-time was the chance topotentially positively impact
tens of millions of lives.
SPEAKER_00 (00:15):
Hello, friends, old and new, and welcome to Drinks
with Caroline.
I'm so happy you've joined mefor what I believe will be
another stimulating conversationwith an industry expert,
founder, or otherwise fabulousperson in the consumer industry.
So, Bill Schufeldt, welcome toDrinks with Caroline.
(00:36):
I am so excited to have you.
I used to do this with ourclients.
We were both on Wall Street inthe past, and my clients used to
love these events because I'dbring in somebody who wasn't
corporate and not allowed to saywhat they really thought.
And we'd have these greatdiscussions.
And so this is an opportunityfor us to have a chat.
And as my friend Harry Schumakersays, everyone listening,
(00:57):
they're just a fly on the wall.
SPEAKER_01 (00:59):
Thank you so much for having me.
And it's nice to live outside ofthe world of quarterly earnings
cycles for sure.
SPEAKER_00 (01:05):
For sure, for sure.
I do want to let everybodylistening know that I have the
great honor of serving on theboard of athletic brewing.
I don't know what Bill wasthinking when he walked up to me
one day and said, you know, I'vegot one open seat, and would you
be interested?
It it took me about threeseconds because I knew a lot
about athletic brewing at thatpoint.
But Bill, what were youthinking?
SPEAKER_01 (01:26):
Thank you so much.
No, it's it's an honor to haveyou and your advice and your
enthusiasm on in our boardroom.
And it's such a great group ofpeople, and you add such a great
element to it with all yourbreadth of industry experience
and perspectives.
And so thank you so much.
SPEAKER_00 (01:39):
Thank you, Bill.
Well, it is an incredible story.
You've been on how I built thiswith Guy Raz, you've been on
CNBC and many other forums, butI still think it's worth
repeating that you left atrading job that I'm sure was
paying you extremely well, andwith the support of your wife
Jackie, you embarked on thisvery, very bold move.
(02:00):
What did that all feel like?
What was the idea that drove youto start athletic brewing?
SPEAKER_01 (02:06):
Maybe I should have thought through it a little bit
better.
It's kind of scary to thinkabout in hindsight.
What was I thinking?
It was like a very highprobability of a safe, secure
career that I did enjoy.
It was intellectuallystimulating.
I liked the people I workedwith.
And I really didn't have anentrepreneurial bone in my body
(02:29):
at the time, too.
At no point during my financialcareer was I kicking around
ideas of businesses I couldstart, and I had no intention of
starting a business myself.
It was this like reallyauthentic place in my life, and
it was such a need.
It was so unmet in the world.
For the first time in my life, Isaw the chance where I could
positively impact so manypeople, too.
(02:50):
In the hedge fund world, as muchas I respect that world, I would
have never had the chance todeal directly with customers,
positively impact their lives,and like make a real positive
dent in the world.
And ultimately that was what litmy fire.
And that's been reinforced overand over again with tens of
thousands of customer emails.
I guess a little bit more aboutthe like how I got there before
(03:11):
the why.
The why is so important in termsof like me actually doing it at
that moment.
I think the life I was living isrepresentative of so many
adults.
You know, we're trying to be alittle bit more high performing,
we're trying to be a little bithealthier, a little bit better
family people, a little take ourcareers a little more seriously.
And being out at three or fourwork dinners a week with
colleagues, social things on theweekends.
(03:33):
Drinking four or five nights aweek, even in small amounts, was
a real limiter on myproductivity, my health, and my
sleep.
It actually came about as I wastraining for my first ultra
marathon and really evaluatingsome things in my life before I
was about to get married.
And I decided to stop drinkingfor a month up to that, and it
was the biggest life hack I everdiscovered.
And so as I went away fromdrinking, I was all of a sudden
(03:56):
in all these very familiarplaces with colleagues and
friends and family, and therewere no menu options for me.
And I was standing there kind ofwith my hands in my pockets, or
like a childish drink, wheneveryone else had the adult
things, and I looked around theworld and did a little bit of
light research, and 50% plus ofadults are really trying to
moderate, and it's so limitingto the adult beverage world that
(04:18):
there's not this cornucopia ofamazing non-alcoholic adult
beverages, and so it was thiskernel of an idea that grew from
there.
SPEAKER_00 (04:26):
I love that story.
And just how long from thatmoment till you landed your
incredible co-founder andbrewer, John?
SPEAKER_01 (04:36):
I make it sound easy.
I'm I realized that there was abig unmet need, but I didn't
realize that was a businessidea.
It took me complaining aboutthis to my wife for her to
really wrap that all togetherand be like, that is a huge
idea.
I knew nothing about thebeverage world, which is both a
very good thing at the end ofthe day that I didn't come in
with a lot of industry baggage.
(04:57):
I did a lot of learning, a lotof phone calls to people all
over the world in Europe beforework.
I was waking up at four in themorning and working on this
idea, spending all weekend, andall of a sudden I didn't my
interest in this kernel of anidea was so much bigger than my
interest in like watchingcollege football on Saturdays or
like going on bachelor parties.
You were on a mission.
Yeah, but I still probably wouldhave never done anything with it
(05:19):
at the end of that two-year planbecause in many ways it just
would have been such a badbusiness decision to leave point
seventy-two and do this.
And it was really my wife whoshook me again and was like,
This is really big.
You've done so much work here.
I don't want to know you in tenyears if you haven't done
anything with this.
And she encouraged me to walkinto work the next week and and
resign.
And that I did, and we realignedour household budgets, and it's
(05:43):
tough.
You know what it's like to be onWall Street, where the
connectivity on Wall Street isamazing.
If you have a question aboutanything or you want to learn
anything, there's probably 200people you could ring or chat or
email and get amazinglywell-informed answers.
And so I was used to like thisoverload of information stimuli.
And the second I walked out thedoor on Wall Street and was home
(06:04):
alone and out on my own, it juststops.
And that was a really darkplace.
I got nothing but rejection.
It was a long road to find John,it was a long road to find
investors, it was a long road tofind distributors and retailers.
In many ways, a good thingbecause we learned so many
lessons off Broadway.
We could definitely talk aboutwhat the industry looked like at
(06:25):
that point, too.
SPEAKER_00 (06:25):
Yeah, it is interesting.
What does long mean?
Was it two years?
Because I think you're stillonly six years into having
founded Athletic, if I'm notmistaken.
SPEAKER_01 (06:35):
I'm ten years into like the idea of athletic and
essentially working on athletic,six and a half years into
commercially working on athleticsince we launched.
And so John and I have beenworking together for upwards of
eight years now.
A big disconnect for me was thatthe enthusiasm I had for this, I
expected to be somewhatreflected out in the world, and
(06:55):
there was just no enthusiasm forit, which was a big
miscalculation on my part, andit should have been foreseen
because non-alcoholic beer wasessentially zero revenue, zero
momentum, zero buzz andexcitement.
It was like the most hated partof the grocery store, the most
hated part of any bar orrestaurant, is very stigmatized.
And so asking anyone from thebrewing world, which the craft
(07:17):
beer world was really excitingat this time, Laganitas and
Bells Point had just sold for abillion dollars.
And to ask someone to like leavethat world and start tinkering
on non-alcoholic beer in awarehouse with someone who knows
nothing about the industry, itwas a really tough sell, and I
very rightfully got hundreds ofrejections.
So I met John about five monthsafter I quit my job, which was a
(07:37):
really dark five months.
Basically, every contract brewerin the country had said no at
that point, and I'd gottenrejected by hundreds of brewers.
Here was this outreach fromsomeone in New Mexico who had
seen on a job board what I waslike thinking about and wanted
to hear more about it.
SPEAKER_00 (07:52):
And John had by far the deepest list of brewing
medals that I talked to, and soAnd let's just clarify for the
audience, this is John Walker,and you'll tell us a little bit
about him as a person and whatit was like meeting him.
SPEAKER_01 (08:05):
Yeah, and I really knew I was about to get on the
phone with someone verytalented, and I didn't want to
just get another 30-secondhang-up phone call.
And so I basically said, pleasedon't hang up and like hear five
minutes of what I've got to say.
And he's like, Okay, of courseI'll listen.
Like, I wasn't gonna hang up onyou.
And then I broke the news thatit's non-alcoholic, and I could
tell he was hanging on by athread a little bit.
But I've looked back at theemails many times, and he
(08:27):
emailed me back on a Sunday, andhe was like, you know, I thought
it was crazy at first, but he'slike, dot dot dot genius.
You know, he'd grown up inrestaurants, his dad ran
farm-to-table restaurants in NewEngland, and so he'd seen the
inside of the restaurant worldand the culinary world, and he'd
been working at a very smallcraft brewer in Santa Fe, New
Mexico that didn't even have acanning line plugged in.
(08:47):
And he really saw the innovationchallenge, the potential for a
positive impact, and he reallyreflected so many of my initial
ideas and my enthusiasm rightfrom the start.
