transcript

Speaker 1:
[00:02] From Audible Originals, I'm David Brown, and this is Business Wars. Back in the day, non-alcoholic beers had, let's call it a stigma. Sour and skunky or bland at best, it was hard to see why anyone would voluntarily opt for a can of NA suds unless they were strictly sober. And even then, why settle for the decaf of beers over any number of other non-alcoholic beverages? I'm thinking a Shirley Temple perhaps, or a soda water with lime for a healthier option. But all that changed when founders Bill Schufelt and John Walker brought athletic brewing to market in 2017. All of a sudden, the narrative surrounding NA beers turned on its head, and you no longer had to choose between enjoying an authentic craft brew and a sober or at least less alcohol-infused lifestyle. These days, more and more non-alcohol beers, wines, and botanicals seem to be hitting the shelves every week. The timing couldn't be better, with consumer reports showing that average alcohol consumption is trending downward, especially with millennials and Gen Z'ers. But is the NA trend here to stay? And how is the beer and booze industry adapting? Here to help us tap in to those questions, is Kate Bernat, a food and beverage reporter and industry analyst with Feel Goods Insights. Kate's covered the beer and spirits industry for Bon Appetit, The Washington Post and Vine Pair among others, and for the Sightlines podcast from Good Beer Hunting. She's also a certified beer competition judge. We'll talk about what goes into making a great non-alcohol brew, how athletic revolutionized the beer industry, and how bars and restaurants are keeping up with the NA craze. Or is it more than just a craze? So go on, pour yourself your favorite NA beer, wine, or mocktail. All that is coming up next. Kate Bernat, welcome to Business Wars.

Speaker 2:
[02:32] Hi David, thanks for having me.

Speaker 1:
[02:33] You know, I know you've covered the food and beverage industry, and more specifically, the beer and spirit space for the Washington Post. I guess you also have done reporting for Bon Appetit, Outside Magazine, Vine Pair. In fact, I'm wondering where you haven't reported from. How did you get started on This of All Beats?

Speaker 2:
[02:54] I was starting in the trenches of the newspaper business on the copyediting desk at the Chicago Tribune's commuter paper called Red Eye. And the dining editor there said, hey, you seem really interested in food and beverages. Would you like to take a crack at some reporting? And I said, yes, ma'am, I would. And so I credit that editor, Lisa, for giving me some of my first bylines writing about food and beverage in Chicago at a really dynamic time for beer in particular. Tons of craft breweries were opening there at the time. And I thought, hey, I think, I think there's something going on here.

Speaker 1:
[03:35] It's sort of a dream come true for a lot of reporters that you'd get to cover something that you feel pretty passionate about. And I gather you must be pretty passionate about beer because from what I hear, you're also a certified beer judge. Is that right?

Speaker 2:
[03:49] That is correct. I took my tasting exam and my written exam, and now I've been judging beer for almost a decade.

Speaker 1:
[03:57] They give an exam for this?

Speaker 2:
[04:01] They give a written and an in-person tasting exam for this. They sure do.

Speaker 1:
[04:06] Wow. Who does that kind of judging? I'm just curious, who judges the judges? How do you get approval?

Speaker 2:
[04:15] Who judges the judges? Very high-ranked judges, people with sensory training through either they are brewers, home brewers, etc. who have passed sensory training, understand the chemistry of how we perceive flavor and aroma and texture. And it's quite a fascinating realm.

Speaker 1:
[04:35] And did you have to learn all of this stuff yourself to become a judge?

Speaker 2:
[04:39] I studied. I was lucky to have a study group that I spent time with, and we all quizzed each other, and we studied diligently for a few months. And it's a really neat group of people who do beer judging, I have to say.

Speaker 1:
[04:53] I am very intimidated. Now, folks, we are in the presence of true expertise, it sounds like. When you're judging one of these competitions, what are you looking for? I don't even want to characterize it because I'd be getting in too deep. What are you looking for?

