Why Nonalcoholic Beer Is So Popular Now | WSJ The Economics Of

Summary

Athletic Brewing has rapidly emerged as a leader in the growing non-alcoholic beer market, with sales exceeding $440 million in 2024. The company’s unique brewing process, which modifies multiple stages of production, sets it apart from competitors. Athletic’s focus on health-conscious, younger consumers has fueled its expansion, with a significant direct-to-consumer presence. Strategic partnerships, like with Whole Foods, and a growing distribution network, have propelled its success. Despite the booming market, Athletic faces the challenge of maintaining growth in an increasingly competitive space, betting that non-alcoholic beer will remain a sustainable trend.

Takeaways

• 😀 Non-alcoholic beer sales are experiencing rapid growth, with over $440 million in sales in 2024.
• 😀 Athletic Brewing, a leading brand in the non-alcoholic beer market, has driven a third of category growth for the past four years.
• 😀 Athletic Brewing’s innovative brewing process involves 10-12 changes throughout production, making their approach unique in the industry.
• 😀 Athletic Brewing’s water efficiency is impressive, using only 3.5 gallons of water per gallon of non-alcoholic beer, compared to the typical 7 gallons in craft beer brewing.
• 😀 The company has invested over $100 million in developing its non-alcoholic brewing process and scaling production.
• 😀 Athletic Brewing’s focus on non-alcoholic beer allows it to bypass alcohol-related regulations, providing a competitive advantage in distribution and marketing.
• 😀 In 2018, more than 50% of Athletic Brewing's sales were direct-to-consumer, which helped the company gather valuable customer data for distribution and marketing decisions.
• 😀 Athletic Brewing’s customers are predominantly under 45 years old, and 80% still consume alcohol, indicating non-alcoholic beer is being consumed alongside alcoholic beer.
• 😀 The company’s products are distributed not only in traditional beer outlets but also in locations like coffee shops, convenience stores, and parks, expanding its customer base.
• 😀 Athletic Brewing's rapid expansion, with facilities in Connecticut and San Diego, is aimed at meeting the growing demand for non-alcoholic beer while pushing for increased consumption.

Q & A

What has caused the growth of non-alcoholic beer sales since 2020?

Non-alcoholic beer sales have seen double-digit growth since 2020, reaching over $440 million in sales in 2024, driven by increasing consumer interest and a shift towards healthier lifestyles and alternatives to alcohol.

How has Athletic Brewing performed in the non-alcoholic beer market?

Athletic Brewing has become a leader in the non-alcoholic beer industry, driving a third of all category growth over the past four years, and outselling competitors like Heineken and Budweiser in 2024.

What makes Athletic Brewing’s approach to non-alcoholic beer different from other companies?

Unlike other companies that simply remove alcohol from traditional beer, Athletic Brewing innovates by making 10 to 12 changes across the entire brewing process to create non-alcoholic beer from the ground up.

How does Athletic Brewing manage water consumption in its production process?

Athletic Brewing uses only 3.5 gallons of water to produce one gallon of non-alcoholic beer, which is significantly more efficient than the average craft brewery that uses seven gallons per gallon of beer.

What challenge does Athletic Brewing face in scaling its production?

Athletic Brewing faces the challenge of maintaining quality while scaling up production, especially since it operates in a niche market and must avoid mistakes that could ruin entire batches due to the complex brewing process.

Why is Athletic Brewing’s direct-to-consumer (DTC) sales model beneficial?

Athletic Brewing's DTC model provides valuable data on consumer preferences, allowing the company to adjust its distribution and marketing strategies efficiently and meet demand in specific regions.

What demographic is driving the growth of non-alcoholic beer consumption for Athletic Brewing?

The growth of non-alcoholic beer consumption is primarily driven by young consumers under 45 years old, many of whom still drink alcohol but are increasingly choosing non-alcoholic options in addition to traditional beer.

What role does Whole Foods play in Athletic Brewing’s growth?

Whole Foods has been a key partner in distributing Athletic Brewing’s products nationwide. Athletic became Whole Foods' top-selling beer across all categories and helped boost the brand’s visibility and sales.

How is Athletic Brewing expanding its distribution network beyond traditional beer retailers?

Athletic Brewing is expanding its reach into non-traditional spaces, including coffee shops, convenience stores, and state parks, targeting places where consumers would typically choose water or soda, thus opening new opportunities for non-alcoholic beer.

What is the long-term outlook for the non-alcoholic beer industry according to Athletic Brewing?

Athletic Brewing believes that the non-alcoholic beer market will continue to grow as more consumers choose non-alcoholic options for a variety of occasions, and the trend will likely expand as younger generations age and embrace these products in more situations.