Athletic Brewing, a Connecticut-based brewery, began in 2017 with the goal of producing tastier and more enjoyable non-alcoholic beers. Since then, Athletic Brewing has garnered investments from a handful of professional athletes and entrepreneurs, including NFL stars J.J. Watt and Justin Tuck. Currently, Athletic Brewing has partnered with country music star Walker Hayes to launch his own line of non-alcoholic beverages, "Fancy Like."

Athletic Brewing CEO Bill Shufelt joins Yahoo Finance in-studio to discuss the projected growth for the total addressable market (TAM) for non-alcoholic beer brands.

"In theory, it could be huge. The beer market at retail in the US overall is about $115 billion estimated. Non-alcoholic beer was 0.3% when we started, it's up to about 1.4% now nationally," Shufelt explains. "But certain channels are five to ten, even as much as some national grocery chains are more than 20% non-alcoholic beer of all beer these days. We think as a company, at least 10 to 20% of the future beer market will be non-alcoholic beer."

Shufelt hopes to expand the available products for people who don't drink — calling modern conceptions of being "sober" as outdated — while also building out Athletic Brewing's presence in the category.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance.

This post was written by Luke Carberry Mogan.

Video Transcript

[AUDIO LOGO]

- Meet the King of non-alcoholic beers, Athletic Brewing. Company's come a long way since it started brewing less than 10 years ago, raising more than $170 million from several investors, including Keurig Dr. Pepper. now, the brand is partnering with a country music star for its latest brew. Fancy Like. And here to discuss the latest collaboration is CEO, Bill Shufelt. Bill, it's good to see you.

Thank you so much for having me.

- Let's start there with that collaboration. Country music star is Walker Hayes. How did that come about, Bill?

BILL SHUFELT: Really authentically, honestly. Musicians is a strong and growing enthusiastic group in our-- musicians live a grueling life on the road, performing, entertaining all the time. But also, there's a lot of partying and travel and everything.

And Walker's been sober for about eight years, I think. And he was naturally drinking Athletic Brewing. And we got to meet him and there was just a lot to like on both sides. We had a lot of fun when he came to the brewery.

And he started telling us what his dream beer would look like. And before I knew it, he was collaborating with our co-founder, John. And so we're just really having fun with it.

- And that brings up an interesting question about who your target demo is, right. Who are the people who are drinking Athletic Brewing?

BILL SHUFELT: Yeah. The long and short, which is a big catchall, is like everyone's an athlete in some way. And this market was so underserved previously. 60% of adults have 0.1 drinks or less per week. So there-- but the beverage alcohol world speaks to like a very small set of occasions.

We want to open that up to any day of the week, any hour of the day, have totally flexible beverages, and then you can get right back on with your life. You can get a great night's sleep, you can wake up, feel great.

So we're not out to speak against alcohol, we're just out to bring a lot more enjoyment into the world. Bring a lot more people into the beer world, and a lot more beer times.

- How big, Bill, is your TAM? Your Total Addressable market. How big is it? How fast is it growing?

BILL SHUFELT: In theory, it could be huge. The beer market at retail in the US, overall, is about $115 billion estimated. Non-alcoholic beer was 0.3% of that when we started, it's up to about 1.4% now, nationally. But certain channels are 5 to 10, even as much as some national grocery chains are more than 20% non-alcoholic beer of all beer these days.

So we think, as a company, that at least 10% to 20% of the future beer market will be non-alcoholic beer. Of course, I'm more delusional than that but I won't say that on live TV.

- Oh, you can say it on live TV. I mean, I am curious what's driving it because anecdotally, we've been hearing more about young people either not really drinking in the first place or people who have been drinking for years cutting back on drinking.

I mean, which of those do you think is-- do you think both of those things are happening? Do you see that happening? And which of those is going to be more your audience?

BILL SHUFELT: So I think there needs to almost be a rethink of the terms too. The word sober is so outdated. People drink alcohol at certain occasions and don't at other times, and some people don't drink it at all, some people only drink it. There isn't another drink category or food category, really, where people have like a word for people-- like if people don't drink coffee, there's not a word for those people.

So we're really just giving people a lot more occasions. Most of our consumers do drink at other times in the week or in the month or in the year. But this is something they can drink any day, any time. So we think-- not only within that $115 billion beer market, but also what does that plus a big occasion expansion and cohort expansion look like? And that could be pretty unlimited.

- And Bill, I mean, listen there's other companies also making non-alcoholic beers. What makes you all different, Bill? I mean, is it the price, the product, the marketing, all three?

BILL SHUFELT: Yeah, I think it's-- we're a specialist in the category. We own all our production. We're dedicated to this in making the highest quality beer in the category. So every non-alcoholic beer we make it's-- non-alcoholic beers all we do and we test our quality so strenuously. Every beer goes through 55 tests before it goes out the door.

And so there's-- and also, we do think it's great. We're thinking about this as a very positive some mindset. That there's well-healed competitors in the category. We honestly don't think of them as competitors in the size of the market we're talking about in the future in this wave of disruption. There's room for a lot of support and growing it.

But Athletic is a little above 20% of the non-alcoholic beer category in the country year-to-date. We became number 1 over some very big international brands at the end of last year.

- How do you make non-alcoholic beer? This is something we were talking about in our news-- first of all, we were talking a lot about the whole non-drinking trend or non alcoholic beverage trend. But how do you make it?

BILL SHUFELT: So that is part of the reason we stand up-- our entirely wholly owned breweries at Athletic. We have big breweries in California and Connecticut, and it is because we've developed a proprietary method to make really high, quality, different, non-alcoholic beer.

Traditionally, there are two or three methods that involve highly processed / and we do use a range of different technology and ingredient selection and controlling natural variables to get there. But at the end of the day, it's a fully fermented, delicious, fully flavored beer that just happens to have no alcohol.

- And Bill, I'm just interested what's next for the company. You've been around a while now, you've raised a lot of money. Is it you raise more money? IPO? Sale?

- Different products.

BILL SHUFELT: Yeah. I mean, at the end of the day, all roads are open in front of us. We've raised a lot of money but relative to most small businesses and startups that have emerged over the last 10 years, we've built a really deep manufacturing base also. We have real hard assets and incredible group of 250 teammates.

So we've really-- I think of it as, really, invested that money in the future of athletic. And with non-alcoholic beer at 1.5% of beer nationally, in our heads, we think it's going 10% to 20%. If not, we'll pass that. So that's a road we want to be a part of and see play out, and we don't know if it plays out without Athletic Brewing driving that movement.

- Bill is most of your sales right now at home sales or are you doing channel sales into bars, for example, as well? And in that channel, do you have trouble because some of the big Brewers do have non-alcoholic options now. So what's your progress in getting into those channels?

BILL SHUFELT: Yeah. Beer is really a relatively democratic, meritocratic environment. If you are selling great products and investing behind them, beer distributors and retailers will support that. And so Athletic is making a big national effort to get into all channels. We're an omnichannel business.

Off-premise grocery stores and retailers are definitely the biggest channel out there. But on-premise is exciting for discovery. And people fall in love with beverages they find there.

Plus we are a true omnichannel business. We have a great e-commerce platform as well, and all those great channels in between now these days as well.

- All right, thanks, Bill. Interesting stuff. As I said, this is a big topic of conversation in the newsroom today when people learn that you're coming in.

BILL SHUFELT: Thank you so much. Cheers.

- Cheers.

BILL SHUFELT: Enjoy your beer.

- Thanks. Thank you.

BILL SHUFELT: Thanks for having me.