Speaker 2:
[05:09] At a basic level, you are trying to determine how well a given beer that is in front of you, which, of course, is judged blindly, you have no idea who made it, etc. You are trying to gauge how well that beer conforms to essentially the platonic ideal of that style.

Speaker 1:
[05:26] What is the platonic ideal? Give me an example.

Speaker 2:
[05:32] Say we're judging German Hefeweizen, there is a written set of guidelines, and each competition has slightly different guidelines, but it explains some characteristics that you are looking for in terms of appearance, aroma, flavor, mouthfeel, balance. So you're evaluating the sample in front of you against the ideal version of those things. So you want to make sure the color is correct, the carbonation level is correct.

Speaker 1:
[05:59] So it's not just the taste, it's all of this other stuff that goes into it.

Speaker 2:
[06:02] All of it together.

Speaker 1:
[06:04] So again, I'm trying to get a sense of this because this can be so subjective, and we all know when it comes to non-alcoholic brews, there are a lot of opinions out there.

Speaker 2:
[06:14] No, exactly. There are these types of guidelines for every style under the sun truly, including non-alcoholic beers get judged in competition as well.

Speaker 1:
[06:24] Well, let's talk about that because when it comes to taste testing, I gather you've sampled a lot of non-alcoholic beers in your travels. I even came across an article from the Women's Lifestyle blog, Cup of Joe, where you judged an NA beer competition for them. Is there a platonic NA beer standard yet, or are you still working on that one?

Speaker 2:
[06:45] I think there are very, very good examples of NA beers out there. Of course, it depends what type of style you like. Are you an IPA drinker? Do you like lagers? Do you like fruitier beers? You can find all of those in non-alcoholic versions. I definitely have some of my favorites, but I cannot overstate the degree to which the quality of these beers has improved over the last five years in particular.

Speaker 1:
[07:10] I'll vouch for that because I've been hitting up the non-alcoholic brews for a while and it was really, really dismal for many, many, many years. But let's name names. That's what people want to hear. What are some of your favorite NA brews? Just put them on the table.

Speaker 2:
[07:27] All right. I'm a huge fan of the Guinness 00. I think it does an excellent job of hewing to what people love about full strength Guinness. The texture is phenomenal. All of the rich flavor is there.

Speaker 1:
[07:42] It's got that creaminess, like you're drinking a loaf of bread kind of thing.

Speaker 2:
[07:48] Exactly. I think Guinness really captures all of the best parts of its standard beer in the non-alcoholic version. Very big fan of the non-alcoholic IPAs from Athletic and from Sierra Nevada also. I'm in a hoppy beer phase right now, so I'm drinking a lot of IPAs. Then I would also call out DeChute's non-alcoholic Black Butte Porter. Again, when you want one of those maltier, little darker version of an NA beer, the Black Butte Porter is also pretty stellar.

Speaker 1:
[08:26] I'm going to throw something out here and this will show just how de classe I am when it comes to NA beers. But I stumbled across an NA beer once when I was moving homes. I had to move from one place to another and it was just a very sweaty Texas day. I think this beer just hit right. It was Pabst Blue Ribbon NA. Now, I don't know anyone else who likes it, but I absolutely love it. And it tasted like a very, very, very light beer that I can remember from back in the days when I used to partake. And to be honest, I don't remember a beer being that refreshing. So I looked high and low for it. It was hard to find for the longest time. But then in recent years, it started to creep back into the stores. And all of a sudden, I noticed that the section for NA beers was taking over two or three different glass doors there at the local supermarket. What's happened?

Speaker 2:
[09:31] Yes. Well, I can definitely explain why we've seen that profusion in the NA selection. But I also want to validate your appreciation for the non-alch PBR, because the best beer is the one that's in your hand that you're enjoying. So good job. And yes, so to explain the proliferation in the non-alch selection in recent years, it's sort of twofold. It's both supply and demand. We've seen just a lot more non-alcoholic beer options hit the market. There are about 200 major brands today in the space. And that is just a 200. And I mean, not all of these are available nationally, but that's a massive uptick from what you would have seen 15 years ago, which was maybe some Coors, NA., maybe St. Paul-y girl.

