Fast-rising non-alcoholic beer maker Athletic Brewing Company has closed a $50 million “equity financing round” led by private equity firm General Atlantic, with several key investors from previous fundraising rounds also participating.
The latest funding round comes 21 months after a $50 million Series D round led by Keurig Dr Pepper (KDP) that closed in November 2022.
Following the latest capital infusion, General Atlantic will receive a seat on Athletic’s board. Although the full composition of Athletic’s board has not been publicly disclosed, investment firm TRB Advisors, which Athletic co-founder Bill Shufelt described as Athletic’s “largest investor across multiple rounds,” KDP and private equity firm Alliance Consumer Growth each hold seats on the board.
The new equity financing round is being earmarked to “drive continued long-term growth,” including Athletic’s purchase of another San Diego-based Ballast Point production facility, as well as expanding international sales of its NA beer.
Shufelt told Brewbound that Athletic is now well-positioned to finance capital projects from either “equity debt or cash flow from operations.”
“Interest rates are so high these days, [so] equity made sense in this instance [for] funding a great project that solidifies our capacity for the future,” he explained. “But also a big part of the reason we wanted to do equity was we had the chance to invite one of the most respected world-class investors onto our cap table, and really importantly, is they have a very long-term vision, no time horizon, they’re super excited about the category we’re trying to innovate in and and really great people.”
General Atlantic’s portfolio covers several sectors, including climate, consumer, financial services, healthcare, life sciences and technology. Existing investments include data firm Fintech, taco chain Torchy’s Tacos and luxury brand Tory Burch.
Andrew Crawford, General Atlantic managing director and global head of consumer, in a statement in the announcement called Athletic “the category-defining brand in non-alcoholic beer.”
“We intend to leverage our international platform and capabilities across technology, digital marketing, and merchandising to help the business achieve its potential,” he continued.
Across six funding rounds, Athletic has now raised around $225 million, including a $75 million Series C round in May 2021 (led by TRB Advisors, private equity firm Alliance Consumer Growth and more than 25 existing investors), a $17.5 million Series B round in 2020 (including TRB and more than 25 existing investors), a $3 million Series A round (including TRB, Tastemaker Capital, and Blake Mycoskie), and a $3 million angel round in 2017.
A Wall Street Journal report today on the equity financing round valued Athletic at $800 million. The Journal added that Athletic’s sales topped $90 million in 2023.
Shufelt told Brewbound that the company has more than 100 investors, the majority (around 70) of whom first invested in the 2017 angel round. He added that the $50 million in funding will go toward company investments, while a secondary transaction will provide a liquidity opportunity to existing shareholders. General Atlantic and other key shareholders are expected to take part in the liquidity opportunity. The total investment from General Atlantic is expected to exceed the headline $50 million figure.
A potential initial public offering (IPO) was previously floated by Shufelt as a future pathway. However, he told Brewbound that an IPO “is just one potential route” for the business.
“Whether we’re private or an IPO, I think the long-term vision playing out is what I’m most focused on,” he said. “And we’re just keeping all options open.
“With non-alcoholic beer at 1.5% of beer, and us thinking with a very firm conviction that it’s going into the double-digits nationally and that we have a chance to play abroad in significant ways as a brand, we’re just still so early on the lifecycle of what we’re doing here that I’m not spending a huge amount of time thinking about that versus just building the business.”
In San Diego, the newly purchased 107,000 sq. ft. production brewery will be Athletic’s third when it comes online in late 2025. Athletic also operates a 150,000-barrel brewery in San Diego that was once a Ballast Point plant and a 450,000-barrel brewery in Milford, Connecticut.
The second San Diego facility will be equipped with 750,000 barrels of capacity, following upgrades that Shufelt expects to cost as much, if not more, than the initial asset purchase price. Once completed, Athletic will have a total of 1.35 million barrels of annual capacity across its facilities. He said the strategy in adding another facility is to stay in front of its production needs while also controlling the quality of its products.
Shufelt estimated that the company has invested around $100 million into its manufacturing base, to date, including a recent investment that added 300,000 barrels of capacity to its Connecticut brewery.
Additional investment in infrastructure appears to be on the table for the future, as Shufelt said the company expects to “be building in other regions in the future.”
“I have a firm belief non-alcoholic beer is easily going [to be] 10% to 20% [share] of [the] overall beer [category], and we plan to continue to be a leader in that,” he said. “So there’ll be a lot of manufacturing needs.”
Citing year-to-date NIQ data through June 15, Athletic said it holds more than 19% market share within the NA beer segment and the company is driving 32% of total NA beer segment growth.
“We’ve added more dollar growth every year of our company’s life so far, and we expect that trend to continue in 2024,” Shufelt said.
In 2023, Athletic sold more than 258,000 barrels of NA beer, a +51% increase year-over-year. Athletic ranked as the 10th largest Brewers Association-defined craft brewery by volume and the 20th largest overall U.S. brewing company.
The biggest opportunities ahead for Athletic will come by building “distribution and awareness,” Shufelt said.
“We don’t feel ourselves being tempted to stretch for innovation to replace things that are working,” he continued. “Our lead packages are up to 35% to 40% [distributed], for our Run Wild IPA, but it drops off very quickly after that. So we’re excited to build distribution penetration there even though Athletic is the No. 1 brand in the category. There are a number of brands that have over twice as much distribution as we have.”
Following the November 2022 $50 million investment from KDP, Shufelt said Athletic was about 12 months away from reaching profitability. Asked about the progress the company has made toward that goal, Shufelt declined to say whether the business had achieved profitability. Instead, he described the business as “sustainable” with the company’s investments “playing out better than we would have expected.”
Year-to-date through June 16, Athletic was the 24th largest beer category vendor in multi-outlet grocery, mass retail and convenience stores tracked by market research firm Circana. Its dollar sales increased +77.7%, to $39.9 million. Volume, measured in case sales, increased +82.7%.