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49% of Americans are trying to drink less alcohol. So we know people are looking for alternatives.
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Non-alcoholic beer is one of those alternatives, of course. We're up against anything that doesn't have alcohol.
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There's so many categories that exist right now that play off of flavor, play off of functional
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benefits. Hello and welcome. You're listening to Marketing Matters on the Wharton Podcast Network.
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It's our weekly podcast where we analyze the latest in advertising, marketing, customer
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behavior, new product launches, branding, retailing, everything marketing. I'm Barbara Kahn, the Patty and J.H. Baker Professor of Marketing, and I'm joined by
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my co-host, Professor Americus Reid, the Whitney M. Young, Jr. Professor of Marketing and the
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brand identity theorist. And today, we have a very interesting guest. We are joined by Rosalie Kennedy, who's the Senior Director of Marketing, and I'm told
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the first marketing director really, at Athletic Brewing Company. She's played a key role in building one of the leading brands, if not the leader brand,
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in the non-alcoholic beer space. And she's helping define that category as it continues to grow.
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In this conversation, we're going to look at the consumer shifts driving the rise of
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the non-alcoholic beer market and how brands are reshaping the perception of what it takes
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to build and differentiate in a rapidly changing and evolving market. So welcome, Rosalie.
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Thank you. Thank you. I'm so excited to be here. So let's just start. One of the things we were talking about before we started the show is one of the interesting
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things about Athletic, and I think that you came a little bit after this started, but
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definitely built on it, was that I believe when they launched, they had a deal with Whole
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Foods. And that was part, I think you said you came to the company in 2020, and they launched
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in 2018 in Whole Foods. You want to talk a little bit about why Whole Foods is an interesting retailer for this
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product? Yeah. First off, we are their biggest supplier in beer, period. So not just non-alcoholic beer, but all beer.
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We're the biggest supplier at Whole Foods in the country. So we've had a longstanding relationship with Whole Foods.
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And you're right, it started before I joined, but what we really like about the partnership
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is we have a shared target demographic. The people that shop at Whole Foods, they care about wellness, they care about what
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they put in their bodies, their high household income. And those are all factors we think about for Athletic Brewing.
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With non-alcoholic beer, it's not necessarily an alternative to beer. It's just a good choice to make.
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And so that's why we think Whole Foods makes a lot of sense for us. Let's just talk about the category and like what came first, the chicken or the egg?
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I mean, did you come first? And because you had that alternative, people found you?
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Were you following a trend? And you have this history of being on brands and starting categories, so you kind of know
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how that works. How do you feel about this non-alcoholic trend? Why is it growing?
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Why are people into it all of a sudden? Yeah, I mean, non-alcoholic beer has been around for decades.
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It's not new by any means, but I think Athletic Brewing renewed interest among consumers
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in the category. So where it's been previously, you know, relatively dusty, maybe something you're embarrassed
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about, you would hide the label or, you know, it's not something people gravitated towards
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or thought was something that was a fit for them. Athletic Brewing really shifted the dynamic and made it something that you could be proud
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of that was a lifestyle status symbol, perhaps, and really tapped into the energy that craft
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beer has and revitalized the category. You know, it's interesting you should say that because it's true, non-alcoholic beer
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has been around for a long time. I remember, and my kids are way old now, but when I was pregnant, you had to drink non-alcoholic
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beer. And there was a brand called O'Doul's or something, and everybody knew it was like
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not real beer. And it definitely was not a status symbol to drink that beer. So it has been around for a long time.
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It just didn't have the cool perception, which I agree, Athletic Brew, which has all different
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kinds. There's not just one kind of Athletic Brew, there's these IPA or lager or it's a cool
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brand to drink. Yeah. And not only that, it actually tastes good. Yeah. I would argue that you could put our Run Wild IPA up against an alcoholic IPA and probably
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not know the difference. We get that feedback a lot, just anecdotally from consumers.
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We brew a variety of styles and because of our proprietary process, we're able to retain
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the mouthfeel and flavor and all the characteristics that you love about craft beer and just never
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brew above 0.5%. So we stay under the legal limit of alcohol. And to be clear, like 0.5% ABV is a level in which you could probably find in orange
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juice. That's incredible. It's certainly in Barber's orange juice in the morning.
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You won't feel the effects. But in our process, like I said, we have a proprietary process that follows the traditional
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craft brewing process. And so we get that craft beer flavor. There's just no alcohol.
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I love this. Thank you for sort of providing this initial context for us, Rosalie.