Speaker 1:
[10:33] You'd always have Oduls.

Speaker 2:
[10:34] Oduls always. So there's just way more options for folks. And then also on the demand side, we have seen really huge sales growth for a lot of these brands, albeit from a very small base. But there is obviously some pent up consumer demand for better tasting and more flavor variety, non-alcoholic beer options that just wasn't being met for a very long time as your experience speaks to. Okay.

Speaker 1:
[11:05] Well, let's talk about how close they come to, I suppose, what some people would call the real deal. Although I'll beg to differ with that. But you know what I'm talking about? How closely do these beers that we're talking about here rival the best alcoholic beers out there? In other words, if you have a sip, is it possible you could have a sip of an NA beer and not be able to distinguish it from a beer with alcohol in it?

Speaker 2:
[11:33] That is the gold standard. That is what every non-alcoholic beer brand is chasing. Some of them, I think, get very, very close or almost there. It is very tricky to replicate the flavors, aromas and textures that the process of full fermentation creates in a beer. But as the science of this advances and as technology advances in this space, we're seeing breweries be able to get a lot closer. And in some cases, I would urge some folks to get the Heineken Zero or the Guinness Zero and try it alongside the real deal and see what you think.

Speaker 1:
[12:20] I think the Heineken Zero Zero is absolutely fantastic. But it's important that we're talking about the brewing process itself because I know that it must be really challenging to pull this off, to make a good tasting in a beer. And I gather that folks have been working on this for some time. But there's sort of an old fashioned way and some new ways that some of these brewers are going about it. Can you sort of encapsulate how it is that we get from wanting in a beer to actually getting it in a can? Well, what's happening on the brewer's side?

Speaker 2:
[12:56] Yeah, there are many ways to skin the cat when it comes to making non-alcoholic beer. And certainly the technology and the methodology has improved greatly over the last few decades. I think one of the more old school ways that has kind of fallen out of favor was something called arrested fermentation, which was essentially you set out making a regular beer. You pitch your yeast, which is going to eat some sugars and turn them into alcohol. But then brewers would halt the process of fermentation, stop the yeast from doing their work. And they would just kind of sputter and stop and not produce the alcohol. But what that also means is that you're not getting all of the beautiful byproducts of fermentation, like flavor and texture. You know, it's not just alcohol that the yeast produce, they also give you some lovely flavors and aroma. So that was what led to NA beer that just kind of tasted half done or not quite right. Today we have more advanced techniques like yeast that just naturally produces very little alcohol. We have vacuum distillation and reverse osmosis. We have many types of genetically modified yeast that can do pretty incredible stuff. So I think now there's just better technology, more advanced methodology and better knowledge sharing around this to produce NA beer that just tastes more like the real deal.

Speaker 1:
[14:19] Better brewing through science, I guess.

Speaker 2:
[14:21] 100 percent.

Speaker 1:
[14:23] Let's step back for just a moment. Again, this is a personal account. I can remember I was going to have some non-alcoholic beer at a party, and I knew that there would be groans and grumbles, but I was going to try this out. Things changed when I brought Athletic to the party. In fact, everything changed. And I was fascinated in the course of doing our series on Athletic, how different the approach was when they were coming up with Athletic. They didn't want to do it the old-fashioned way. They had a different sort of method in which it almost came across to me like it was a completely new way of thinking about brewing. Am I far off the mark?

Speaker 2:
[15:09] No, I think that's correct. And I think a lot of this is very guarded kind of trade secret stuff in the NA beer world. But the method and the technology really matter here. Obviously, good raw materials matter, but really it's the process by which you're achieving the less than 0.5% alcohol by volume that really makes the difference. And Athletic was revolutionary in both the technological process of brewing non-alcoholic beer, as well as the marketing of non-alcoholic beer, because they were one of the first really standalone beer companies to plant their flag only in non-alcoholic beer. I mean, up until that point, most non-alcoholic beer came from existing beer brands and existing multinational corporations. Athletic was the first real sizable craft non-alcoholic beer, and as you mentioned, the first to really come up with a pretty new proprietary, of course, process for doing that and to invest in their own manufacturing facilities specifically for the design and execution of non-alcoholic beer. Okay.