And it really wasn't long beforewe started exchanging hundreds
of emails of collaboration, andwe've been kind of off and
running ever since.
It's a totally underrated partof any founder story, but like
(09:08):
the thing we probably got mostlucky at Athletic is to have two
co-founders who are veryopposite talents and love
working together so much.
There's really nothing I likemore than having five hours in
the car with John to talk aboutrandom things in the business
and get on the same page.
SPEAKER_00 (09:23):
Do you talk about the details of your individual
beers and the brewing process,or what's the conversation like?
SPEAKER_01 (09:29):
Really, everything.
The future, friendship.
We both really came into thisindustry with so little industry
knowledge and no knowledge ofscaling businesses.
And we've learned step by stepwith our team along the whole
way.
And we've been lucky to havesuch great advisors and
investors, including yourself,and that have really helped us
think through all the decisionswe're making along the way.
(09:49):
But yeah, John went from a20-barrel brew house in Santa
Fe, New Mexico with no canningline, and now with Ease,
operates 200-barrel fullyautomated five-vessel brew
houses.
And you know, we did right about400,000 barrels of beer last
year in 2024.
So John has really grown withthe business impressively on the
operation side as well.
SPEAKER_00 (10:09):
Well, having walked one of the breweries, the one in
Connecticut, the scale isincredible.
It's absolutely incredible.
And now increasingly being ableto walk into stores, I live in
LA and see these beautifuldisplays of athletic brewing.
And when I mention it, I mean,every bar I've been into in New
York, I've been able to order anathletic.
It's super exciting.
(10:30):
I just want to, before we talkmore about the beer, talk about
this group of advisors.
Because for me, it's been aprivilege to be in the
boardroom.
There are such incrediblyintelligent people and wise and
worldly people on your board,and you've had really long-term
capital behind you.
And the importance of that, ofhaving investors who are not
(10:51):
short-term and thinking, justbringing them around to belief,
the way you have belief.
What was that like?
SPEAKER_01 (10:56):
From day one, we've really been really fortunate
with the investors we've hadjoin our vision.
And similar to trying to findJohn as a co-founder, it was
really hard to find investors.
John and I didn't have productwe were bringing around.
I had a 96-page white paper onhow we were going to change the
Brewing industry, but I didn'thave a product to share.
There's no momentum.
It was pre-revenue.
(11:17):
So it was a really tough sell,very rightfully so, to
investors.
And a lot of great investorssaid no.
But the 70 angel investors whosaid yes have been incredible.
And they gave us a lot offreedom of momentum and strategy
to run our business and learnour lessons and do a lot of
things off Broadway.
And there wasn't a huge pressureto scale two different metrics
at a speed that wasn't in ourplan.
(11:39):
And along the way, we've metsome amazing people along that
journey.
And great from our Series A, ourlead investor Tim Barricette and
his family office joined ourteam and he's been an amazing
advisor, as well as DarrenRuvell's Tastemaker Capital,
Blake Mykowski, the founder ofTom Shoes, JJ Watt, and a number
of other great early advisorsand investors.
And we've also, as we've scaledas a business, Alliance Consumer
(12:02):
Growth as a world-class privateequity firm who's been a great
board member for upwards of fiveyears now on the athletic
journey.
And so we've kind of riddenthrough every kind of market
cycle in a very short amount oftime with them.
We were lucky to pick up a muchbigger beverage strategic who's
been an amazing people and greatadvisor in Kirk Dr.
Pepper.
Justin Whitmore, their chiefstrategy officer and now GM of
(12:22):
their energy division, is on ourboard.
And General Atlantic, theworld-class financial private
equity firm, joined this pastsummer to help finance our
newest brewery build.
It's a great group ofperspectives.
And I think one thing we gotright is really trying to
communicate our vision for whatwe want the category and company
to be.
People were signing up for that.
And there aren't five differentgroups with five different ideas
(12:44):
of what the future of Athleticcould be.
I think it's a really goodcohesive boardroom and investor
team, which has always beenreally important to me.
SPEAKER_00 (12:50):
Well, I think, Bill, that people trust you because I
think you've been really clearwith one vision.
And the partnership with you andJohn is so strong.
The proof is now in the pudding,but I can only imagine just how
grueling those early years were.
And it takes a lot of fortitudeand fortune with so many
entrepreneurs who they're juststruggling, struggling,
struggling.
And to keep getting yourfinancing through that journey
(13:12):
is really challenging.
So to even be here is justremarkable.
I'd love you just to summarizehow big you are today, how many
doors and things like that, justsort of a sense and how many
different varietals you'reoffering.
I'm saying that like a wineperson, but how many flavors of
beer and styles.
And then what the vision is fornon-alk beer and your role in
(13:32):
it.
SPEAKER_01 (13:33):
We really started out with this idea of like
authentic innovation.
I think, especially in CPG,there's so much trend chasing
and opportuneness.
And I think the reason we havebeen able to have such a long
lead time on our innovation isbecause it's kind of
authentically ours.
We have a real mission aroundit.
It's what we're focused on.
We're not in a new categoryevery year.
A lot of brands are in like fournew categories every year with
(13:55):
2% of resources in all of them.
This is our thing, and we'refocused on it.
And that white paper I had inthe very early days was pointing
towards Spain and Germany.
And as they went from like 12 to15% of their beer market being
non-alcoholic beer.
SPEAKER_00 (14:09):
You've got to just repeat that.
That's such a stunning number.
SPEAKER_01 (14:12):
Yeah.
So when we started non-alcoholicbeer in the US was a rounding
era to zero.
It was like 0.3% of the beermarket.
It'd been a under$100 millionmarket very consistently for 30
years.
And we had this vision that theUS is lagging for really like
post-prohibition reasons still.
Like it has a real branding andinnovation and quality problem.
(14:34):
And we're going to reinvent andreimagine this category.
And it should snap prettyquickly to the worldwide
average, but there's everyreason it should be an even
bigger part of the futureglobally.
And so at that time,non-alcoholic beer was 5% of the
worldwide beer market.
But there were all these otherplaces in the world like Spain,
Germany, Japan, where it washigher, upwards of 10% and
(14:57):
trending towards 12% and nowit's 15% in Spain and Germany,
which is a really exciting datapoint to point at.
But now we've taken it fromnarrative to it's actually
happening in the US.
And it's been a lot of resourcesto invest behind that, and it
takes real time to make realchange.
I guess I should clarify too,like Athletic Brewing's not out
(15:17):
to bring back prohibition.
We're not out to point thefinger at people and make them
feel guilty about alcohol.
We're not out to steal thoseoccasions even.
Like the world's a stressfulplace and people want alcohol
great.
But 10 years ago, there was nooption to even be moderate if
you wanted to be moderate.
And we just want to have great,exciting options alongside the
alcohol options so more peoplecan enjoy great adult beverages,
(15:39):
more people can be included inoccasions.
People don't feel like theiralcohol and fun is boxed into
like one or two days a week.
They can have seven days a weekof great beer and feel fine
about it, and it's a good,healthy decision.
And we're really trying to growthe category, not cannibalize
the category, where most adultbeverage innovation is a
one-for-one substitute for anexisting occasion.
(16:00):
Like if a bourbon drinker isgoing to drink a tequila this
year, it's like a one-for-oneswap for the most part.
Or if like a light beer drinkeris going to drink a white claw,
that's a one-for-one swap.
We want to take it from, yeah,you can have your white claw on
Saturday, but I'm going to giveyou a beer five days of the
week.
And that's real growth for theindustry.
And so those were all thesesfive years ago.
(16:21):
And it's been really fun to playit out with data tests all
across the country.
And at first, non-alcoholic beerwent from like 0.3% to 0.5%.
And now, if you exclude theconvenience channel,
non-alcoholic beer is about 3%of total beer.
So category has grown about 10xsince we got going.
But if you look at the chain bychain level, it's much more
(16:44):
exciting.
You know, a lot of the massnational retailers like Walmart
and Target and Total Wine thatleaned in earlier than most,
they're starting to move above4%, 5%, 6% of all beer is now
non-alcoholic beer.
And we're seeing some of theleading natural channel
retailers move above 12, 15.
And the first national retailerjust passed 20% of all beer.
(17:06):
So, like that's out in front ofeven where anywhere in Europe
is.
The US has gone from theultimate laggard to the leader
of non-alcoholic beer.
And that gets me so fired up.
SPEAKER_00 (17:16):
It's really interesting, though.
I'm thinking about how withinfrastructure in China, they
had nothing.
And because they were comingfrom nowhere, when they built
it, they built it right andbigger and better than anyone.
Our infrastructure in the US ischallenged.
And I guess the US had minimaldecent tasting non-mulk beer.
(17:36):
And now you're building itright.
You're building these deliciousbeers so that if someone
actually tries it for the firsttime, they go, I'm shocked at
how good it is.
I'm shocked at how low thecalories are.
You know, I almost had one forbreakfast, quite frankly.
Why not?
