Expanding St. Paul company's machines remove alcohol from beer, then make hard seltzer

Although its customers were in a slump last year, ABV Technology, which makes equipment to produce nonalcoholic beer and hard seltzer, decided to bet on its future growth.

The company moved into about 10,000 square feet of office and manufacturing space in St. Paul, nearly four times bigger than its previous location.

Its machines take alcohol out of beer, to make nonalcoholic versions. The extracted alcohol is then used to make hard seltzer.

Last year, its main customers — craft brewers — were in a slump due to the pandemic. ABV's leadership decided to move ahead with the expansion plan anyway.

And with taprooms reopening and craft-brewery sales rising again, ABV is making moves to place more of their machines across North America, and possibly overseas, while dabbling in more than just serving beer makers.

ABV Technology has been making its machines since 2018, said Patrick Frimat, one of three co-founders of St. Paul-based ABV Technology and the company's vice president of business development.

Initially, ABV's founders were contemplating a mobile service model in which they would bring their machines to craft brewers, but they realized setting up the machines in that format would be too complex, Frimat said.

Instead, ABV decided to set up a service center in St. Paul, which has since drawn dozens of Minnesota craft brewers. They soon drew brewers from North Dakota and South Dakota, and they came up with a partnership model.

The service validated the idea for a shared revenue partnership model, in which a brewer would pay to have a machine installed and charge to let other brewers in the region use it.

ABV's first partnership was in Colorado, near Denver. The company also set up partnerships in California and Nevada.

The plan was to begin deploying more machines in 2020, but that plan got delayed by the coronavirus pandemic.

During the pandemic, however, ABV shipped a machine to a brewery in Canada.

"Because we were successful in doing that, we're considering overseas faster than we thought," he said. "We thought it would be a 2023 venture, but now more like 2022."

ABV also has in its pipeline partnerships in Texas and North Carolina.

Each ABV machine can produce 6,000 barrels of nonalcoholic beer and hard seltzer per year. With one barrel of beer, a machine can turn out one barrel of nonalcoholic beer and one barrel of hard seltzer, multiplying the output, Frimat said.

ABV invoices by the barrel.

For perspective, there were 8,884 craft brewers in the U.S. in 2020, which collectively brewed more than 22 million barrels of beer, according to the Brewers Association. The U.S. craft-beer market is pegged at $22.2 billion, accounting for just under 24% of the $94 billion U.S. beer market.

U.S. beer volume sales dropped 3%, and it was even more grim for craft brewers, whose sales declined more than 9%, according to the Brewers Association.

That dip in sales for craft brewers shaved about a year and a half off of ABV's growth curve, Frimat said.

To account for the drop in business, the company raised $1.3 million from private investors.

For additional revenue streams, ABV is also working with cideries to make nonalcoholic cider and is exploring nonalcoholic wine and whiskey, Frimat said.

The company is preparing for the Craft Brewers Conference in Colorado this September, a large trade show that Frimat anticipates will generate buzz for the company's machines.

ABV signed a seven-year lease for its new space on Energy Park Drive in St. Paul, Frimat said. There, the 14-person company was able to consolidate operations for research and development, its service center and machine assembly and manufacturing.