Speaker 1:
[16:24] Well, so does that mean given what Athletic is doing and how they're doing it differently from some of the other players out there? Are they now kind of the gold standard of non-alcoholic beers or not so much?

Speaker 2:
[16:39] I think that's fair to say. I think they're the gold standard in terms of consistency across the portfolio of different styles that they make, and also the way, as you mentioned, they've become sort of synonymous as a brand with non-alcoholic beer, right? Give me an athletic. I mean, that's what every brand in any consumer package good category would love to be is that call order, right? So if you go to a craft beer bar and they only have one brand of non-alcoholic beer, I bet you it's going to be athletic 99% of the time. So they've built a subcategory that didn't exist, which is craft non-alcoholic beer and they've maintained, despite the entry of a lot of upstart brands, they've really maintained their place as leaders in that subcategory that they built despite continued competition.

Speaker 1:
[17:35] Our guest is Kate Bernat. She's a reporter specializing in the beer and beverage industry. When we come back, we're going to look a little deeper at the business of non-alcoholic beer and how consumers view the NA brands today. Stay with us. Hey, welcome back to Business Wars. My guest is Kate Bernat, who's covered the beer industry for Bon Appetit, Sightlines, Vine Pair and a whole lot more. We've been talking about taste and how brewers are cracking the code on better tasting non-alcoholic beer, but there's also a marketing component to this. In our series on Athletic Brewing, the company and its co-founder Bill Schufelt helped change the narrative surrounding NA beer. I'm wondering, Kate, what was the breakthrough in your eyes in terms of how to sell or position NA beer for consumers and their lifestyles? It seemed like athletic beer was not just saying, hey, try this, you can drink it, you know, at places where you might not otherwise drink beer. They were kind of suggesting a healthier lifestyle, which is asking a lot of consumers, it seems to me.

Speaker 2:
[18:48] It's true, and it's a very fine line to walk because we know that the overwhelming majority of drinkers who purchase non-alcoholic beer also do drink alcohol. Just, you know, maybe they're going back and forth between one and the other in the course of a night, or maybe, you know, they drink alcohol on the weekends, but they want to drink non-alcoholic during the week, et cetera. So, you know, I think the challenge for some of these non-alcoholic brands is not to demonize or vilify alcohol, but to promote, like you said, health and moderation and choice and kind of empower the consumer to have the experience with alcohol that they want to have. And it turns out that that marketing really met Americans at the right time when a lot of Americans, you know, over the last decade, have been thinking differently about alcohol and about health in general. I mean, we're all wearing these wearable devices that tell us how terrible our sleep is, and we're not getting enough steps in, and we're just optimizing our bodies because we have a lot more data at our fingertips about how to make healthier decisions. And so, the fact that Athletic came around at the same time that we saw Michelob Ultra exploding in terms of sales, these are both brands that are built on sort of still having your cake and eating it too, but just maybe having it a little healthier for you. You still want to drink beer, you just want to have it be a little better for you or at least less bad.

Speaker 1:
[20:23] Right, well, just think of the name itself, right, Athletic. It sort of seems to suggest, I don't know, it suggests a different kind of beer, a different kind of consumer really.

Speaker 2:
[20:34] It's aspirational and it makes people, whether they are athletes or not, it makes them think that they possibly could be, or at least this is a choice that's in line with that. Early on, Athletic really did a lot to position itself with that audience. They were sponsoring road races and different kinds of actual athletic pursuits, and they still do that. They've broadened the kinds of marketing and sponsorships they do now, but they started off pretty squarely in that very active lifestyle lane.

Speaker 1:
[21:13] That is really, really interesting. Well, now, I want to go back to something that you mentioned, because I think this is a fascinating thing that I don't think I've fully understood. And that is that, you know, it's not like people who drink non-alcoholic beer today are exclusively NA. In fact, did I understand you correctly? Did you say that most people drinking non-alcoholic brews these days also drink alcoholic beer?