SPEAKER_01 (17:49):
It's 11 o'clock in the morning, and I have one next
to me.
And it's not because we're goingto be on a podcast as like, oh,
it's a Friday morning.
I might have a peach beer whileI do my work.
It's funny you saidmanufacturing.
We did look also at theindustry, and one of our first
principles thinking things waswe really have to reinvent this.
And in many ways, craft beerreinvented a lot of beer
(18:11):
production in this country.
I did think it required like abetter look at how is
non-alcoholic beer made?
Is there an artificially lowceiling on what can be done
here?
And everyone knew marketing hadto be revamped, even though
people weren't talking aboutthat.
But like if we got the productright, we got the nutritionals
right, and then we turned on themarketing.
I think that's a reallyinteresting, like successful
(18:32):
cocktail there.
But we deliberately made thechoice to lean in and build all
US manufacturing.
And so a really unprofitableidea to begin with, but
increasingly so as the CapExdecisions start to play out over
a longer time frame.
SPEAKER_00 (18:47):
Well, you get an incredible cash flow generation
once you hit certain capacityutilizations and then, you know,
add growth on top of that.
So it's a very bold move.
I mean, so few startups andbeverage, be it soft drinks or
alcohol, across spirits, wine,bit, whatever, they don't tend
to own their assets.
So how hard was it to persuadeyour investors that this was the
(19:08):
way to go?
SPEAKER_01 (19:09):
We're really lucky to have great alignment on our
investor team.
And even though I honestly makemodeling mishaps, I, you know,
when you build a operating modelprojecting a facility, and you
usually do it with a utilizationassumption that assumes you're
going to operate thesefacilities at some point,
relatively fully utilized for adecent amount of time.
(19:30):
And I underestimated how quicklywe would grow out of facilities
and need to jump to a next one.
And that made the investmentpicture even harder.
It is really tough to buildmanufacturing, and it's also
triply easy for me to talk aboutit as if it's happening in
Excel.
Like everything I do in Excel,John has to do in the real world
with like 18-month lead timesand you know, our last brew in
(19:51):
Connecticut, just the firstphase of it, was something like
110 shipping containers of steeland electronics and everything.
We had did 40,000 hours ofstainless steel welding went
into that building.
And so taking it from Excel tothe real world is a huge lift,
too.
I really appreciate ourinvestors and advisors in
trusting us that the three-yearturnaround in gross margins and
(20:12):
growing into our facilitieswould play out.
But there's a lot of elements ofthat conversation too, is it's
hard for most CPG categories tohave a lot of confidence that
there's going to be like a10-year bull trend ahead that
you can make those kind ofinvestments behind.
Because if we thoughtnon-alcoholic beer was a wave we
had to time right like three tofour years, that wouldn't have
(20:34):
made sense in buildingmanufacturing and making 10-year
investments and 20-yearinvestments.
And so there's huge differencesbetween this trend and like
seltzer and RTD Spirits andeverything where you like really
have to catch the wave.
We're really lucky to have along-term investor, long-term
trend, really be building aroundthat.
SPEAKER_00 (20:52):
What are some of the comments you hear from your
customers and retailers andrestaurants and so on?
Just love you to share some ofthe enthusiasm with us.
SPEAKER_01 (21:01):
Yeah.
The main reason I did jumpcareers to do this full-time was
the chance to potentiallypositively impact tens of
millions of lives.
And I saw the positivetransformation in my life and
that access to greatnon-alcoholic beer could
potentially have.
And if we just made moderationaccessible, there could be so
much fun and so much impact onpeople's lives there.
(21:22):
And I had a funny error abouttwo weeks ago that actually
turned into a big positive.
I accidentally emailed about athousand of our highest lifetime
value customers ever.
And not something you'dtypically want to do, but it
gave me a great chance tointeract directly with a lot of
our best customers of all timeand hear those stories directly
(21:43):
from them.
It was like such fun emailexchanges.
And some examples were like Istopped drinking in 2005, they
would say, and I felt totallyshut out of the social world and
my life and all my favoritethings, sports, venues, music.
And people tell these storiesabout once they discovered
Athletic in 2018, 2019, theywere like so comfortable in
(22:04):
re-entering society and havingfun, and they were
destigmatized.
And then there's all sorts ofother stories about like
positive health impact.
And like we don't make healthclaims with our products, but
it's like great to hear it fromcustomers and or people telling
us that they're a better parentthan they could ever imagine
they could be.
And it was really touching.
And we do hear from thousands ofcustomers a week via just
(22:25):
regular emails to our company aswell.
So that is like really whatcontinues to get me out of bed
and light my fire ever stronger.
Plus, I love being an employertoo.
Our team at Athletic Brewing isincredible, and I love all our
teammates.
And it's been an underexpectedpart of this journey that I love
so much has been building thiscompany with John and all the
(22:45):
great teammates who workalongside of us along the
journey.
SPEAKER_00 (22:47):
Well, I can certainly attest to the quality
of the people that are behindthe athletic brewing success,
and you're always one to setit's never just one person, it's
always the team.
As an analyst on Wall Street, Ialways did look for the leader
though, because I think the waysomeone leads defines what that
team is going to look like andhow empowered they feel.
(23:08):
And there's just clearly such ashared sense of vision and
mission and wanting to knoweverybody's opinion.
I think one of the things thatmatter most, Phil, is you're
always asking how you can bebetter.
And you really want to know.
You're not being polite.
And so that level of humility isunusual, quite frankly.
And I think why you're going tobe so incredibly successful.
(23:30):
I mean, you have already, you'vebuilt something that I think so
many people didn't think waspossible.
You could say non-alcoholic beeris an oxymoron, and wow, try and
go into a retailer and sellthat.
And that that is hard to do.
But I'm on your same page that Ithink that if there's an example
of where it can be 12% or 20%,then we're going to be very
surprised by how big this canbe.
(23:51):
I want to ask if you think GLP1drugs have any impact on
consumer your consumers.
SPEAKER_01 (23:56):
Yeah, and on that last topic too.
I think I'm probably right like20% of the time.
My goal is to be very right inthat 20%.
But I have a great teammatekeeping me on the rails and the
other 80%.
There's so many trends happeningconcurrently in society right
now.
I think one thing that wasprobably underrated in helping
my decision to quit drinking.
In the beginning of my financecareer, work actually kind of
(24:19):
stopped when I left work.
And as interconnected as theworld was in 2005, it really
didn't follow you home thatmuch.
So you could go out to workdrinks, you could have drinks,
and you could relatively unplugand catch up in the morning.
And I found as we started tohave more and more sophisticated
phones and connectivity in thenext three years, work actually
followed me around the clock.
(24:40):
And there was all of a suddenlike real alpha to be made at
like three or four in themorning.
There was a lot of reading to bedone, there was a lot of writing
to be done at night.
As the world became moreinterconnected, like that
information trend is such a megatrend.
And alcohol may or may not fitgreat in a world that's that
connected.
And I think part of that is thehealth information that's
(25:01):
emerging too.
Like 15 years ago, people stillkind of referred to the FDA food
pyramid and how bread at thebottom was like a huge part of
everyday health, and nothinggets bread, but like the quality
of health advice and real-timedata inputs and podcasts and
everything is happeningalongside that too.
And I think you layer in thingslike GLP1s on top of that health
(25:22):
trend, and people are justmaking more and more informed
choices about what makes sensefor their life, and not just one
size fits all recommendationsfrom society.
So it's really tough to discernif GLP1s have had a big impact
on our business yet.
Like in the context of fairlysteep growth, it's tough to say
exactly what is drivingdifferent things.
(25:42):
But I do think in aggregate,things like GLP ones, things
like Andrew Huberman commentingon alcohol, the Surgeon
General's comments a few weeksago, they're all just
informational or somewhat habitdriving.
And I think they would all beclassified as tailwinds.
But I do also think the otherside of that argument could be
made is that if people aren'tdrinking as much alcohol or not
(26:05):
socializing as much, or like arethey actually socializing as
much?
Are they going to bars andrestaurants as much?
So there is potentially like ashrinking of occasions if people
aren't having adult beverages asmuch.
So I think we need to rethinkadult beverages to meet people's
future dietary habits, also.
So I think there will be thingsthat come in.
I think our products help meetthose needs, but I think there
might be more seltzer typeoptions.
(26:27):
There might be lower calorie,higher protein things and across
all different food categories, Iwould say.
SPEAKER_00 (26:32):
That makes a lot of sense.
I actually sat next to someonewho works for um a wine and
spirits distributor, and theywere bemoaning the fact that
restaurants are having a reallyhard time right now with
traffic, but also with theiralcohol sales, their wine and
beer sales, and so on.
So there is a need for theindustry to get together and
think about this holistically.
(26:52):
How do we grow the pie again?
Because it's been verychallenging.
SPEAKER_01 (26:56):
Yeah, and that's something I've been really
trying to beat on the drum withour partners is so Athletic is
working really hard to driveprogramming at on-premise bars
and restaurants.
