As 2021 comes to a close, AleSmith Brewing Company is investing $1.75 million in brewery and equipment upgrades to continue production growth and new innovation launches in 2022.
This year, the San Diego-based brewery increased production to 34,000 barrels (up from 32,000 barrels in 2020, according to the Brewers Association), and increased sales to retailers +33%. The brewery also increased shipments (sales to wholesalers) +40% year-over-year (YOY) compared to 2020, and +29% compared to 2019.
In 2022, the brewery expects to increase production to 42,000 barrels, Alesmith president Brandon Richards told Brewbound. He credits much of that growth to Alesmith’s .394 San Diego-style pale ale, the brewery’s top selling brand.
The beer launched in 2014 in collaboration with National Baseball Hall of Fame inductee and former San Diego Padres player Tony Gwynn and has grown to make up 50% of the brewery’s sales. It now claims the most tap handles in San Diego county, according to Richards, outnumbering brands such as Budweiser.
“I don’t think it was ever set up with the intention of being in and out, but I don’t think it was set up with the intention of being our lead brand,” Richards said. “I think people are just really looking for beers that still have some hop characteristic to it, but are balanced.”
Part of the brewery’s latest equipment investment includes higher capacity tanks for the continued growth of its brands, as well as a new canning line, which will increase capacity +30% and ramp up production from 75 cans per minute to 300 cans per minute.
“We never needed to have a canning line that went 300 cans a minute,” Richards said. “I’m proud of how we handled the pandemic. We didn’t let people go and we quickly pivoted off-premise, but that instantly put a huge strain on our production from one shift to three shifts.”
Prior to the COVID-19 pandemic and on-premise shutdowns, AleSmith’s sales were 70% on-premise, 30% off-premise. Now the brewery has completely flipped, with nearly 70% of its sales coming from the off-premise and 30% from the on-premise, with the goal to be 60/40 when on-premise establishments stabilize.
“The canning line gives us more capacity and gets us down from three shifts to one shift,” Richards continued. “And we know that we’re going to have better quality beer and we know that we’re going to be able to get it out faster.”
The investment will also go towards installing pasteurization equipment, which will be used to launch the brewery’s first non-alcoholic (NA) beer, an IPA, in January.
The NA project has been in the works for over a year, and will launch in 12 oz. 6-packs.
“I’m very bullish on non-alcoholic,” Richards said. “There’s just such a huge opportunity for local and regional brands that are coming out with non-alcoholic right now.”
The NA beer will originally be available only direct-to-consumers, with the brewery producing about 80 barrels at first, before growing to the 240 barrels needed for retail. Richards said it will go into retail sometime in 2022, but an exact date hasn’t been determined yet.
“We’re gonna release this first style with the new pasteurizer and make sure that we can start nailing the quality that our brewery is asked to hit every single time, and then I think you’ll start to see some other fun things from us,” he added. “So we’re planning on hitting the beer drinker that is also drinking non-alcoholic, and that’s where we’re focused.”
Possible NA versions of the brewery’s popular alcoholic beers, such as its .394, are also being explored.
Additionally, AleSmith will add a new permanent alcoholic offering to its portfolio in January 2022. Party Trick, a 6.8% ABV West Coast IPA, will launch on draft as well as in 16 oz. 6-packs – a packaging format in which the brewery will offer several of its top brands in 2022, including .394 pale ale.
“We’re seeing this 16 oz. 6-pack format performing very well in California IRI,” Richards said. “So we’re really excited about bringing forth not only the beer, but also the format.”
The IPA is the brewery’s “big bet for 2022,” and Richards expects it to quickly become the second largest brand in AleSmith’s portfolio.
“We really need to figure out how to make a beer that can stand on its own right next to [.394] in the chain,” he said. “And that’s really what we’re looking at with Party Tricks. Honestly, that brand is being picked up pretty widely in Northern California by the chain.”
The brewery will also be investing in its Clásico Mexican-style lager in 2022. The new release will replace AleSmith’s Sublime, a Mexican lager launched in 2017 in partnership with the Californian reggae-punk band Sublime. The beer is now the third largest brand for the brewery.
AleSmith will be sunsetting the partnership in 2022, and rebranding the beer as Clásico, with a small change to the malt bill, although Richards said “the beer will be very similar.”
“The interesting part with this [Sublime] brand is that AleSmith carried some weight and sales for the Mexican-style lager and Sublime traded some weight with it as well,” he said. “We think that Sublime carried most of the weight in Los Angeles – it is a known brand, they sell a lot of shirts still, and they’re really well known in Southern California – so we’re trying to overcome that, and really just focusing on the AleSmith brand.
“I think most craft breweries are trying to figure out how to win the Hispanic-Mexican, millennial, second generation,English speaker [consumer],” he continued. “We’re just really trying to get that consumer to stop drinking their dad’s beer. If we can win there, that’s going to be great.”
Richards said the beer has a great opportunity to gain traction at Petco Park, San Diego’s MLB field and home of the San Diego Padres. He expects the start of the baseball season in April will help get the Clásico brand “out to the masses pretty quickly.”