Bill Shufelt is the founder and CEO of Athletic Brewing Company.
His problem: How do you turn non-alcoholic beer from a punchline into something people drink all the time?
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Pushkin. Beer is deep. It's as old as civilization, older than writing or money. Beer is ritual, Beer is delicious. Beer is a way to get drunk. So here's a question. Can you keep all the ritual and deliciousness of beer and get rid of the getting drunk part. I'm Jacob Goldstein and this is What's Your Problem, the show where entrepreneurs and engineers talk about how they're going to change the world once they solve a few problems. My guest today is Bill Schufeld, founder and CEO of Athletic Brewing Company, which brews craft non alcoholic beer. Bill's problem is this, how do you turn non alcoholic beer from a punchline into a normal thing? People drink all the time. When Bill worked in finance in his twenties, he drank at social events several nights a week. He was also really into sports and working out, and around the time he turned thirty, he found that drinking was slowing him down, so he stopped drinking, and that, he told me, made his social life much harder. Everywhere I was going after I stopped drinking. When I tried to order a non alcoholic beer in a loud bar, restaurant. It seemed like the music would stop and fifty people would look at me and be like, Oh, my goodness, is this guy okay? Can he be trusted? Something has happened here, Like, let's try to get to the bottom of it before the night goes on. Everywhere I was going these days, there were just no options on any menu. There were stigmas around any choice he would choose at a group setting, out of social setting. And it just blew my mind that the adult beverage industry hadn't evolved the sophistication of a glass of wine or a nice craft beer or a very well crafted cocktail, and there was just no replacing that. The options were super bleak. Even five years ago there had been while the whole grocery store had evolved and the whole bar menu had evolved. There's this one dusty corner of everything that hadn't changed in really thirty five fifty years. It had the same case of o'duels that had been sitting there for thirty years. Basically, Yeah, these products somehow survived prohibition and survived right through to the two thousands. Okay, so go on, So what happens next? Yeah, I guess the moment where I had the actual realization. Me and my wife were walking to dinner and I was yet again complaining, and I just exclaimed, I can't believe that no one has tackled this yet, that someone should make amazing craft non alcoholic beer that is as good as any alcoholic option out there, both in experience and quality. And when I said that, she just grabbed my shoulder and said, that's an amazing idea, And she had never said that before. We had known each other for fifteen years at that point, first amazing idea you'd had in her eyes? Yeah, And we immediately the wheels got turning, and we talked about it the hole dinner. We started researching on our laptops when we got back, and every data point we pulled up, we were like, Wow, this is just a huge opportunity. Or I didn't realize this many people don't drink, and like I didn't realize how everywhere else except the US, that non alcohol adult beverages are an enormous market. I found myself working on it on nights and weekends and drawing up a business plan and running surveys and calling people in Germany to ask about technology, and it just snowballed for two years straight. And so going into twenty seventeen, resigned from my resigned from my job and went full time on it, which was a pretty shocking moment, and especially to work on non alcoholic beer. There was no market, there was no facilities at the time making great non alcoholic beer. We were going to be the first brewery and tap room that did non alcoholic beer as a pure focus in the country. Now you have this fundamentally a technical problem, right, a kind of kind of an engineering problem, a brewing problem. You want to make like very delicious, interesting beer that doesn't have any alcohol in it, right, which is which is a technical problem. How do you do it? How do you solve that? Yeah? So I had overwhelming passion, overwhelming delusional optimism, call it. And I thought starting a business was going to be super easy, And here we God, did you really I think I did? I thought I would be often running and things scale nicely and their vendors for everything, and here we go. And I have such respect for anyone who has started any size business out there. It is there isn't as anyone knows who's built anything, There isn't a single easy step to anything out there at any scale, Allen, It's amazing. How so, I'd read every brewing textbook out there under the sun before I quit my old job, but I'd never brewed a beer period. Resigned from my job and started to talk to potential brewers, starting to sourceburg equipment, contract brewers, everything, and I couldn't believe how much no came at me so fast, meaning everybody just said no every time he asked. Yeah. I'd gone from a firm where