Last month was our best month inthe on-premise by over 20% ever
in terms of on-premise sales.
And January is usually a reallybad beer month at the
on-premise.
And we created programs to getpeople out to bars and
(27:17):
restaurants and support bars andrestaurants in that bad month.
I think that's such a bedrock ofthe industry, too.
Like people don't just go buy a12-pack of very expensive things
at the grocery store.
They love to try one or have itrecommended to them first
socially or at a bar andrestaurant before they go buy it
in the on-premise oroff-premise.
And at Athletic, it's verydifficult to service the
(27:39):
on-premise.
It typically takes us three tofive visits to a bar to open the
account.
So it's like a very hand-to-handsell.
And then once we've proven thatwe deserve to be there, it's
even harder, unfortunately, toget it delivered.
The distribution tier is sofocused on the high volume
off-premise.
I think everyone got addicted toCOVID margins and being able to
(27:59):
drop pallets at chain retailersand not do much of the rest.
And unfortunately, I think forthe long-term health of the
industry, the industry reallyneeds to get behind the
on-premise again.
Because that's where like newdrinkers, young drinkers are
having fun.
And I have a really strongopinion on that.
SPEAKER_00 (28:14):
Yeah, I mean, it it would be cool if the industry
can actually create someprograms, reminding people that
part of being healthy is havingsocial time with friends and
chats, you know, random chats.
I think they have found that areally important part of
longevity of mental health iseven just three or four random
interactions with someone duringthe course of a day.
(28:34):
And we all know how big themental health issue is in this
country right now, and probablyacross many countries.
SPEAKER_01 (28:40):
Yeah.
And not to make this all aboutme, but when I lived in New York
City, I lived right above agreat independent corner bar.
And I was working incrediblyhard.
And it was such an importantpart of my like daily stress
relief and fun to like pop inthere and have a beer after
work.
And very often, like friendswould just expect other friends
to be there and go there andcatch up after work and then go
on our ways.
(29:01):
And I hate to lose that insociety, but Athletic right now,
I just said how hard it is towin a new account.
Because of distribution service,we end up churning about 40% of
new wins within three months.
SPEAKER_00 (29:13):
So this is a plea to distributors to get back to
building brands, you know, whichthey could do really, really
effectively if they put theirminds to it.
SPEAKER_01 (29:22):
Ian, we're out there making the sales, we're asking
for deliveries, just thedeliveries.
SPEAKER_00 (29:27):
Yeah, and just to explain to our audience, if if
someone's not deep in the weedscare, that by regulation a
brewer can't sell directly to aretailer or bar.
Now, because you're non-elkbeer, that might be different,
but we've chosen to go the beerdistribution route.
So we're very reliant ondistributors.
If they don't do a drop for you,that is lost sales.
(29:49):
There's not much you can doexcept fight for it back.
SPEAKER_01 (29:52):
You know, if we sell into a restaurant and they don't
deliver the placement and welose it, there's at least a
thousand people a month in theirDrinking something that's not
our beer that could have beenpeople falling in love with
athletic and then buying it atthe grocery store.
So it's it's really importantand it's a big theme for us for
2025 that we're going to bepushing on.
SPEAKER_00 (30:10):
So this is an ask for athletic call.
Exactly.
Yeah.
And I always thank thebartenders for serving me
athletic if they have it.
SPEAKER_01 (30:18):
Thank you.
SPEAKER_00 (30:19):
So, Bill, we see a lot of competition coming in
now.
And I'd love your view onwhether more push from an
Anheuser Busch and aconstellation brands with their
Mexican beer portfolio, is thata good thing, a bad thing, or
you're just not sure?
SPEAKER_01 (30:34):
I think going back to kind of what I said earlier
is I think a big part ofathletic success is authentic
innovation.
I think in the adult beverageindustry, we've seen a number of
cycles in seemingly every threeyears where something starts to
grow and 2,000 SKUs launch intothat category.
And craft beer had a verydurable wave, and now there's
(30:54):
10,000 craft brewers in a prettytough time in the industry.
Then it was seltzer.
Three brands had success, and2,000 brands launched behind it,
and essentially three brandsremain now.
So it's been through a wholechurn there.
And then immediately after that,similar dynamic happening with
RTD seltzers, like the shelfexpands, the shelf contracts,
and on and on with like waves ofinnovation.
(31:16):
We're seeing that withnon-alcoholic beer now, where
we've already gone through a lotof brands have come in and
cycled out already in this, butthe number of brands is
increasing dramatically.
And I think the key thing isjust what incremental buyers are
people bringing to the shelf.
Is it authentic innovation?
Is it additive to category?
And I love having a competitivecategory.
(31:38):
I think this category is goingto be very big and there's room
for a lot of brands in it.
But I do think people should beauthentic with their innovation.
And maybe everyone doing thesame category every year isn't
the right move for the category.
Maybe people should think aboutwhat's great for their own
brands as well.
And so in that, there's about150 brands, and I'm so glad to
have a variety of brands on theshelf.
(32:00):
And I'm more often than notselling other brands alongside
Athletic and recommending a morefull menu or a more full shelf.
However, there is a lot of likecontract brewed cut and paste
going on as well.
We have had a lot of issues.
I would say upwards of 25companies have probably copied
word for word our whole aboutstory off our webpage and things
(32:21):
like that.
So there's a lot of diluting,confusing things for the
customer as well.
You know, there's a brand outthere in the world right now
that's identically copied ourpackaging, and they're trying to
sell it right next to us on theshelf.
And so I wish distributors andretailers would push back on, be
like, hey, this is actually ourbest brand in the category.
This is our highest potentialfor repeat buyers, and we want
(32:42):
people to start here and to putsomething that mimics it right
next to it is a disservice tothe category and customer, not
an ad.
So there's celebrity brandscoming in, there's new
powerhouse brands like MickUltra coming in.
I I think all this is greatbecause it'll come with real
investment, new eyeballs.
Athletic over the life of ourbrand has always put
double-digit millions bymarketing the category.
(33:03):
And because of that, we estimatethat almost a third of our
buyers of beer are new to thebeer shelf.
Like people walking into thegrocery store and walking to the
shelf because to find Athletic,and they weren't going to visit
the beer shelf when they were inthe store otherwise.
I wish more brands, I think it'sonly Athletic, Heineken, and now
Bureau and McUltra who do muchmarketing at all.
(33:24):
Most brands just show up at theshelf, get next to get on the
shelf, and don't support theshelf.
So in the overall dynamics ofthe category, it is about five
brands driving about 70% ofsales and growth of the
category.
Athletic drives about 32% ofcategory growth in any given
period.
I I love a competitive category.
I just wish a bit more of it wasan authentic approach.
SPEAKER_00 (33:47):
So do you have anyone approaching you from the
retail side and saying, will yoube the category manager for
non-elk?
Or could you also, just addingto that, could you imagine a
Walmart or Target actuallycreating a whole focus around
non-elk beverages?
SPEAKER_01 (34:02):
Many of the chain retailers, including the ones
you just mentioned, are great.
They're so accessible and soapproachable, and they want
insight from the industry andthe leaders of categories.
And so it would almost be unfairto name but Whole Foods,
Walmart, Target, Total Wine,HEB, Wegmans, so many
approachable chain buyers whoare really data-driven and who
(34:24):
don't just rely on the pen of anAnheuser-Busch to draw the set.
And I think this is a reallyevolved category for the most
part.
These are starting to be reallyproductive SKUs, so it's going
to be an exciting five years.
The first zero to two percent ofbeer is gonna be the hardest.
I think two to ten percent ortwo to twenty percent is gonna
happen way faster than peoplethink.
SPEAKER_00 (34:43):
Exponential.
SPEAKER_01 (34:44):
Hopefully, yeah.
SPEAKER_00 (34:45):
What do you want to leave our listeners and viewers
with?
What thoughts about new flavorscoming, what you have planned
for the year, and you know,where they can find Athletic?
SPEAKER_01 (34:55):
We had a really fun innovation planning meeting
yesterday at the team.
We have two operationalbreweries right now, and we're
building our fourth totalbrewery, and all of them have
pilot systems.
So it's a great chance for ourextremely talented brewing team
to flex their creativity.
And so we probably have about 40new beers coming this year.
Most of them will be onathleticbrewing.com, and the
biggest successes will go fromthere to the outside world.
(35:17):
Yeah, really excited about someof the innovation we have
coming.
Overall, more just excited aboutthe future of the category.
It's an exciting time.
SPEAKER_00 (35:24):
Thank you so much, Bill.
Really, really appreciate youdoing this.
And I look forward to doing thisin a year and hearing about
another great success, theopening of the San Diego
Brewery, the second one, and anda whole lot more.
Cool.
Sounds good.
If you enjoyed this session,please do comment, rate, and
(35:46):
follow us on Apple Podcasts,Spotify, or wherever you listen.
And please share this with yourfriends and colleagues.
The main reason I did jump careers to do this
full-time was the chance topotentially positively impact
tens of millions of lives.