Speaker 2:
[21:41] It is not just most. It is the vast majority of households.

Speaker 1:
[21:44] The vast majority?

Speaker 2:
[21:45] Yes, of course, there are people who are, you know, dedicated non-alcoholic consumers, but almost all research from brands themselves and from, you know, polling and all of that shows that people who purchase non-alcoholic beer, wine and spirits also do purchase alcohol either on the same trip or on a separate shopping trip. But these households are consuming both alcohol and non-alcoholic products. And I think that speaks to the growth that we've seen in this category, as it used to be presumed that those dusty six-packs of St. Poly Girl NA or O'Douls at the bottom of the case were only for people who couldn't drink anymore.

Speaker 1:
[22:29] Yeah.

Speaker 2:
[22:29] And now we're seeing, and retailers and brands have wisen up to the fact that people who drink alcohol might also want these products just in the mix as a different option as they're trying to make healthier and more thoughtful decisions about when they drink and how they drink.

Speaker 1:
[22:49] I'm interested in how these different non-alcoholic brands position themselves in terms of targeting their product to specific segments of the marketplace, because I know that when Heineken 00 came out, it was very much like you don't have to sacrifice if you're looking for a Heineken. Whereas athletic, it was a different thing. It was more of a healthier option. That was the thing. I'm seeing a lot of craft brews out there that are marketing themselves as hop water but not as non-alcoholic beer, which I'm intrigued by, but I've had some of this hop water and frankly, some of it tastes like mud to me. I don't, and maybe that's part of how hard it is to translate that craft brew experience to a non-alcoholic format. Maybe that's what that is. I don't know. You got any insight on the way that these companies are pitching their brews and what you end up with?

Speaker 2:
[23:47] I do think that as this non-alcoholic beer space becomes more crowded, brand positioning is going to become critically important I think. A lot of brands are late to the game on that. Everyone's telling similar stories. It's a little better for you and you don't have to sacrifice flavor and it's like, okay, but you all say that. Exactly. Athletic had a smart idea with starting in this pretty niche active lifestyle realm. But you're right, there are different brands that are coming at this in different ways, whether you're targeting a more full-flavored experience like a Guinness or like Deschutes, Mirror Pond Pale Ale, or whether you're looking for something really light and easy, drinking like the PBR or the Heineken. But then Hopwater is an interesting, I don't know, cousin to non-alcoholic beer. So they are distinct in that Hopwater is really more like a seltzer with hops in it. It has no malt component. So they're not malting grains. There's not that beer-y malt flavor. It's really just pure hops layered on top of carbonated water. So if you like La Croix and you love IPAs, that product is for you. If you don't like either of those things, you're going to struggle.

Speaker 1:
[25:19] I'm afraid I struggled, yes. So well, now I know what I'm dealing with with this hop water thing, but it's interesting. It seems like there are different labels that are being put on some of these alternative beverages. I mean, that's what we're seeing is an expansion, not just of non-alcoholic brews, but sort of alternative beverages in this space. And I guess it's just taking up more shelf space too, and sort of competing for attention with the NA brews, right?

Speaker 2:
[25:48] 100%. I mean, we haven't even touched on the very small, but existing segment of non-alcoholic beer with THC in it.

Speaker 1:
[25:58] Oh, right, I've seen that.

Speaker 2:
[25:59] Which is legal in some states. So there are many, many ways that brands are coming to market with products that are beer adjacent, that either mimic flavors of beer, or are intoxicating in other ways, or are not intoxicating at all. And I think you've really hit on a core tension in the space is that there's a lot of consumer interest, but there's also a ton of consumer confusion, because these are new categories. And building a category is extremely difficult, especially when it's a category as, really as intimate and personal as something you're going to put inside your body, right? People really need to understand what it is, trust it, trust that it's going to make them feel okay, that it's going to taste good, that it's going to be safe, all those things. And so brands in either hot water, non-alcoholic beer, THC drinks, what have you, they're trying to build brands while they're trying to build a category. And that's a really tough hill to climb, and it requires a ton of consumer outreach and a ton of education. And, and really playing the long game, like athletic has, I mean, they were building their brand at the same time, and they were building the craft non-alcoholic beer category.

