Anheuser-Busch InBev is finally making an acquisition in San Diego, but it’s not a craft brewery.
The world’s largest beer company today announced the purchase of fast-growing Cutwater Spirits, a craft distilling venture that was originally born inside of Ballast Point Brewing & Spirits.
Specific financial terms of the deal – A-B InBev’s first in the spirits space — were not disclosed. The transaction, which is for 100 percent of the Cutwater business, is expected to close this spring, a spokesperson told Brewbound.
Founded by former Ballast Point Brewing executives Yuseff Cherney (then-COO), Earl Kight (then-CCO) and Jim Buechler (then-CEO), along with investment from Ballast point founder Jack White, Cutwater operates a sprawling 50,000 sq. ft. distillery, tasting room and kitchen in San Diego’s Miramar neighborhood, which is home to numerous craft breweries, including Ballast Point.
The company manufactures 14 different ready-to-drink canned cocktails, which carry a suggested retail price of as much as $16.99 per 4-pack, and distributes to 34 states. It also makes 16 types of spirits, according to a press release.
Speaking to Brewbound, Brendan Whitworth, A-B’s vice president of sales in North America, said the acquisition of a spirits company would help the beer giant better compete in non-beer categories.
“We are first and foremost a beer company,” he said. “That being said, we want to be sure we are present where all consumers are. That includes adjacencies within beer, and different segments that are emerging.”
Whitworth, who expressed excitement about the future growth possibilities of the Cutwater’s canned cocktails, said he was drawn to the acquisition opportunity because of the company’s “innovative and disruptive approach.”
According to off-premise retail data from Nielsen, dollar sales of Cutwater’s spirits products grew 203 percent during the 52-week period ending January 26.
Meanwhile, dollar sales of the company’s RTD cocktails grew a whopping 356 percent and far outpaced the single-serve spirit-based cocktails segment (+66.2 percent) during the same period, Nielsen added.
Kight, who serves as Cutwater’s chief sales and marketing officer, attributed the company’s rapid growth in part to a retail-driven expansion strategy.
“We went where the chains were asking for us,” he told Brewbound. “If consumers are looking to buy it, I am going to be there.”
For his part, Cherney said Cutwater’s fast success was a “perfect storm,” pointing to hiring the right people to push an in-demand product at the right time.
“I think it is a magical team that puts stuff like that together,” he said.
After manufacturing and selling a variety of products under the Ballast Point Spirits label, Cutwater was formally established in mid-2016, about one year after Ballast Point sold to Constellation Brands and all four of the smaller spirits company’s founders departed the New York-headquartered alcohol company.
In 2017, Cutwater opened its production facility, which includes a continuous column still, barrel-aging capabilities, a high-speed canning line capable of filling 350 cans per minute and a bottling line that can fill 70 bottles per minute.
“Yuseff and the operations folks can drown me in booze if they want to,” Kight said jokingly.
Cutwater will be part of A-B’s Beyond Beer portfolio, which was created last July and includes the company’s Ritas, Bon & Viv spiked seltzer, Babe Rosé and HiBall brands.
There are no immediate plans to alter Cutwater’s current distribution footprint, Whitworth said, noting that the company would look to use A-B wholesalers for future market entries.
“Right now, the near-term objective is to keep the current route to market and minimize disruption,” he said. “As we expand, we obviously believe in the power of the A-B network, and state-by-state that is the preference.”
Although this is the first spirits acquisition for A-B, the company isn’t totally unfamiliar with the space. Two of its U.S. craft breweries – 10 Barrel Brewing in Oregon and Devils Backbone in Virginia – also have distilling capabilities.
A press release with additional details is below.
Anheuser-Busch Welcomes Cutwater Spirits
Partnership Will Help Cutwater Spirits Grow Even Faster
Anheuser-Busch is delighted to share that Cutwater Spirits, an award-winning spirits and canned cocktail company, is joining their growing Beyond Beer portfolio.
Founded in 2016 by former Ballast Point executives, Cutwater Spirits has quickly become a leader in the premium ready-to-enjoy cocktail market with its high-quality ingredients, transparent packaging, and innovative combinations. In total, Cutwater Spirits has seven premium mixers, 14 canned cocktails and 16 types of spirits encompassing variations of whiskey, vodka, gin and rum. They currently distribute to 34 states and have experienced double and triple-digit growth since inception.
“We’re thrilled to have found a partner that understands our vision for Cutwater Spirits and will give us with the tools and resources to grow and thrive. We’re excited to join A-B and work with the team there to bring our spirits and canned cocktails to the world,” said Yuseff Cherney, Cutwater Spirits Founder.
Cutwater Spirits is based in San Diego, CA and operates out a 50,000 square foot production facility. The company, which will continue to be led by Yuseff Cherney, Earl Kight, and other Senior-level Managers will leverage Anheuser-Busch’s expertise in logistics & distribution, brand-building and packaging to scale the brand even faster.
“We’re excited to welcome the Cutwater Spirits team to the Anheuser-Busch family. We have tremendous respect for the brand that Cutwater Spirits has created and cultivated in just a few years and look forward to working with them to expand their premium canned cocktails to consumers across the U.S.,” said Marina Hahn, New Business Co-Founder, Anheuser-Busch. Cutwater Spirits will add premium ready-to-enjoy cocktails to Anheuser-Busch’s “Beyond Beer” portfolio, which already includes the Ritas, Spiked Seltzer, Babe Rose and HiBall. The partnership with Cutwater Spirits is subject to regulatory approval. Terms of the agreement were not disclosed.
About Cutwater Spirits
Built on the spirit of innovation, Cutwater Spirits is an award-winning maker of distilled spirits, mixers, and ready-to-enjoy canned cocktails based in San Diego, California. Originally founded in 2007 as Ballast Point Spirits, and rebranded in 2016 as Cutwater Spirits, we have amassed over 450 awards across our portfolio of products and are currently distributed in 34 states. We have become an industry leader in the RTD canned cocktail market with 14 different spirit based canned products, including our American Distillers Institute Best-in-Class winning Vodka Mule, San Francisco World Spirits Competition Gold Medal winning Spicy Bloody Mary, and our line of Vodka Sodas featuring 99 calories and zero carbohydrates. Production takes place at our 50,000 square foot facility in the Miramar neighborhood of San Diego, which includes a 250-seat world-class tasting room offering lunch, dinner, cocktails, and tours, where guests can learn about our products and experience our R&D process. For more information, visit www.cutwaterspirits.com or follow Cutwater on Instagram, Facebook, and Twitter.
About Anheuser-Busch
For more than 165 years, Anheuser-Busch has been woven into the cultural fabric of the United States, carrying on a legacy of brewing great-tasting, high-quality beers that have satisfied beer drinkers for generations. Today, we own and operate 23 breweries, 29 distributorships and 23 agricultural and packaging facilities, and have more than 18,000 colleagues across the United States. We are home to several of America’s most recognizable beer brands, including Budweiser, Bud Light, Michelob ULTRA and Stella Artois, as well as a number of regional brands that provide beer drinkers with a choice of the best-tasting craft beers in the industry. From responsible drinking programs and emergency drinking water donations to industry-leading sustainability efforts, we are guided by our unwavering commitment to supporting the communities we call home.
For more information, visit www.anheuser-busch.com or follow Anheuser-Busch on LinkedIn, Twitter, Facebook and Instagram.