San Diego’s Coronado Brewing will expand its local presence with the purchase of a 15,000 sq. ft. building in Imperial Beach, the company announced last week.
The new space — Coronado’s fourth location and its second in Imperial Beach — will include a 10-barrel brewhouse, a small distillery and a restaurant with seating for more than 300, brewery co-founder Rick Chapman told Brewbound.
“A distillery has always been on my wish list, and now it is on my to do list,” he said, adding that the company is leaning toward calling the new brand “Coronado Spirits Company.”
Construction will take place over the next 18 months, Chapman said, but brewing and distilling won’t start until sometime in 2018. In the meantime, the company will open a temporary tasting room at the site this summer and sell beers brewed at its San Diego and Coronado locations.
The decision to double-down on the local market comes after a year in which sales of the Coronado brand grew by more than 21 percent in San Diego and by 19.1 percent throughout California, the company shared.
But a strong local presence hasn’t always translated to growth in faraway markets, Chapman admitted. Coronado sold about 40,000 barrels in 19 states in 2016 and grew by more than 50 percent within national grocery store chains, but the company still fell short of its original projections.
“We had planned to grow by 15 percent, and we grew about 10 percent, which we’re pretty happy with based on what the industry did last year,” Chapman said.
Indeed, category-wide growth slowed in 2016, according to data from market research firm IRI Worldwide, which reported last week 3.4 percent craft volume sales growth at grocery, convenience, liquor and other off-premise retail locations such as dollar and club stores. That’s compared to 12.9 percent volume growth in 2015, as reported by industry trade group the Brewers Association.
An industry-wide slowdown, coupled with Coronado’s own “growing pains,” forced the company to “tighten the belt” last year, Chapman said.
“We had invested thinking we were going to brew those extra 2,000 barrels, and that hurt a little bit because the cash flow just wasn’t there,” he said. “Financially, we had to trim ownership salaries, we couldn’t hire salespeople or add positions that we wanted to add.”
However, don’t expect the company to rely on expanded domestic distribution as a means of recapturing some of last year’s missed opportunities.
“It doesn’t really scare us, but we are definitely aware of it,” Chapman said of the craft slowdown. “We’ve had some pretty bad weather out here lately, which definitely affects beer drinking, and we are off our projections for the first quarter.”
Nevertheless, Coronado will expand its international presence; it plans to add sales in France, Germany and China and re-enter Sweden and Australia, Chapman said.
“International is about 10 percent of our business, and we want to continue to play in that market,” he said. “It is healthy pricing, profitable and we enjoy traveling. We will look to expand in other countries.”