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I want to step back because I fancy myself a marketing historian and I want to give some
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context. I don't know. Do I have to add that to your introduction now? Yes. I'm just making up labels as I go.
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It's all about personal branding. But here's what's interesting. So I'm not going to name a competitor, but there's a famous competitor that is kind of
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known to be like, quote, the healthy beer. And it's a brand that I talk about in my class, Rosalie.
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And what's interesting when we think about this is the insight there was that people
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wanted to enjoy the social utility of enjoying their beer, but also see themselves as doing
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something good and healthy. And this particular beer sort of started positioning itself around, hey, listen, we've got like,
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you know, 95 calories and 26 grams of carbs and it's really good for you and all this
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kind of stuff. And the class and I look at this and we say, like, well, yeah, the the sort of nutritional
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elements of this beer are identical, actually, to the other competitors. But they're positioning themselves as, quote, the healthy beer.
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And we discuss it in that context. And we sort of then pivot to you guys to say, at some point, customers said, well, listen,
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alcohol is a toxin, actually, and it's vestigial, which means it has no biochemical purpose
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in the body whatsoever. So wouldn't it be nice to sort of gateway to like actually healthy beer?
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And I think that's what you guys sort of deliver on, which like the actual promise of this
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is actually good for you, but it also tastes really good. And there's an because, you know, athletic beer, it's like, wow, that blows your mind.
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So talk, talk about that evolution historically as the to Barbara's point, as the category
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is evolving and forming. Yeah, I mean, so I do think if you look at seltzers as a category, a lot of that was
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driven by the functional benefits, like 100 calories, right? And flavor, flavor, flavor.
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So and even insider with my previous experience, a lot of the conversation was around the
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sugar content of the drink. So I do think there's been health trends in consumers that make sense and like definitely
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sets the stage for non-alcoholic beer to be, you know, positively received. And I think that's true.
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And but at the end of the day, too, it's all about taste, beer lovers. And I think where athletic is perfectly positioned is we aren't on a soapbox trying to
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tell you how to live your life or that you should be healthier. That's not the approach we're taking.
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It's more if you want a beer, athletic will fit and whatever occasion that may be for
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you. Athletic is always going to be a good choice, whether it's because you have
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something you want to do the next day or you have athletic pursuits, you are a high
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performer and you just don't want to compromise on your performance. Is that is the brand name athletic supposed to be athletic?
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Like, I mean, well, so my my take on the brand name, because I wasn't there when it
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was named. But first and foremost, I think your guys's reaction to it is exactly what we were going
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for. It's kind of an oxymoron. It's very unexpected for beer. Athletic is, you know, the traditionally never been paired with beer drinkers.
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So it definitely stops people in their tracks and makes them think differently and
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wonder. But also beyond that, we are trying to move away from what was a dusty category that nobody related to.
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So athletic felt aspirational, something that a lot of people could look to and be.
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Yeah, I see myself in that. Yeah. And that transforms it into this is a beer for me.
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This is a brand for me. Let me ask you something, because we had a while ago someone else from on our show who
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did a non-alcoholic beverage that had alcoholic also. You just have non-alcoholic, correct?
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But some of these like Heineken, one of your old brands, will have alcohol, beer and
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non-alcoholic beer. And so I can't remember exactly who it was, but somebody was on the show who was in that
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situation, an alcoholic and non-alcoholic. And they were very specific in saying that they were going after people who were only
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drinking non-alcoholic, but they were also going after people who were drinking alcoholic sometimes and non-alcoholic other times.
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And they saw both of them as their target segment. How do you feel about that? Is your segment predominantly people who don't drink alcohol or are you looking at
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people who drink both and want it for one reason or another? Yeah, our target is people who drink beer.
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And if they're drinking alcoholic beer, we believe that they would enjoy athletic
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brewing. We're giving them more opportunities to enjoy that taste that they love.
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I also think by going after people who don't drink alcohol, it's very exclusionary.
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And I really strive to make sure the brand remains inclusive and is appropriate for
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sociability. You want to be drinking it so that you're able to fit into any occasion.
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And if you just want to participate, but just not have alcohol for whatever reason
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that is, athletic is that choice. I personally think that's a good choice because when I drink athletic beer, which I
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do, I like to feel like it's a beer. I don't like to feel like it's a non-alcoholic beer.
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I want to be part of the party. I may not be drinking alcohol now, but I'm still part of everybody drinking beer, you
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know, and I like that idea. I also totally agree with you just spontaneously. It does taste like beer.