Speaker 1:
[27:16] Listen, let's pull out for just a moment and talk about the beer industry as a whole. We've been hearing for the last few years that young people in particular are drinking less and less. So I'm sort of under the impression that maybe the rise of non-alcoholic brews has been something of a lifeline for some of these beer makers sweating it out with Gen Z.

Speaker 2:
[27:37] Absolutely. A, it's a new revenue stream that probably was nothing to their bottom lines. Ten years ago, if they even had NA products, it was probably basically a rounding error on their balance sheets. Now they're pretty meaningful parts of their portfolios in some cases. And it's also one of the sub-segments of the beer industry that's reliably growing right now. Beer has lost a ton of volume over the past few decades really since that time in the 90s. So beer has been shedding sales and volume. And then suddenly you have non-alcoholic beer come along and post really strong consistent year over year growth. And that is something that these beer companies are just thrilled to see, not only from a revenue standpoint, but also it is in line with how beer makers like to be perceived by regulators and the public, which is as the drink of moderation and responsibility. And it helps them also make that message that, look, we offer these products that are non-intoxicating. So it helps them from the revenue side and from maybe a little bit of public relations too. Okay.

Speaker 1:
[28:51] Well, now we're going on the premise that we're seeing this explosion in non-alcoholic brews writ large. And I'm certainly seeing it at the local grocery store. I'm wondering if you think that perhaps we are writing a bubble now. I mean, has demand for NA beer been exaggerated or hyped in recent years? Are we going to see this go the other direction here soon? How do you see this playing out?

Speaker 2:
[29:18] I think we will in the next few years and to an extent, we're already seeing growth slow. The category of non-alcoholic beer is still growing for sure year over year. However, the rate of growth has slowed, but we would expect that because when you're growing from a very small base, it's easy to post triple digit growth. Now that it's becoming a more mature category, we're going to see that level off a bit. I think what we will see is the same as I would expect in other alcohol categories where you have this huge explosion of entrance, and then you winnow down to the lead horses. Retailers will do that on their shelves. Let's look at hard seltzer. We have this huge boom where hard seltzer was a brand new thing, and you had market leaders, but then every craft brewery also wanted to make a hard seltzer. Now we've paired that back to the ones with real staying power and real consumer demand behind them. I think we'll see perhaps a similar trajectory for non-alcoholic beer. That's true of any alcohol category, it's a sign of health and maturation for the category long-term, it's not a bad thing.

Speaker 1:
[30:33] We're going to take a quick break and come back for one more round with food and beverage industry analyst and certified beer judge Kate Bernat. We're going to talk about how bars and restaurants are adapting to this NA movement. Stick around for more Business Wars. Hey, welcome back to Business Wars. I'm here with beer industry reporter Kate Bernat. And Kate, we've been talking mainly about the retail business, but I'm curious how the NA beer trend and consumer habits around drinking are affecting the hospitality space. You know, I'm talking about the bars and restaurants, hotels, where you might find this stuff. From where you sit, what's been the impact on the bottom line in those places? How are they adapting?

Speaker 2:
[31:25] Well, from a consumer standpoint, I'm gonna say that it is wonderful to see NA options, whether that's great.

Speaker 1:
[31:33] Ain't it though?

Speaker 2:
[31:34] Cocktails that don't have alcohol in them or NA beers on a menu. It's wonderful that people have those options now. So need to get that out of the way. From the hospitality industry standpoint, I think lots of hospitality businesses, restaurants in particular, will say, alcohol margins pays the bills, right? It's not the entrees, it's not the roast chicken that keeps the restaurant's doors opened. It's alcohol margins. So the challenge is to see the same or similar margins from non-alcoholic products as you would from alcohol. So actually, I was looking at some data last week to show that an increasing percentage of restaurants say that non-alcoholic drink sales have been a primary boost to their revenues over the past year. And I think that speaks to the more premium options that are on menus today. I mean, maybe 10 years ago, if you went out to a restaurant and you didn't want to drink alcohol, what could you have? A diet Coke or an iced tea, right?