I was a customer of three to five hundred people. Everyone wanted to talk to us any chance they could get sure you had all the money, right, you were a buyer rather than a seller in your old job, right, And like a phone not being picked up was such a foreign concept to me. And all of a sudden, it was unbelievable how much outreach I did that just went utterly cold. Then I was moving from to a sector that there was literally no interest, and people thought, no retails, no customers know anything, wanted anything to do with this. I would go to brewing conferences, I was posting applications everywhere I could, looking for our co founder and a broom maaster and did not get one hint of interest. I would walk into conferences with ten thousand burgers and tried in network and grab people, and it was like a middle school dance. I couldn't get anyone to talk to me, and it was just like tons of nos, over and over again. And so I eventually stopped talking about non alcoholic. I just started talking about innovation and took non alcoholic out of all the job descriptions. And that's interesting. Yeah, And that's when John Walker, our co founder, reached out to me. He was an extremely highly awarded boomaster in Santa Fe, New Mexico, and our first conversation was, please don't hang out. This is going to sound a little crazy, but if you give me five to ten minutes and don't say no for three days, like I'd love to revisit this on Monday. And John did give me a good half hour to talk through it. And it's so funny looking back at our first emails. He was one hundred percent going to say now. And then he's a young father at the time, and he loved innovative challenges and he was the one person who saw the potential impact we were potentially going to have on the world, and before I knew it, he was moving his family across the country from Santa Fe, New Mexico to homebrew in an empty warehouse with someone he didn't really know at all, brewing non alcoholic beer and like with a big hope for the future. So I know this is more his domain than yours, But so just give me very basic like how do you make non alcoholic beer? And was it hard to figure out how to make it good? Yes? So basically all non alcoholic beer from nineteen thirties to this day, even ninety five ninety eight percent of the non alcolck beer market is made using the same two or three types of very simple technologies that all don't have a ton of regard for the nuance of fermentation and all the subtleties of like a finally crowd to beverage. They all just basically blast it through torch it rip out a lot of great things to dealcoholize it. And what's the problem with those techniques? Why are they bad? Ultimately they're just not soft enough and careful enough to protect the nuance of a really finely crafted beverage. So basically, you take, you take the good flavor, the taste along with the alcohol when you do it like that. Yeah, So instead of doing that, is it right that what you do is you brew beer, but you just sort of turn the dials in such a way that at the end of the process, instead of having whatever four percent alcohol, the beer has zero point four percent Yep, exactly. Yeah. So in the fermentation seller, for example, our beer never goes above zero point five percent. In the conditioning tanks, it's refining a finished product that's all under point five percent. And even to the most experienced brewers, if you're walking around in our brewery, most of it you wouldn't say is a harm all at all. It's what we're doing in the tanks with our beers. What's different? So do you have IP around your Do you have intellectual property of patents on the way you make beer? Is it a trade secret? So like the Coca Cola formula, so more towards that. It is significant IP for sure, and it is a trade secret, but it is more in the Coca Cola category where if you go for a patent, you have to publish out there your patent for contestion and approval and everything. And we knew with ten thousand birds in the country that if we publish how we make our beer, then we're in the business of policing our patent as well, and we would much rather just have it be something that we do proudly internally in our own berries, and we're super focused on quality every step of it in house at Athletic. I mean, the trade secret worked for Coke, still working for Coke, seems to be for sure after all that. I don't want to say that making the beer was the easy part. Clearly it wasn't easy. But the next thing that Bill had to do, and frankly it's a problem he still has not entirely solved, was much harder. That's after the break. Now back to the show. Here's the hard problem Bill is still trying to solve. How do you make non alcoholic beer normal? How do you make it a thing you can drink without having to explain yourself? How do you make ordering a non alcoholic beer as easy as ordering a pilsner or an ipa? And for Bill, all that really comes down to how do you use marketing to change the culture of beer. We knew the marketing side of this would be equally as big as the product side, and both were going to be enormous challenges on the marketing side. It