SPEAKER_00 (00:15):
Hello, friends, old and new, and welcome to Drinks
with Caroline.
I'm so happy you've joined mefor what I believe will be
another stimulating conversationwith an industry expert,
founder, or otherwise fabulousperson in the consumer industry.
So, Bill Schufeldt, welcome toDrinks with Caroline.
(00:36):
I am so excited to have you.
I used to do this with ourclients.
We were both on Wall Street inthe past, and my clients used to
love these events because I'dbring in somebody who wasn't
corporate and not allowed to saywhat they really thought.
And we'd have these greatdiscussions.
And so this is an opportunityfor us to have a chat.
And as my friend Harry Schumakersays, everyone listening,
(00:57):
they're just a fly on the wall.
SPEAKER_01 (00:59):
Thank you so much for having me.
And it's nice to live outside ofthe world of quarterly earnings
cycles for sure.
SPEAKER_00 (01:05):
For sure, for sure.
I do want to let everybodylistening know that I have the
great honor of serving on theboard of athletic brewing.
I don't know what Bill wasthinking when he walked up to me
one day and said, you know, I'vegot one open seat, and would you
be interested?
It it took me about threeseconds because I knew a lot
about athletic brewing at thatpoint.
But Bill, what were youthinking?
SPEAKER_01 (01:26):
Thank you so much.
No, it's it's an honor to haveyou and your advice and your
enthusiasm on in our boardroom.
And it's such a great group ofpeople, and you add such a great
element to it with all yourbreadth of industry experience
and perspectives.
And so thank you so much.
SPEAKER_00 (01:39):
Thank you, Bill.
Well, it is an incredible story.
You've been on how I built thiswith Guy Raz, you've been on
CNBC and many other forums, butI still think it's worth
repeating that you left atrading job that I'm sure was
paying you extremely well, andwith the support of your wife
Jackie, you embarked on thisvery, very bold move.
(02:00):
What did that all feel like?
What was the idea that drove youto start athletic brewing?
SPEAKER_01 (02:06):
Maybe I should have thought through it a little bit
better.
It's kind of scary to thinkabout in hindsight.
What was I thinking?
It was like a very highprobability of a safe, secure
career that I did enjoy.
It was intellectuallystimulating.
I liked the people I workedwith.
And I really didn't have anentrepreneurial bone in my body
(02:29):
at the time, too.
At no point during my financialcareer was I kicking around
ideas of businesses I couldstart, and I had no intention of
starting a business myself.
It was this like reallyauthentic place in my life, and
it was such a need.
It was so unmet in the world.
For the first time in my life, Isaw the chance where I could
positively impact so manypeople, too.
(02:50):
In the hedge fund world, as muchas I respect that world, I would
have never had the chance todeal directly with customers,
positively impact their lives,and like make a real positive
dent in the world.
And ultimately that was what litmy fire.
And that's been reinforced overand over again with tens of
thousands of customer emails.
I guess a little bit more aboutthe like how I got there before
(03:11):
the why.
The why is so important in termsof like me actually doing it at
that moment.
I think the life I was living isrepresentative of so many
adults.
You know, we're trying to be alittle bit more high performing,
we're trying to be a little bithealthier, a little bit better
family people, a little take ourcareers a little more seriously.
And being out at three or fourwork dinners a week with
colleagues, social things on theweekends.
(03:33):
Drinking four or five nights aweek, even in small amounts, was
a real limiter on myproductivity, my health, and my
sleep.
It actually came about as I wastraining for my first ultra
marathon and really evaluatingsome things in my life before I
was about to get married.
And I decided to stop drinkingfor a month up to that, and it
was the biggest life hack I everdiscovered.
And so as I went away fromdrinking, I was all of a sudden
(03:56):
in all these very familiarplaces with colleagues and
friends and family, and therewere no menu options for me.
And I was standing there kind ofwith my hands in my pockets, or
like a childish drink, wheneveryone else had the adult
things, and I looked around theworld and did a little bit of
light research, and 50% plus ofadults are really trying to
moderate, and it's so limitingto the adult beverage world that
(04:18):
there's not this cornucopia ofamazing non-alcoholic adult
beverages, and so it was thiskernel of an idea that grew from
there.
SPEAKER_00 (04:26):
I love that story.
And just how long from thatmoment till you landed your
incredible co-founder andbrewer, John?
SPEAKER_01 (04:36):
I make it sound easy.
I'm I realized that there was abig unmet need, but I didn't
realize that was a businessidea.
It took me complaining aboutthis to my wife for her to
really wrap that all togetherand be like, that is a huge
idea.
I knew nothing about thebeverage world, which is both a
very good thing at the end ofthe day that I didn't come in
with a lot of industry baggage.
(04:57):
I did a lot of learning, a lotof phone calls to people all
over the world in Europe beforework.
I was waking up at four in themorning and working on this
idea, spending all weekend, andall of a sudden I didn't my
interest in this kernel of anidea was so much bigger than my
interest in like watchingcollege football on Saturdays or
like going on bachelor parties.
You were on a mission.
Yeah, but I still probably wouldhave never done anything with it
(05:19):
at the end of that two-year planbecause in many ways it just
would have been such a badbusiness decision to leave point
seventy-two and do this.
And it was really my wife whoshook me again and was like,
This is really big.
You've done so much work here.
I don't want to know you in tenyears if you haven't done
anything with this.
And she encouraged me to walkinto work the next week and and
resign.
And that I did, and we realignedour household budgets, and it's
(05:43):
tough.
You know what it's like to be onWall Street, where the
connectivity on Wall Street isamazing.
If you have a question aboutanything or you want to learn
anything, there's probably 200people you could ring or chat or
email and get amazinglywell-informed answers.
And so I was used to like thisoverload of information stimuli.
And the second I walked out thedoor on Wall Street and was home
(06:04):
alone and out on my own, it juststops.
And that was a really darkplace.
I got nothing but rejection.
It was a long road to find John,it was a long road to find
investors, it was a long road tofind distributors and retailers.
In many ways, a good thingbecause we learned so many
lessons off Broadway.
We could definitely talk aboutwhat the industry looked like at
(06:25):
that point, too.
SPEAKER_00 (06:25):
Yeah, it is interesting.
What does long mean?
Was it two years?
Because I think you're stillonly six years into having
founded Athletic, if I'm notmistaken.
SPEAKER_01 (06:35):
I'm ten years into like the idea of athletic and
essentially working on athletic,six and a half years into
commercially working on athleticsince we launched.
And so John and I have beenworking together for upwards of
eight years now.
A big disconnect for me was thatthe enthusiasm I had for this, I
expected to be somewhatreflected out in the world, and
(06:55):
there was just no enthusiasm forit, which was a big
miscalculation on my part, andit should have been foreseen
because non-alcoholic beer wasessentially zero revenue, zero
momentum, zero buzz andexcitement.
It was like the most hated partof the grocery store, the most
hated part of any bar orrestaurant, is very stigmatized.
And so asking anyone from thebrewing world, which the craft
(07:17):
beer world was really excitingat this time, Laganitas and
Bells Point had just sold for abillion dollars.
And to ask someone to like leavethat world and start tinkering
on non-alcoholic beer in awarehouse with someone who knows
nothing about the industry, itwas a really tough sell, and I
very rightfully got hundreds ofrejections.
So I met John about five monthsafter I quit my job, which was a
(07:37):
really dark five months.
Basically, every contract brewerin the country had said no at
that point, and I'd gottenrejected by hundreds of brewers.
Here was this outreach fromsomeone in New Mexico who had
seen on a job board what I waslike thinking about and wanted
to hear more about it.
SPEAKER_00 (07:52):
And John had by far the deepest list of brewing
medals that I talked to, and soAnd let's just clarify for the
audience, this is John Walker,and you'll tell us a little bit
about him as a person and whatit was like meeting him.
SPEAKER_01 (08:05):
Yeah, and I really knew I was about to get on the
phone with someone verytalented, and I didn't want to
just get another 30-secondhang-up phone call.
And so I basically said, pleasedon't hang up and like hear five
minutes of what I've got to say.
And he's like, Okay, of courseI'll listen.
Like, I wasn't gonna hang up onyou.
And then I broke the news thatit's non-alcoholic, and I could
tell he was hanging on by athread a little bit.
But I've looked back at theemails many times, and he
(08:27):
emailed me back on a Sunday, andhe was like, you know, I thought
it was crazy at first, but he'slike, dot dot dot genius.
You know, he'd grown up inrestaurants, his dad ran
farm-to-table restaurants in NewEngland, and so he'd seen the
inside of the restaurant worldand the culinary world, and he'd
been working at a very smallcraft brewer in Santa Fe, New
Mexico that didn't even have acanning line plugged in.
(08:47):
And he really saw the innovationchallenge, the potential for a
positive impact, and he reallyreflected so many of my initial
ideas and my enthusiasm rightfrom the start.