Speaker 1:
[32:40] Yeah, right.

Speaker 2:
[32:40] Or water, which they're going to charge you $2 for. Now, you can have a craft mocktail for $12 or maybe a non-alcoholic beer for $6 or $7. Those are much better margins than that iced tea.

Speaker 1:
[32:56] You know what I haven't found yet? I haven't yet had someone say, and we've got some non-alcoholic beer on tap. I haven't come across that yet.

Speaker 2:
[33:06] It does exist. There are logistical difficulties for some establishments with that. In addition to its intoxicating properties and in addition to the flavor it provides, alcohol is antibacterial.

Speaker 1:
[33:26] Wait, so you're missing that element with non-alcoholic beers. Well, food safety, I guess, could become a consideration.

Speaker 2:
[33:34] Exactly. Draft lines need to be squeaky clean, and they especially need to be squeaky clean if you are serving a non-alcoholic product. That does not have even that small amount of alcohol to zap some of the less desirable microbes that might be living in that draft line. So unless you feel extremely confident about the cleanliness of your draft lines, non-alcoholic beer might seem a little bit risky. That said, I've never heard of any adverse health effects from draft non-alcoholic beer. I think it's more a question of, do operators feel confident serving that?

Speaker 1:
[34:11] Yeah, totally get that. Now, I'm in Austin. Am I correct in saying you're in Missoula, Montana? Is that right?

Speaker 2:
[34:18] That, yes, beautiful Missoula, Montana.

Speaker 1:
[34:20] That's a beautiful country, but tell me about the NA scene there. Are bars offering athletic and some of these other options, or you're still waiting around?

Speaker 2:
[34:30] You know, it's been great to see. I'm going to give a shout out to my local, Flippers Bar and Grill, if you know, you know. Fantastic little establishment. And Flippers has actually a really pretty robust selection of non-alcoholic beers. When I'm there, I can get Athletic, I can get Deschutes, I can get Micolob Ultra Zero. That's at least three that I know of off the top of my head.

Speaker 1:
[34:57] Well, they know they've got a beer judge in the audience, surely.

Speaker 2:
[35:02] Well, they know Missoula is a beer drinking town. So maybe that's it. But no, it's been impressive to see even out here and us fly over states that the non-alcoholic thing even reached us. I do think where there's still some hurdles are in terms of consumer perception on pricing. I've heard that feedback at some of the bars here. People will ask me if I order an Athletic or something, they'll say, why does that cost five or $6 if there's no alcohol in it, right? And I think that's a barrier that those brands are continuing to have to overcome, is that consumer perception that non-alcoholic beer just shouldn't cost as much when it almost always is priced in line with full strength beer.

Speaker 1:
[35:51] Does it cost as much to make or more than regular beer, or do you have any sense of that?

Speaker 2:
[35:57] It's my understanding that the process of making non-alcoholic beer because of the technology involved and the smaller scale of many of these producers can be equal to or sometimes even more than existing full strength alcohol. I don't think that's always the case. Obviously, there are different economies of scale that would lower some of those costs. But yeah, I think there's a misperception among the public that NA beer should cost the same as soda or something. Unfortunately, the inputs are just not as inexpensive as high fructose corn syrup.

Speaker 1:
[36:39] You were talking about some mock tables and that kind of thing. We've been talking mainly about beer, but there are these zero proof spirits that I've seen on shelves with herbal botanicals, all kinds of really exotic concoctions. I know that in some places, certainly here in Austin, you can pay $12, $14 for a mocktail. How much are bars and restaurants leaning into that side of it, and is it really a savings for them or is there more profit in a mocktail?