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I think. And so if you're marketing it on the taste, that really appeals to me as well.
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I think that is a different kind of positioning, Americas, than what you were suggesting. You know, it's part of the party, part of the taste.
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And I don't want it to be that I'm like a healthy person. I want to be just fair.
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That's fair. So you're going to reject the athletic part. And just stay with the social.
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Here's something interesting for both of you. I'm going to do an equals two here.
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Really good question. We believe in like large numbers. Large samples. What are thoughts about?
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Because when you I'm just trying to conceptualize Barbara and Rosalie beer, like
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what is beer like? Do I need alcohol to be in it for it to be beer as as non-alcoholic beer sort of
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becomes more and more of a high growth category? Like are we are we trying to get rid of the alcohol at some point or like what is
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it? How does this play in the psychology of consumers and thinking about thinking
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about this? Add something to what you're saying, Rosalie, so you can direct both our
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questions more efficiently. So what he's asking you is on beer. And I'm thinking this is the way I think about it personally, because I am a big
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drinker of yours. And I've thought about this as well, is I think of it as a occasion
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drink, not just a drink that like I want beer, then I'm going to go for this or
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that based on taste and brand, et cetera. But like if I'm at a party or everybody's going up to the to the, you know, to the
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bartender to get a drink before things get moving, I want to have a drink that I can
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get to that's legitimate in that area. So it's not necessarily beer the way you're suggesting Americans.
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And you can comment on which one of the way we're positioning this. You think it makes sense.
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But I think of it as a social drink, like the alcohol category sets up a certain kind of
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expectation. And if I'm not drinking alcohol, I don't want to miss out on that
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occasion. And that's the way I think of it, which I think is a little bit different
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Americans than what you're saying. And I'm curious, Rosalie, what actually you think of beer when you're drinking it?
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I agree with both of you. So beer has been around for centuries. It's always been a connection point for people, for humans.
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People drank beer before water was purified. Like it's always been around. And it's very much a social drink like that.
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It's supposed to be fun. Beer is supposed to be fun. And it's something you drink when you're at a special occasion with friends, enjoying
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something like sports on TV or at a bar. And so I do think it's meant to be very social.
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And that's why when I was speaking about, are we going after beer drinkers or people
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who don't drink alcohol? I go after the beer drinker segment because it's about being included.
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You want to be able to participate whether or not you're drinking alcohol because it's
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awkward to cheers with a glass of water. I violated that on many occasions, I did not know that America is to your point, though.
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Like, I do think it's important to also acknowledge like customer segmentation.
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There is different motivations for different groups of people. And we we do have some data on our on our target audiences that segments them by their.
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What are their motivations? What are their emotional needs? And how does our brand uniquely address them?
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And so we do shift our communication strategy depending on who we're trying to talk to.
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As long as it all ladders up to our brand positioning and ultimately ultimately just
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makes a distinctive brand statement that separates us from the competition. It's the right message.
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You know, so what your differentiation against other non because almost all companies
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have now come out with non-alcoholic versions. So how do you position yourself compared to you're all a Heineken zero zero or?
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Yeah, well, for us, especially at the beginning of the category, you know, being up against
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a brand like Heineken, these are established brands. We're very much the underdog when we're thinking about Heineken, Budweiser, whatever.
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So for us, we carved out this message of authenticity. We brew our own beer at wholly owned facilities in Connecticut and San Diego.
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We have built these breweries from scratch and we control the quality process and we
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have our own brewing process that really retains that craft flavor. The big brands don't do that.
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They don't. There's a lot of different methods to produce non-alcoholic beer.
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Ours, no one does it quite like us. Interesting. That is interesting. You look at other brands that have come into the category since we started.
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It's a lot of me too. There's a lot of people that are taking elements of our playbook and trying to
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activate it. So I'm my goal in my role is to keep looking forward, keep thinking about
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how to push it forward, recruit new drinkers, bring more people in. I'm not worried about the infighting within the category.
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I'm just trying to continue to say, hey, how can I convince the next consumer that I
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thought it is for them and they don't need to feel like that's a great beer, but it's
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for my sober friend. Like, I don't I like it. It's not for me. I want to break that.
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Yeah, that is interesting. Let me ask you this. Sorry, Rosa. Let me ask you this as well, because I want to get Barbara is always telling me
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America's. You always have to ask about competition because you need to learn more
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about competition. Rosalie, do you see these brands of CBD drinks, let's say, as competition?