And it really wasn't long beforewe started exchanging hundreds
of emails of collaboration, andwe've been kind of off and
running ever since.
It's a totally underrated partof any founder story, but like
(09:08):
the thing we probably got mostlucky at Athletic is to have two
co-founders who are veryopposite talents and love
working together so much.
There's really nothing I likemore than having five hours in
the car with John to talk aboutrandom things in the business
and get on the same page.
SPEAKER_00 (09:23):
Do you talk about the details of your individual
beers and the brewing process,or what's the conversation like?
SPEAKER_01 (09:29):
Really, everything.
The future, friendship.
We both really came into thisindustry with so little industry
knowledge and no knowledge ofscaling businesses.
And we've learned step by stepwith our team along the whole
way.
And we've been lucky to havesuch great advisors and
investors, including yourself,and that have really helped us
think through all the decisionswe're making along the way.
(09:49):
But yeah, John went from a20-barrel brew house in Santa
Fe, New Mexico with no canningline, and now with Ease,
operates 200-barrel fullyautomated five-vessel brew
houses.
And you know, we did right about400,000 barrels of beer last
year in 2024.
So John has really grown withthe business impressively on the
operation side as well.
SPEAKER_00 (10:09):
Well, having walked one of the breweries, the one in
Connecticut, the scale isincredible.
It's absolutely incredible.
And now increasingly being ableto walk into stores, I live in
LA and see these beautifuldisplays of athletic brewing.
And when I mention it, I mean,every bar I've been into in New
York, I've been able to order anathletic.
It's super exciting.
(10:30):
I just want to, before we talkmore about the beer, talk about
this group of advisors.
Because for me, it's been aprivilege to be in the
boardroom.
There are such incrediblyintelligent people and wise and
worldly people on your board,and you've had really long-term
capital behind you.
And the importance of that, ofhaving investors who are not
(10:51):
short-term and thinking, justbringing them around to belief,
the way you have belief.
What was that like?
SPEAKER_01 (10:56):
From day one, we've really been really fortunate
with the investors we've hadjoin our vision.
And similar to trying to findJohn as a co-founder, it was
really hard to find investors.
John and I didn't have productwe were bringing around.
I had a 96-page white paper onhow we were going to change the
Brewing industry, but I didn'thave a product to share.
There's no momentum.
It was pre-revenue.
(11:17):
So it was a really tough sell,very rightfully so, to
investors.
And a lot of great investorssaid no.
But the 70 angel investors whosaid yes have been incredible.
And they gave us a lot offreedom of momentum and strategy
to run our business and learnour lessons and do a lot of
things off Broadway.
And there wasn't a huge pressureto scale two different metrics
at a speed that wasn't in ourplan.
(11:39):
And along the way, we've metsome amazing people along that
journey.
And great from our Series A, ourlead investor Tim Barricette and
his family office joined ourteam and he's been an amazing
advisor, as well as DarrenRuvell's Tastemaker Capital,
Blake Mykowski, the founder ofTom Shoes, JJ Watt, and a number
of other great early advisorsand investors.
And we've also, as we've scaledas a business, Alliance Consumer
(12:02):
Growth as a world-class privateequity firm who's been a great
board member for upwards of fiveyears now on the athletic
journey.
And so we've kind of riddenthrough every kind of market
cycle in a very short amount oftime with them.
We were lucky to pick up a muchbigger beverage strategic who's
been an amazing people and greatadvisor in Kirk Dr.
Pepper.
Justin Whitmore, their chiefstrategy officer and now GM of
(12:22):
their energy division, is on ourboard.
And General Atlantic, theworld-class financial private
equity firm, joined this pastsummer to help finance our
newest brewery build.
It's a great group ofperspectives.
And I think one thing we gotright is really trying to
communicate our vision for whatwe want the category and company
to be.
People were signing up for that.
And there aren't five differentgroups with five different ideas
(12:44):
of what the future of Athleticcould be.
I think it's a really goodcohesive boardroom and investor
team, which has always beenreally important to me.
SPEAKER_00 (12:50):
Well, I think, Bill, that people trust you because I
think you've been really clearwith one vision.
And the partnership with you andJohn is so strong.
The proof is now in the pudding,but I can only imagine just how
grueling those early years were.
And it takes a lot of fortitudeand fortune with so many
entrepreneurs who they're juststruggling, struggling,
struggling.
And to keep getting yourfinancing through that journey
(13:12):
is really challenging.
So to even be here is justremarkable.
I'd love you just to summarizehow big you are today, how many
doors and things like that, justsort of a sense and how many
different varietals you'reoffering.
I'm saying that like a wineperson, but how many flavors of
beer and styles.
And then what the vision is fornon-alk beer and your role in
(13:32):
it.
SPEAKER_01 (13:33):
We really started out with this idea of like
authentic innovation.
I think, especially in CPG,there's so much trend chasing
and opportuneness.
And I think the reason we havebeen able to have such a long
lead time on our innovation isbecause it's kind of
authentically ours.
We have a real mission aroundit.
It's what we're focused on.
We're not in a new categoryevery year.
A lot of brands are in like fournew categories every year with
(13:55):
2% of resources in all of them.
This is our thing, and we'refocused on it.
And that white paper I had inthe very early days was pointing
towards Spain and Germany.
And as they went from like 12 to15% of their beer market being
non-alcoholic beer.
SPEAKER_00 (14:09):
You've got to just repeat that.
That's such a stunning number.
SPEAKER_01 (14:12):
Yeah.
So when we started non-alcoholicbeer in the US was a rounding
era to zero.
It was like 0.3% of the beermarket.
It'd been a under$100 millionmarket very consistently for 30
years.
And we had this vision that theUS is lagging for really like
post-prohibition reasons still.
Like it has a real branding andinnovation and quality problem.
(14:34):
And we're going to reinvent andreimagine this category.
And it should snap prettyquickly to the worldwide
average, but there's everyreason it should be an even
bigger part of the futureglobally.
And so at that time,non-alcoholic beer was 5% of the
worldwide beer market.
But there were all these otherplaces in the world like Spain,
Germany, Japan, where it washigher, upwards of 10% and
(14:57):
trending towards 12% and nowit's 15% in Spain and Germany,
which is a really exciting datapoint to point at.
But now we've taken it fromnarrative to it's actually
happening in the US.
And it's been a lot of resourcesto invest behind that, and it
takes real time to make realchange.
I guess I should clarify too,like Athletic Brewing's not out
(15:17):
to bring back prohibition.
We're not out to point thefinger at people and make them
feel guilty about alcohol.
We're not out to steal thoseoccasions even.
Like the world's a stressfulplace and people want alcohol
great.
But 10 years ago, there was nooption to even be moderate if
you wanted to be moderate.
And we just want to have great,exciting options alongside the
alcohol options so more peoplecan enjoy great adult beverages,
(15:39):
more people can be included inoccasions.
People don't feel like theiralcohol and fun is boxed into
like one or two days a week.
They can have seven days a weekof great beer and feel fine
about it, and it's a good,healthy decision.
And we're really trying to growthe category, not cannibalize
the category, where most adultbeverage innovation is a
one-for-one substitute for anexisting occasion.
(16:00):
Like if a bourbon drinker isgoing to drink a tequila this
year, it's like a one-for-oneswap for the most part.
Or if like a light beer drinkeris going to drink a white claw,
that's a one-for-one swap.
We want to take it from, yeah,you can have your white claw on
Saturday, but I'm going to giveyou a beer five days of the
week.
And that's real growth for theindustry.
And so those were all thesesfive years ago.
(16:21):
And it's been really fun to playit out with data tests all
across the country.
And at first, non-alcoholic beerwent from like 0.3% to 0.5%.
And now, if you exclude theconvenience channel,
non-alcoholic beer is about 3%of total beer.
So category has grown about 10xsince we got going.
But if you look at the chain bychain level, it's much more
(16:44):
exciting.
You know, a lot of the massnational retailers like Walmart
and Target and Total Wine thatleaned in earlier than most,
they're starting to move above4%, 5%, 6% of all beer is now
non-alcoholic beer.
And we're seeing some of theleading natural channel
retailers move above 12, 15.
And the first national retailerjust passed 20% of all beer.
(17:06):
So, like that's out in front ofeven where anywhere in Europe
is.
The US has gone from theultimate laggard to the leader
of non-alcoholic beer.
And that gets me so fired up.
SPEAKER_00 (17:16):
It's really interesting, though.
I'm thinking about how withinfrastructure in China, they
had nothing.
And because they were comingfrom nowhere, when they built
it, they built it right andbigger and better than anyone.
Our infrastructure in the US ischallenged.
And I guess the US had minimaldecent tasting non-mulk beer.
(17:36):
And now you're building itright.
You're building these deliciousbeers so that if someone
actually tries it for the firsttime, they go, I'm shocked at
how good it is.
I'm shocked at how low thecalories are.
You know, I almost had one forbreakfast, quite frankly.
Why not?
SPEAKER_01 (17:49):
It's 11 o'clock in the morning, and I have one next
to me.