Speaker 2:
[37:11] Depends on the kind of ingredients you're using to make it. I think in maybe mocktail 1.0 world a decade ago, many bars just kind of put a bunch of syrupy stuff and some club soda and a wedge of lemon and wanted to charge you $12. You think you can get away with this stuff. Yeah. That didn't last very long. And those were good margins because syrups and soda water are not expensive. I think the consumer has rapidly evolved and is now expecting a complex mocktail with some of the same texture, flavor balance and complexity as a full strength cocktail. And that does require more expensive ingredients. Maybe you are starting off with, as you mentioned, one of those non-alcoholic kind of spirits alternatives, which are not cheap by any means. Or even if you're building something from scratch, you're probably using really expensive teas or really interesting tinctures and different botanicals that are pretty expensive. Because to recreate the complexity that, again, that alcohol brings in terms of flavor and texture takes some sophisticated ingredients. So I think those $12 to $14 mocktails are, if you're getting a complex drink, that's probably justified.

Speaker 1:
[38:40] If you are going to unwind after a long day with a non-alcoholic beverage, what would be your go-to? This is the experts challenge here. Do you have a favorite that you would say, okay, it's been a long day? I'm going to kick back with something in a, what are you going to go for?

Speaker 2:
[39:02] Oh, man. Okay. So if I want a refreshing cocktail-ish experience, honestly, a soda water and a couple of drops of bitters. You can make that yourself.

Speaker 1:
[39:17] That's mine. Yeah, absolutely. Angostura bitters.

Speaker 2:
[39:21] Still undefeated. That said, like I said, I'm on this hoppy beer kick lately, so I've been reaching for a lot of Sierra Nevada Trail Pass IPA, or the Athletic Run Wild IPA, because I'm just in this IPA phase right now, and I understand that that's not everyone's bag, but especially if I'm drinking one, and I really want that big flavor delivery, then I'm going to go IPA.

Speaker 1:
[39:49] Well, I would be remiss if I didn't do a shout out to the Spetzl Brewery here in Texas for finally, finally coming out with a fun brew of their classic Shiner beer, which tastes fantastic. It's a light beer. I get it. I get it. But it's so good, and it's wonderful to have all these options finally. I love it.

Speaker 2:
[40:13] I mean, it's such a, you know, not to get too fuzzy and emotional here, but there is something really special about being able to deliver a beer experience to consumers who thought that they couldn't have a beer experience anymore, right? Whether they're not drinking at all or whether they just wouldn't drink on a Tuesday night because they have to go get the kid from soccer practice. It's really excellent that breweries can extend that hand to people who thought that they couldn't have a beer. Guess what? You can.

Speaker 1:
[40:48] Kate Bernat is a food and beverage reporter covering the beer and spirits industry, lead analyst for Feel Goods Insights, and you can check out her work in Bon Appetit, Washington Post, and Vine Pair, and on the Sightlines podcast from Good Beer Hunting. Kate, thanks so much for joining us on Business Wars. It's been a real pleasure.

Speaker 2:
[41:08] Thanks for having me, David.

Speaker 1:
[41:09] Next time on Business Wars, the dating app Bumble tossed out what differentiated it from the pack, a move that came at the same time users were already feeling burned out by dating apps. Now, it faces real pressure to prove it can survive. From Audible Originals, this is episode three of Athletic Brewing and the Non-Alcoholic Beer Revolution. For Business Wars, I'm your host David Brown. Our senior interview producer is Peter Arcuni. Our senior producers are Jenny Bloom and Emily Frost. Our producer is Tristan Donovan of Yellow Inn. Karen Lowe is our producer Emeritus. Engineered by Sergio Enriquez. Our managing producer is Desi Blaylock. Kyle Randall is our lead sound designer. Executive producer for Audible, Jenny Lauer Beckman. Head of Creative Development at Audible, Kate Navin. Head of Audible Originals North America, Marshall Lewy. Chief Content Officer, Rachel Giazza. Copyright 2026 by Audible Originals LLC. Sound Recording Copyright 2026 by Audible Originals LLC.