started with the name. We want to make it something that was undeniably positive and say the name save the name Athletic Growing. It's so awesomely on the nose, right, it's so simply unsubtle of a name. We wanted it to be undeniably positive, aspirational, not tied to any geography or anything like that. We wanted to be an easy bar call and then attract high performance people to the brand. And our hypothesis was if we could make moderation cool and in reach of people, our impact would be an untold positive impact on the world. I don't know if I would use the word moderation, right. I feel like one beer is moderate, you know, one alcoholic beer, Like it's not drinking right. Yeah. So previously non alcoholic beer was for people who don't drink ever, Basically eighty percent of our customers do drink, just drink non alcoholic beer at other times. And was that did you know that that's what you were going for? I wanted people to be able to have great beer anytime, anywhere, and have the choice to drink non alcoholic beer, like, I'm not out to necessarily like kill the alcohol industry. I want people to be able to make their own choices. We're never standing on a soapbox and pointing the finger condemning people. We just want the options for healthy choices to always be there. And we've found that our customers, while they do still drink alcohol sometimes for the most part, they increasingly drink non alcoholic beer through all other days and times and occasions and maybe are swapping in some non alcoholic drinks as well. So you have this idea, you want to create this aspirational non alcoholic beer as opposed to some weird, stigmatized thing, which frankly I think non alcoholic beer was before. And in a way this is even harder than creating a new category, because you have to take a category that has all these negative connotations and kind of overcome that. And I know to that end, part of the marketing you have done has been paying college athletes. And paying college athletes is a new thing, right, not just for you, but more generally because the rules for paying college athletes have changed just in the past few years so that companies can out basically hire them as spokespeople. And so I'm curious tell me about your work there. Yeah, so college athletes are really exciting because we can talk to athletes of all ages. Really, we talk to twenty one year old plus athletes for the most part, to not confuse children that that is an interesting question. Let's just let's just go there since you mentioned it, Like, is it legal for anybody to drink your beer? Are you making a choice just because you don't want to be like the Gateway beer? Like, how does that work? Kids? In non alcoholic beer? It is in most states totally fine for anyone of any age to drink our beer. We do it is that candy cigarettees Gateway argument though, Like, it's just a marketing hill we don't want to die on. And so we generally target athletes and people we market with of twenty one plus and encourage marketing to twenty one plus and selling to twenty one plus. But of course anyone in most states can fire products. But we thought, if we get the coolest high performance athletes on campus to be drinking non alcoholic beer, like, there's really no one better to reach twenty somethings than twenty somethings themselves. And so We've had athletes like CJ. Strout, the Ohio State quarterback, Jean Robinson running back at Texas, two women on the NCAA South Carolina winning basketball team this year. We're drinking r beer and so across a huge range of verticals in the college sports atmosphere, I have people drinking athletic beer. To be clear, that's that's marketing you're paying for. You're paying them to be endorsers or spokespeople. Yep, exactly. And then we have so we have a whole range from amateur to paid athletes. We have an amazing ambassador program that started with organic outreach and we have about fifteen hundred amateur ambassadors across the country or just posting for beer and merch and other reward, and then all the way to paid athletes like JJ WATD and like super elite athletes who have joined our midst over the years as well. And there are much more like traditional marketing assets. When you say traditional marketing assets, what do you mean? Yeah, anything from social media to usage of name and pr name image and likeness and autographs or and we are starting to work up towards organized to TV campaigns and media campaigns which is a lot of fun. Now, most of our marketing efforts from day one were me behind a ten at the finish of any race across the country. I did say seventy finish lines the first year we're in business, and then our sales team has continued to do that. So you would just go to a race with like trunk full of your non alcoholic beer and put it in a cooler and stand there and hand it to people when they finished a race, A ten A or whatever, Yeah, ten table cooler, draft or anything like that. Hand out. The goal is to hand out thousands of beers every weekend to sweaty people with a smile on their face who might be receptive to hearing about nonlocock beer. And I'd usually hear a