And it's not because we're goingto be on a podcast as like, oh,
it's a Friday morning.
I might have a peach beer whileI do my work.
It's funny you saidmanufacturing.
We did look also at theindustry, and one of our first
principles thinking things waswe really have to reinvent this.
And in many ways, craft beerreinvented a lot of beer
(18:11):
production in this country.
I did think it required like abetter look at how is
non-alcoholic beer made?
Is there an artificially lowceiling on what can be done
here?
And everyone knew marketing hadto be revamped, even though
people weren't talking aboutthat.
But like if we got the productright, we got the nutritionals
right, and then we turned on themarketing.
I think that's a reallyinteresting, like successful
(18:32):
cocktail there.
But we deliberately made thechoice to lean in and build all
US manufacturing.
And so a really unprofitableidea to begin with, but
increasingly so as the CapExdecisions start to play out over
a longer time frame.
SPEAKER_00 (18:47):
Well, you get an incredible cash flow generation
once you hit certain capacityutilizations and then, you know,
add growth on top of that.
So it's a very bold move.
I mean, so few startups andbeverage, be it soft drinks or
alcohol, across spirits, wine,bit, whatever, they don't tend
to own their assets.
So how hard was it to persuadeyour investors that this was the
(19:08):
way to go?
SPEAKER_01 (19:09):
We're really lucky to have great alignment on our
investor team.
And even though I honestly makemodeling mishaps, I, you know,
when you build a operating modelprojecting a facility, and you
usually do it with a utilizationassumption that assumes you're
going to operate thesefacilities at some point,
relatively fully utilized for adecent amount of time.
(19:30):
And I underestimated how quicklywe would grow out of facilities
and need to jump to a next one.
And that made the investmentpicture even harder.
It is really tough to buildmanufacturing, and it's also
triply easy for me to talk aboutit as if it's happening in
Excel.
Like everything I do in Excel,John has to do in the real world
with like 18-month lead timesand you know, our last brew in
(19:51):
Connecticut, just the firstphase of it, was something like
110 shipping containers of steeland electronics and everything.
We had did 40,000 hours ofstainless steel welding went
into that building.
And so taking it from Excel tothe real world is a huge lift,
too.
I really appreciate ourinvestors and advisors in
trusting us that the three-yearturnaround in gross margins and
(20:12):
growing into our facilitieswould play out.
But there's a lot of elements ofthat conversation too, is it's
hard for most CPG categories tohave a lot of confidence that
there's going to be like a10-year bull trend ahead that
you can make those kind ofinvestments behind.
Because if we thoughtnon-alcoholic beer was a wave we
had to time right like three tofour years, that wouldn't have
(20:34):
made sense in buildingmanufacturing and making 10-year
investments and 20-yearinvestments.
And so there's huge differencesbetween this trend and like
seltzer and RTD Spirits andeverything where you like really
have to catch the wave.
We're really lucky to have along-term investor, long-term
trend, really be building aroundthat.
SPEAKER_00 (20:52):
What are some of the comments you hear from your
customers and retailers andrestaurants and so on?
Just love you to share some ofthe enthusiasm with us.
SPEAKER_01 (21:01):
Yeah.
The main reason I did jumpcareers to do this full-time was
the chance to potentiallypositively impact tens of
millions of lives.
And I saw the positivetransformation in my life and
that access to greatnon-alcoholic beer could
potentially have.
And if we just made moderationaccessible, there could be so
much fun and so much impact onpeople's lives there.
(21:22):
And I had a funny error abouttwo weeks ago that actually
turned into a big positive.
I accidentally emailed about athousand of our highest lifetime
value customers ever.
And not something you'dtypically want to do, but it
gave me a great chance tointeract directly with a lot of
our best customers of all timeand hear those stories directly
(21:43):
from them.
It was like such fun emailexchanges.
And some examples were like Istopped drinking in 2005, they
would say, and I felt totallyshut out of the social world and
my life and all my favoritethings, sports, venues, music.
And people tell these storiesabout once they discovered
Athletic in 2018, 2019, theywere like so comfortable in
(22:04):
re-entering society and havingfun, and they were
destigmatized.
And then there's all sorts ofother stories about like
positive health impact.
And like we don't make healthclaims with our products, but
it's like great to hear it fromcustomers and or people telling
us that they're a better parentthan they could ever imagine
they could be.
And it was really touching.
And we do hear from thousands ofcustomers a week via just
(22:25):
regular emails to our company aswell.
So that is like really whatcontinues to get me out of bed
and light my fire ever stronger.
Plus, I love being an employertoo.
Our team at Athletic Brewing isincredible, and I love all our
teammates.
And it's been an underexpectedpart of this journey that I love
so much has been building thiscompany with John and all the
(22:45):
great teammates who workalongside of us along the
journey.
SPEAKER_00 (22:47):
Well, I can certainly attest to the quality
of the people that are behindthe athletic brewing success,
and you're always one to setit's never just one person, it's
always the team.
As an analyst on Wall Street, Ialways did look for the leader
though, because I think the waysomeone leads defines what that
team is going to look like andhow empowered they feel.
(23:08):
And there's just clearly such ashared sense of vision and
mission and wanting to knoweverybody's opinion.
I think one of the things thatmatter most, Phil, is you're
always asking how you can bebetter.
And you really want to know.
You're not being polite.
And so that level of humility isunusual, quite frankly.
And I think why you're going tobe so incredibly successful.
(23:30):
I mean, you have already, you'vebuilt something that I think so
many people didn't think waspossible.
You could say non-alcoholic beeris an oxymoron, and wow, try and
go into a retailer and sellthat.
And that that is hard to do.
But I'm on your same page that Ithink that if there's an example
of where it can be 12% or 20%,then we're going to be very
surprised by how big this canbe.
(23:51):
I want to ask if you think GLP1drugs have any impact on
consumer your consumers.
SPEAKER_01 (23:56):
Yeah, and on that last topic too.
I think I'm probably right like20% of the time.
My goal is to be very right inthat 20%.
But I have a great teammatekeeping me on the rails and the
other 80%.
There's so many trends happeningconcurrently in society right
now.
I think one thing that wasprobably underrated in helping
my decision to quit drinking.
In the beginning of my financecareer, work actually kind of
(24:19):
stopped when I left work.
And as interconnected as theworld was in 2005, it really
didn't follow you home thatmuch.
So you could go out to workdrinks, you could have drinks,
and you could relatively unplugand catch up in the morning.
And I found as we started tohave more and more sophisticated
phones and connectivity in thenext three years, work actually
followed me around the clock.
(24:40):
And there was all of a suddenlike real alpha to be made at
like three or four in themorning.
There was a lot of reading to bedone, there was a lot of writing
to be done at night.
As the world became moreinterconnected, like that
information trend is such a megatrend.
And alcohol may or may not fitgreat in a world that's that
connected.
And I think part of that is thehealth information that's
(25:01):
emerging too.
Like 15 years ago, people stillkind of referred to the FDA food
pyramid and how bread at thebottom was like a huge part of
everyday health, and nothinggets bread, but like the quality
of health advice and real-timedata inputs and podcasts and
everything is happeningalongside that too.
And I think you layer in thingslike GLP1s on top of that health
(25:22):
trend, and people are justmaking more and more informed
choices about what makes sensefor their life, and not just one
size fits all recommendationsfrom society.
So it's really tough to discernif GLP1s have had a big impact
on our business yet.
Like in the context of fairlysteep growth, it's tough to say
exactly what is drivingdifferent things.
(25:42):
But I do think in aggregate,things like GLP ones, things
like Andrew Huberman commentingon alcohol, the Surgeon
General's comments a few weeksago, they're all just
informational or somewhat habitdriving.
And I think they would all beclassified as tailwinds.
But I do also think the otherside of that argument could be
made is that if people aren'tdrinking as much alcohol or not
(26:05):
socializing as much, or like arethey actually socializing as
much?
Are they going to bars andrestaurants as much?
So there is potentially like ashrinking of occasions if people
aren't having adult beverages asmuch.
So I think we need to rethinkadult beverages to meet people's
future dietary habits, also.
So I think there will be thingsthat come in.
I think our products help meetthose needs, but I think there
might be more seltzer typeoptions.
(26:27):
There might be lower calorie,higher protein things and across
all different food categories, Iwould say.
SPEAKER_00 (26:32):
That makes a lot of sense.
I actually sat next to someonewho works for um a wine and
spirits distributor, and theywere bemoaning the fact that
restaurants are having a reallyhard time right now with
traffic, but also with theiralcohol sales, their wine and
beer sales, and so on.
So there is a need for theindustry to get together and
think about this holistically.
(26:52):
How do we grow the pie again?
Because it's been verychallenging.
SPEAKER_01 (26:56):
Yeah, and that's something I've been really
trying to beat on the drum withour partners is so Athletic is
working really hard to driveprogramming at on-premise bars
and restaurants.