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Because one of the things one of the things that they argue is that alcohol is bad for
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you, but this other stuff kind of gives you this happiness effect. Is that part is that is that part of the competitive matrix?
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Yeah, I mean, 49 percent of Americans are trying to drink less alcohol in twenty
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twenty five. That status from. So we know people are looking for alternatives. Non-alcoholic beer is one of those alternatives.
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Of course, I don't like to think of us as an alternative. I think we're a choice.
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But if you look, yeah, we're up against anything that doesn't have alcohol.
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There's so many categories that exist right now that play off of flavor, play off of
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functional benefits, play off of other, you know. Effects, and so. I do think to an extent we are competing against them, yes, but it's the it's more
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about the mind share of the consumer or the occasion in which that consumer would
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take that that that different option. Gotcha. So let's talk a little bit then about some of your new ideas and your new
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ideas and things like that. So I read that in early twenty twenty six, you launched the athletic light lime and
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salt. That's a that's a cock. Rosalie, my mouth is watering that that produced a Pavlovian response in me.
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Barbara, just like name that flavor. Holy crap. That's amazing. That's an interesting idea because it's kind of like a cocktail inspired beer, you
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know. I mean, I don't know. Like when I think a lime and salt, I think a margarita is kind of before I think of
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or maybe other beers. I don't know. Well, it's funny you say that because we also launched cocktail inspired
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beers. So we have a Paloma and a Moscow Mule. So they're more of what you're describing.
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They're emulating the cocktail flavors. It's still a beer, so it's not just a RTD, but it does take inspiration from a
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cocktail. So it's a mix of flavors. But when you look at the American consumption, a lot of people enjoy lagers and
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light beers. So light lime and salt was introduced as just another line extension of
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that that category. Interesting. Interesting. How's it doing? A lot of positive reaction to it that you have.
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Yeah, it's good. Yeah, great. I'm really excited for this summer. I think that's going to be when we really see it take off because of just, you know,
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summer occasions, warm weather, I think will play really, really well. Interesting. Here's a here's a rapid fire question for you.
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Yeah. I mean, because it's related a bit to what Barbara was asking about in sort of
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this nuance of athletic beer. If you were if you and the team, Rosalie, were approached by, let's say, an athletic
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event like a marathon or something like that, and they came to you guys and said, we
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want to partner with you guys. Yeah. Would you say, no, we don't we don't want to be too athletic.
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We don't want to get like in the super psychological space of, hey, this is the
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athletic beer. We want to stay a bit more diffuse. What would be your thought process on help me walk me through the strategic partnership
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fit decision calculus of how you might choose to work with other brands that will help
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amplify what it is that you that you're doing? I mean, we started Bill Shufelt, the co-founder, was literally handing out beers at
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road races in the Northeast, sampling people on the product. So we really our roots are in running and races.
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So I feel like that's always going to be a core part of the brand identity. I think when people cross that finish line, they're looking to celebrate and they want
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to they're they want that drink. And why not have a non-alcoholic beer that's going to taste amazing, fit that occasion
00:22:02
without undoing all the progress that you've made? So that person who who participates in a road race is a is kind of like a bullseye for
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us. Like once you just get them to taste it, they're going to have the easiest time
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understanding and converting to a customer. So when I think about races like marathons and stuff, I am interested in those
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partnerships because it's an opportunity to sample and get people to try the beer who we
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think will who will definitely like it. But that's not our only sponsorship approach.
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We do a lot of work. We're a partner of Live Nation. So we have set ups at multiple festivals across the country.
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We're in Live Nation venues across the country because we also are mindful of the
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fact that not everyone is an athlete and we don't want to be exclusive to that.
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So we we do both. Interesting. So you started out with this Whole Foods channel, which I think is a very good channel
00:23:08
for a lot of different reasons. An interesting thing to grow that way. But it's you don't exclusively sell in Whole Foods anymore.
00:23:16
So do you what is your distribution strategy for it? How do you market this product?
00:23:21
Yeah, we're in all 50 states. Retailers across the country, chains, independent accounts, on premise bars and
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restaurants. We have our e-commerce. We're on American Airlines now, too. Like, I think.
00:23:35
Yes, we are. Yeah. You're on American Airlines. Yes. That's awesome. Now, let me ask you this, Rosalie.
00:23:41
Do I get the whole can? You do, you do. Excellent. That's awesome. We also have our e-commerce platform so you can purchase online, which is a pretty
00:23:52
unique experience for beer. And online we have limited variety. So it's like kind of like if you were to go to our tap room, the small batch beers
00:24:02
that we would have on tap at a tap room. That's what our e-commerce platform is like.