joke first, and then I'd be like, you can make fun of me all you want if you just try it. And that's when the light bulb would go on. What was the classic joke? What kind of jokes would people make when you said it's none alcoholic beer, Like, what's the point is this? Like decaf coffee? Yeah, tons of stuff like that. You get tired of what's the point as a question, Well, if the product wasn't so good, and I didn't know I could win them, Like it would be exhausting, for sure, But the amount of people I'd talked to who are like rudely making fun of me to my face ninety seconds before they were basically asking where they can buy it, it was like a transition that I could have done zillions of times and I did. And these same people who are making fun of me just before all of a sudden drinking it will sit there and you see the light go on and they're like, oh, like, I could drink this with my night dinner. I could drink this like, oh like while I'm golfing, or while I'm at the beach with my kids, or you know, maybe I could have two of these before I have alcoholic drinks at night, and they would past me out. And like, people just started rattling off occasions of when they would consume non alcoholic beer and when it would exist in their life, sort of answering the what's the point question themselves in that setting. Yeah, and I know you've mentioned that in Europe there has long been a big, robust non alcoholic beer industry. It's a thing there. It's just the European culture towards drinking, which my theory is that they've never had prohibition and never had alcohol strictly taken away, and so there's a relative indifference to drinking or not drinking and societal norms of moderation or daytime cafe culture drinking. So you have a theory that, like, the culture of drinking in the US right now is still weird basically different than it is in other parts of the world because of prohibition. Yeah, prohibition, the romanticism of turning twenty one, a number of factors where so like drinking versus not drinking is a more kind of binary, big deal choice here than it is elsewhere. Is that the idea, that's how we frame it for sure? And yeah, the European non beer market has been big, and it's always been big, and it's growing fast with the same health trends that are driving it in the US, but it's starting off a much bigger base where the market's about twenty five times the size and in quite a few countries it's over ten percent of the overall beer market, where in the US in twenty seventeen it was point three percent of the overall beer market. Point zero point three. And the thing is, people think of nonlock off beer such a small specific market, and like, my secret thought is, I think this is ultimately going to be way over fifty percent of the market because alcohol makes so little sense in so many times of life. So you mean that, like regular beer is going to be the niche, and like normal beer will be non alcoholic beer, and they'll be like, oh, you're drinking alcoholic beer. You want to explain that. I think eventually alcohol probably will. Well, alcohol is a niche occasion, it's just that it's a big niche right now. Basically a thousand years of history, alcohol has been a very big niche, for sure, But I think the modern life, there's so many more occasions that make sense for non alcoholic beverages than alcoholic beverages. And we can empower people and make people feel great and relaxed and social and everything without that one ingredient that I think it's going to explode. And I've been murdered in the beer world for suggesting that non alcoholic beer can even be twenty percent. I think it's going to be fifty. Yeah, So you were creating a category more or less trying to almost create a category. I had not previously looked for your beer. But yesterday I was at the grocery store and it was not a fancy grocery store. It was not Whole Foods. It was foodtown. It was a food down in Brooklyn. And not only did they have I don't know four kinds of athletic Brewing Company beer, they had Stella zero and Heineken zero and Budweiser zero. And Brooklyn Brewing Company also has a non alcoholic beer, which I didn't even know existed. It seems like this is becoming a category, and there is this thing happening where you're like, you know, out in front whatever, cutting the wind, whatever the sports metaphor is. And if you're successful, I guess a draft on you as a terrible pun to make in this context. But if you're successful, all of these other companies are going to come and start doing what you're doing. And in the same way that suddenly there's a million craft beers on the shelf. If you're successful, there's going to be a million non alcoholic craft beer is all surrounding you literally on the shelf, And I'm trying to figure out is that good for you? Or is that bad for you? It's great. So we see this as very much a rising tide lifts all shifts. Yeah, like you just said, humans have been drinking beer since I think thirty thousands of years, but we're getting to like the exponential age in human history where it needs a real reframing about how people think about drinking, and