Keurig Dr Pepper invests $50M in Athletic Brewing

Dive Brief:

• Keurig Dr Pepper purchased a minority stake in Athletic Brewing through a $50 million investment in the nonalcoholic craft beer maker, the beverage giant said in a statement. The investment is part of a $75 million fundraising round by Athletic, according to Brewbound.
• Keurig Dr Pepper said it will now own an equity stake in Athletic Brewing that is comparable to other lead investors, and it will have a seat on the company’s board of directors. Further terms of the deal were not disclosed.
• The investment represents Keurig Dr Pepper’s latest move into the rapidly growing nonalcoholic beverage category following its acquisition of ready-to-drink cocktail brand Atypique in June.  

Dive Insight:

While Keurig Dr Pepper’s roots are built on its namesake brands, the company has not been shy about moving into fast-growing categories where it lacks meaningful representation.

In recent years, it has invested in A Shoc, an energy drink it distributes, and an entity affiliated with Keurig Dr Pepper purchased an equity stake in Vita Coco stock as part of its IPO. It also acquired Bai Brands for $1.7 billion in 2016 and the premium water brand Core Nutrition for $525 million in 2018. And just five months ago, Keurig Dr Pepper announced it would acquire Atypique. 

Now, Keurig Dr Pepper is betting big on the future of the fast-growing nonalcoholic category as more consumers look to curtail their alcohol consumption and caloric intake.

According to NielsenIQ data cited by the company, nonalcoholic beer in the U.S. grew almost 20% in retail dollars during the past year. The craft segment, where Athletic Brewing holds a 55% market share, far outpaced total category growth. Athletic Brewing has a lineup of more than 40 brews. 

“Athletic Brewing is a winning brand in a rapidly growing beverage segment. Our investment reflects our interest and ability to move into exciting white spaces, including in the blurring of the alcoholic and non-alcoholic categories,” said Bob Gamgort, Keurig Dr Pepper’s executive chairman, in a statement.

Keurig Dr Pepper’s strategy of focusing on nonalcoholic offerings stands in sharp contrast to Coca-Cola and PepsiCo, who have entered ready-to-drink booze through a series of partnerships with companies like Boston Beer and Molson Coors.

With alcohol distribution being far more challenging compared to drinks like water, soda and tea, Keurig Dr Pepper may want to avoid these obstacles altogether. It also could want to differentiate itself from Coke and Pepsi by entering a different fast-growing, trendy category. Few companies have come to define nonalcoholic beer more than Athletic.

The company was co-founded in 2017 by Bill Shufelt who struggled at first to convince people in the industry to take a chance on his idea. Shufelt told Food Dive in 2020 that at a conference three years earlier with 10,000 brewers he failed to generate even a single meaningful conversation with people skeptical about the segment’s prospects.

Just a few years later, he’s undoubtedly feeling more upbeat. Athletic has raised around $173.5 million across five funding rounds, Brewbound noted. It raised $17.5 million in funding in 2020 and another $50 million a year later. It now has the backing of Keurig Dr Pepper that has injected money and invaluable insight through its board presence to help further Athletic’s rapid ascent.