00:24:07
Oh, that's nice. So how many different types of beer do you have now? How big is that one?
00:24:12
Yeah, I honestly like over 20. Maybe more than that. I can't even keep count.
00:24:19
There's so many. We release pilot batches online at a clip of like two or three a month.
00:24:25
There's I think six or seven beers in stores that you could find, not counting the recent innovation.
00:24:33
So we also have athletic light lime and salt and the cocktail inspired brews. We have IPAs, we have hazy IPAs, stouts, nitro just released for St.
00:24:45
Patrick's Day. I mean, sours, ales, farm, like funky beers. All of them. You name it, you guys have it.
00:24:55
I know we've done it. And we have awards for them, too. That's amazing. Special flavors that are only there for a certain period of time, like those
00:25:03
kind of things, too. We have limited releases online, but also in store we do seasonal rotation.
00:25:09
So we'll bring, we'll rotate in styles that are appropriate for the season and
00:25:14
they'll be gone in like after a quarter. Very, very cool. I want to ask quickly, Rosalie, we, we often do this with our podcast guests,
00:25:22
which is to, because you guys are the gurus, we want to put you into the time capsule and you to give us a bit of your wisdom and from the crystal ball in
00:25:32
terms of three years, five years, seven years in your space, like what are the things that you are predicting you are seeing as perhaps, you know, things to be
00:25:42
paying attention to that you're focused on? You know, what is that? What is this world looking like and how is it going to like evolve into the future?
00:25:50
So I think non-alcoholic beer is only going to continue to grow because similar to what I was describing about the people at the finish line, they were just easy
00:26:00
wins in some, in some respects. I think the more that we invest in educating people and partnering with the
00:26:08
right partners that help shift perceptions of the category, we're just going to get
00:26:12
more and more people included into the category and, you know, being open to drinking any beer.
00:26:19
So I do think that there's a lot of growth ahead of us. I think one of the risks to the growth is more so risk of the beer category at
00:26:31
large. You had mentioned like CBD drinks. There's a lot of different ways people are choosing to, they're filtering their
00:26:39
choices for drinks. And I think the beer industry at large has a marketing issue and we need to make
00:26:47
sure as younger drinking age consumers come in that they're interested in beer and
00:26:54
the beer profile, the flavors of beer. That's something that I think if we don't pay attention to would hurt us in the
00:27:02
long run. That's an interesting thing because you kind of have to educate people the way the
00:27:06
wine industry did, you know, on the different flavors and looking for different and all
00:27:11
those types you mentioned, like to understand what it means. It's kind of an education, sophistication kind of argument.
00:27:19
And I think, sorry, go ahead. No, no, I agree with what you were saying. I think that you have to do that because if you don't have that, people won't
00:27:26
appreciate that. And they might start thinking of you as a non-alcoholic, you know, it might might as
00:27:32
well be soda pop. And you don't want that. I don't think. I think you want the idea that it's a special occasion.
00:27:38
It's it's a drink you drink in certain circumstances. And it isn't a soda, even though it's non it's fizzy and non-alcoholic.
00:27:46
Right. It's a it's a sophisticated drink. And there's there's a craftsmanship involved.
00:27:52
The ingredient quality matters. And there's there's multiple styles to choose from.
00:27:58
Like as I rattled off some of the ones that we make at Athletic, that that's
00:28:02
something that takes a degree of education and interest in it. If we don't figure out the right way to speak to Gen Z or Gen A as they start to
00:28:12
move into drinking ages, then, you know, we're risking that volume to other categories.
00:28:19
Yeah, well, you know, time flew by, but that's all we have time for today. So we'd like to thank Rosalie Kennedy, who's the senior director of marketing at
00:28:28
Athletic Brewing Company for being here. And if people want to know more about this category, where should they go,
00:28:34
Rosalie? I suggest checking out our website, athleticbrewing.com. We have a lot of information about our brand, our Chief of the Trails program,
00:28:44
which is a donation program that donates up to two million dollars per year to trail restoration.
00:28:51
And we also have a huge selection of beer that you can learn more about. Oh, that's cool.
00:28:56
Very cool. Thank you very much for joining us. And we'd like to thank our producers, Jacob Grodnick and Marissa Renna.
00:29:03
Thank you all for listening today. We'll be back soon. Till then, this has been Marketing Matters on the Wharton Podcast Network.
00:29:10
I'm Barbara Kahn, here with historian and brand identity theorist, America Reed.