we're trying to do that and really modernized beer for the modern lifestyle. And that's going to be an enormous step functioned switch in this category. And if we do go to even ten percent of the category, there's going to be so much room for every other beer, and Athletic wouldn't possibly be able to meet every occasion in store, and then we're going to need a lot of help. So there's a lot of opportunity for Everyone's the long and short, and we're very thankful for the dedication of the category. We've seen Heineken and has A Bosh, Brooklyn, Sam Adams and many others have to the category for sure. I mean, I guess if the big fundamental problem you have to overcome for your business to succeed is the stigma, frankly around non alcoholic beer, then the more nonalcoholic beers, and the better quality non alcoholic beers, the better for you. Weirdly, for sure, frankly, we wish we had more help, especially on the marketing front. You want more competition. You want Budweiser to be advertising Budweiser zero in football games. We do, and they're starting to do it for sure, So you want your rivals to be spending more on advertising. These are companies that are competing against you and are right next to you on the shelf. We would kill for it. There is I think an interesting precedent for Bill's story, and it goes back to the nineteen sixties. At the time, a US brewer tried to sell this low calorie diet beer. Presently, it was a flop. Nobody wanted to diet beer. It was like what people always said to Bill about non alcoholic beer, what's the point? Miller The Miller Brewing Company wound up with the rights to the beer, and in the nineteen seventies they launched it as Miller Lighte. They had this famous ad campaign with athletes talking about how they like to drink Miller Lighte when they're doing, you know, manly active things, because it's less feeling than regular beer. Today, Miller lighte is the third best selling beer in America and the two beers that outsell it are Bud Light and Coarse Light. We'll be back in a minute with the lightning round. Now, let's get back to the show. Let's close with a lightning round. Fast questions you can answer them fast. In what year will I see a National Athletic Brewing ad in an NFL game? So we did some March Madness ads for our new Athletic light year this past March, but we our second half media plan this year will be our first coordinated, like real advertising campaign this year. If I'm watching whatever Tony Romo calling a game, We'll break and we'll see an athletic ad. It's going to happen, I hope. So yeah, what's the farthest you've ever run in one day? I've done a number of fifty K races if K for our American listeners. That is, what about thirty thirty two miles or so? Longer than a marathon? Seems really long? Slow and study the whole way. I know you don't drink alcohol anymore, but when you did, what was your favorite non non alcoholic beer? I would say Sierra Nevada Palel is incredible. Maybe it's just because I'm from California, but I feel like Sierra Nevada was pretty early in the sort of craft beer universe. Yeah, Ken Grossman was the pioneer who set the road for everyone essentially in so many ways. And Grossman is the Sierra Nevada person found. Yeah. Yeah, you took it from homebrewing to an absolutely world class company and everything they do and every beer they make is super high quality. Do they make a non alcoholic beer? Not yet. I know they're working on it yet though, and that would be kind of a dream to have them come into the category. Do you think the Athletic Brewing Company is going to ever make anything other than non alcoholic beer as a product. We do. So we launched on our e commerce platform last year our daypack hopped Sparkling Waters, and so that's going after a different daytime occasion where so beer maybe, like beer isn't something people have any day everywhere. We wanted something people can drink all throughout the day, reach people in a different aisle of the grocery store and the sparkling water aisle, And so that's our first emerging brand on the Athletic platform name essentially, so we sit sparkling water that tastes a little bit like beer. I'm sorry that I haven't tried. It sounds weird. Frankly, it's sounds weird. I'm gonna be honest, but I'm interested. It's very lightly fruited, lightly hot, so it almost has like a bit of like a juniper overtone to like the light fruitiness. Do you think you're gonna run Athletic forever or do you think you'll do something else? At some point, I didn't have a ton of ideas and chose one like this is my idea and my mission and the impact I want to have, and I can't see myself ever being able to turn it off. Bill Shufelt is the founder and CEO of Athletic Brewing. Today's show was produced by Edith Russolo, engineered by Amanda kay Wong, and edited by Robert Smith. I'm Jacob Goldstein, and I would love to know who else you think we should book for the show. You can email us at problem at pushkin dot fm. It's problem at Pushkin dot fm, or you can find me on Twitter. I'm at Jacob Goldstein. We'll be back next week with another episode of What's Your Problem.