Partake Brewing taps $4M in funding to expand fast-growing nonalcoholic beer

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Since Ted Fleming started Partake Brewing in 2017, the founder and his wife have invested 300 Million Canadian dollars ($225 million U.S.) in the fast-growing nonalcoholic craft beer, with much of the money coming from a mortgage on their house.

But the company this week announced it went outside the family for the first time to raise $4 million in an institutional funding round led by San Francisco-based CircleUp Growth Partners. The cash, which Partake will use to hire more employees, grow its distribution and retail network and increase consumer awareness of the brand, has been a popular move not only for the beer upstart but within the Fleming household. 

My wife and I “certainly had some conversations over the years that if this doesn’t turn the corner you’re going to have to get a real job,” said Fleming, who has three daughters ages 10, 7 and 3. “It was a big moment for us to have the interest and conversations to begin with, and ultimately get the deal done and sort of move on to this next stage of the business and the next stage of our life outside of a startup.”

Partake Brewing has been rapidly growing, posting a 250% increase in sales compared to a year ago. Similar growth is expected in 2021, Fleming said. The company has added more than 1,000 stores since 2019 and its five beer offerings — IPA, pale, blonde, red and stout — are now available in 3,000 outlets including Total Wine & More and Whole Foods locations in the northwestern U.S. Each can, which uses traditional ingredients of barley, water, hops and yeast, has only 10 calories.

What used to be a movement relegated to Dry January, when people abstain or limit alcohol consumption, has become a yearlong lifestyle for many. U.S. bottled low- and no-alcohol beverages are projected to jump about 32% between 2018 and 2022 — three times their growth in the previous five years — according to IWSR cited in the Wall Street Journal.

Large beer companies have taken notice. Anheuser-Busch in July released its first zero-proof beer under the Budweiser brand called Budweiser Zero. Heineken unveiled its 0.0% MAXX in 2017, and Coors offers its own nonalcoholic brand. Guinness owner Diageo sells Open Gate Pure Brew, and Carlsberg has been making no-alcohol beers since 2015. 

Fleming predicted 2021 would see an even bigger emergence of nonalcoholic beers across the United States with the brews gaining wider acceptance among more large retailers and in natural channels. Retailers are often slow to recognize some trends, and in many cases want to see if a concept has long-term staying power before they commit to giving it more space on their shelves, he said. 

“2021, there is going to be an evolution of the nonalcoholic beer category,” Fleming predicted. “We’re excited for where the conversations are going next year, so I think that’s when you’ll really see a large shift in the category.”

Fleming gave up alcohol nearly a decade ago after being diagnosed with Crohn’s disease, but he didn’t want to give up drinking craft beer or the social experience that came with it. After several years in a corporate job, he started an online store in 2013 selling nonalcoholic beers from around the world. The business allowed him to try other nonalcoholic beers from Europe that were way ahead of the United States when it came to flavor.

“The first step for me was just as a consumer saying, ‘Okay, there are not really good options out here. There is a lack of variety, the taste,'” he said.

While Partake has posted impressive growth on its own, Fleming said he likes the thought of going to a small town or an independent restaurant and seeing a great-tasting nonalcoholic beer on tap. To do that might require the help of the very same large beer companies he’s trying to unseat. Fleming said he hasn’t entered into serious discussions with large beer companies about investing or purchasing his business, but he expects those talks to happen in about a year. 

“I think in order for us to get there, a partnership with a larger company with North American and even global distribution is probably the path we would need to go down in order to accomplish that. We’re open to [an acquisition] as a potential option down the road,” Fleming said. 

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