Last month was our best month inthe on-premise by over 20% ever
in terms of on-premise sales.
And January is usually a reallybad beer month at the
on-premise.
And we created programs to getpeople out to bars and
(27:17):
restaurants and support bars andrestaurants in that bad month.
I think that's such a bedrock ofthe industry, too.
Like people don't just go buy a12-pack of very expensive things
at the grocery store.
They love to try one or have itrecommended to them first
socially or at a bar andrestaurant before they go buy it
in the on-premise oroff-premise.
And at Athletic, it's verydifficult to service the
(27:39):
on-premise.
It typically takes us three tofive visits to a bar to open the
account.
So it's like a very hand-to-handsell.
And then once we've proven thatwe deserve to be there, it's
even harder, unfortunately, toget it delivered.
The distribution tier is sofocused on the high volume
off-premise.
I think everyone got addicted toCOVID margins and being able to
(27:59):
drop pallets at chain retailersand not do much of the rest.
And unfortunately, I think forthe long-term health of the
industry, the industry reallyneeds to get behind the
on-premise again.
Because that's where like newdrinkers, young drinkers are
having fun.
And I have a really strongopinion on that.
SPEAKER_00 (28:14):
Yeah, I mean, it it would be cool if the industry
can actually create someprograms, reminding people that
part of being healthy is havingsocial time with friends and
chats, you know, random chats.
I think they have found that areally important part of
longevity of mental health iseven just three or four random
interactions with someone duringthe course of a day.
(28:34):
And we all know how big themental health issue is in this
country right now, and probablyacross many countries.
SPEAKER_01 (28:40):
Yeah.
And not to make this all aboutme, but when I lived in New York
City, I lived right above agreat independent corner bar.
And I was working incrediblyhard.
And it was such an importantpart of my like daily stress
relief and fun to like pop inthere and have a beer after
work.
And very often, like friendswould just expect other friends
to be there and go there andcatch up after work and then go
on our ways.
(29:01):
And I hate to lose that insociety, but Athletic right now,
I just said how hard it is towin a new account.
Because of distribution service,we end up churning about 40% of
new wins within three months.
SPEAKER_00 (29:13):
So this is a plea to distributors to get back to
building brands, you know, whichthey could do really, really
effectively if they put theirminds to it.
SPEAKER_01 (29:22):
Ian, we're out there making the sales, we're asking
for deliveries, just thedeliveries.
SPEAKER_00 (29:27):
Yeah, and just to explain to our audience, if if
someone's not deep in the weedscare, that by regulation a
brewer can't sell directly to aretailer or bar.
Now, because you're non-elkbeer, that might be different,
but we've chosen to go the beerdistribution route.
So we're very reliant ondistributors.
If they don't do a drop for you,that is lost sales.
(29:49):
There's not much you can doexcept fight for it back.
SPEAKER_01 (29:52):
You know, if we sell into a restaurant and they don't
deliver the placement and welose it, there's at least a
thousand people a month in theirDrinking something that's not
our beer that could have beenpeople falling in love with
athletic and then buying it atthe grocery store.
So it's it's really importantand it's a big theme for us for
2025 that we're going to bepushing on.
SPEAKER_00 (30:10):
So this is an ask for athletic call.
Exactly.
Yeah.
And I always thank thebartenders for serving me
athletic if they have it.
SPEAKER_01 (30:18):
Thank you.
SPEAKER_00 (30:19):
So, Bill, we see a lot of competition coming in
now.
And I'd love your view onwhether more push from an
Anheuser Busch and aconstellation brands with their
Mexican beer portfolio, is thata good thing, a bad thing, or
you're just not sure?
SPEAKER_01 (30:34):
I think going back to kind of what I said earlier
is I think a big part ofathletic success is authentic
innovation.
I think in the adult beverageindustry, we've seen a number of
cycles in seemingly every threeyears where something starts to
grow and 2,000 SKUs launch intothat category.
And craft beer had a verydurable wave, and now there's
(30:54):
10,000 craft brewers in a prettytough time in the industry.
Then it was seltzer.
Three brands had success, and2,000 brands launched behind it,
and essentially three brandsremain now.
So it's been through a wholechurn there.
And then immediately after that,similar dynamic happening with
RTD seltzers, like the shelfexpands, the shelf contracts,
and on and on with like waves ofinnovation.
(31:16):
We're seeing that withnon-alcoholic beer now, where
we've already gone through a lotof brands have come in and
cycled out already in this, butthe number of brands is
increasing dramatically.
And I think the key thing isjust what incremental buyers are
people bringing to the shelf.
Is it authentic innovation?
Is it additive to category?
And I love having a competitivecategory.
(31:38):
I think this category is goingto be very big and there's room
for a lot of brands in it.
But I do think people should beauthentic with their innovation.
And maybe everyone doing thesame category every year isn't
the right move for the category.
Maybe people should think aboutwhat's great for their own
brands as well.
And so in that, there's about150 brands, and I'm so glad to
have a variety of brands on theshelf.
(32:00):
And I'm more often than notselling other brands alongside
Athletic and recommending a morefull menu or a more full shelf.
However, there is a lot of likecontract brewed cut and paste
going on as well.
We have had a lot of issues.
I would say upwards of 25companies have probably copied
word for word our whole aboutstory off our webpage and things
(32:21):
like that.
So there's a lot of diluting,confusing things for the
customer as well.
You know, there's a brand outthere in the world right now
that's identically copied ourpackaging, and they're trying to
sell it right next to us on theshelf.
And so I wish distributors andretailers would push back on, be
like, hey, this is actually ourbest brand in the category.
This is our highest potentialfor repeat buyers, and we want
(32:42):
people to start here and to putsomething that mimics it right
next to it is a disservice tothe category and customer, not
an ad.
So there's celebrity brandscoming in, there's new
powerhouse brands like MickUltra coming in.
I I think all this is greatbecause it'll come with real
investment, new eyeballs.
Athletic over the life of ourbrand has always put
double-digit millions bymarketing the category.
(33:03):
And because of that, we estimatethat almost a third of our
buyers of beer are new to thebeer shelf.
Like people walking into thegrocery store and walking to the
shelf because to find Athletic,and they weren't going to visit
the beer shelf when they were inthe store otherwise.
I wish more brands, I think it'sonly Athletic, Heineken, and now
Bureau and McUltra who do muchmarketing at all.
(33:24):
Most brands just show up at theshelf, get next to get on the
shelf, and don't support theshelf.
So in the overall dynamics ofthe category, it is about five
brands driving about 70% ofsales and growth of the
category.
Athletic drives about 32% ofcategory growth in any given
period.
I I love a competitive category.
I just wish a bit more of it wasan authentic approach.
SPEAKER_00 (33:47):
So do you have anyone approaching you from the
retail side and saying, will yoube the category manager for
non-elk?
Or could you also, just addingto that, could you imagine a
Walmart or Target actuallycreating a whole focus around
non-elk beverages?
SPEAKER_01 (34:02):
Many of the chain retailers, including the ones
you just mentioned, are great.
They're so accessible and soapproachable, and they want
insight from the industry andthe leaders of categories.
And so it would almost be unfairto name but Whole Foods,
Walmart, Target, Total Wine,HEB, Wegmans, so many
approachable chain buyers whoare really data-driven and who
(34:24):
don't just rely on the pen of anAnheuser-Busch to draw the set.
And I think this is a reallyevolved category for the most
part.
These are starting to be reallyproductive SKUs, so it's going
to be an exciting five years.
The first zero to two percent ofbeer is gonna be the hardest.
I think two to ten percent ortwo to twenty percent is gonna
happen way faster than peoplethink.
SPEAKER_00 (34:43):
Exponential.
SPEAKER_01 (34:44):
Hopefully, yeah.
SPEAKER_00 (34:45):
What do you want to leave our listeners and viewers
with?
What thoughts about new flavorscoming, what you have planned
for the year, and you know,where they can find Athletic?
SPEAKER_01 (34:55):
We had a really fun innovation planning meeting
yesterday at the team.
We have two operationalbreweries right now, and we're
building our fourth totalbrewery, and all of them have
pilot systems.
So it's a great chance for ourextremely talented brewing team
to flex their creativity.
And so we probably have about 40new beers coming this year.
Most of them will be onathleticbrewing.com, and the
biggest successes will go fromthere to the outside world.
(35:17):
Yeah, really excited about someof the innovation we have
coming.
Overall, more just excited aboutthe future of the category.
It's an exciting time.
SPEAKER_00 (35:24):
Thank you so much, Bill.
Really, really appreciate youdoing this.
And I look forward to doing thisin a year and hearing about
another great success, theopening of the San Diego
Brewery, the second one, and anda whole lot more.
Cool.
Sounds good.
If you enjoyed this session,please do comment, rate, and
(35:46):
follow us on Apple Podcasts,Spotify, or wherever you listen.
And please share this with yourfriends and colleagues.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Bobby Bones Show
Listen to 'The Bobby Bones Show' by downloading the daily full replay.