Firestone Walker has reached a deal to acquire the Cali-Squeeze brand from SLO Brewing Co.
Financial terms of the transaction, which is expected to close by July 1, pending customary closing conditions, were not disclosed.
“We have been close friends with Hamish [Marshall] and Rod [Cegelski] for 20-plus years, and we’ve remained impressed with their commitment to innovation and the way they bring their brands to life,” Firestone Walker co-founder David Walker said in the release. “Cali-Squeeze presents a unique beer style for us to explore through what we like to call ‘Fruits with Benefits.’ As a traditional hop-forward craft brewer, we have watched these styles evolve and we see Cali-Squeeze as the beer to help with that discovery.”
In an FAQ about the transaction, Firestone Walker explained that the Cali-Squeeze brand “aligns with our vision as a California beer company” and “from a branding standpoint it’s a natural fit.”
Firestone Walker added that it has been “historically reluctant to develop beers outside the traditional footprint.” Nevertheless, the company has toyed with fruited beers but ultimately “recognized that Cali-Squeeze already had everything we were looking for.”
Dollar sales of fruited craft beers have increased 8.2%, to $171.5 million at multi-outlet grocery, mass retail and convenience stores for the 52-week period ending March 21, according to market research firm IRI.
Firestone Walker’s off-premise sales have increased 27.7%, to $119.3 million for the 52-week period ending March 21, making it the beer category’s 20th largest vendor, according to IRI. As the calendar cycles the tough comp period of elevated off-premise spending due to the onset of the COVID-19 pandemic last spring, Firestone Walker’s trends have decelerated, but the company’s off-premise dollar sales have still increased 16.3% year-to-date through March 21, according to IRI.
San Luis Obispo-based SLO Brewing launched the Cali-Squeeze brand in 2017 as a line of fruited hefeweizens, with flavors such as Blood Orange, Mango, and Tropical P.O.G. Last year, SLO Brewing produced 8,000 barrels of Cali-Squeeze products.
“Our talented team of brewers and marketers know how to capture the spirit of the times, creating new and exciting types of beverages for the evolving marketplace,” Marshall said in the release. “This sale provides a significant opportunity for us to invest in what we do best – developing and building up new, groundbreaking brands, including Tio Rodrigo craft micheladas, Porch Pounder and Rod & Hammer’s SLO Stills whiskey.”
Until the deal closes, SLO Brewing will continue to produce Cali-Squeeze offerings to maintain supply in the western U.S., the companies said in a joint statement.
Firestone Walker plans to transfer production of the Cali-Squeeze portfolio to its Paso Robles brewery once complete. Cali-Squeeze will retain its own identity.
Firestone Walker’s initial plans are to focus only on Cali-Squeeze’s core beer offerings, rather than its hard seltzer, which “is under evaluation,” according to the FAQ. Firestone Walker has been reluctant to enter the $4.1 billion hard seltzer segment.
“We’re focusing on the Cali-Squeeze beers for now, and we’ll go from there,” the company wrote.
In the FAQ, Firestone Walker said it makes sense to align the Cali-Squeeze brand within its wholesaler network. The company believes the combination of its distribution power and brewing operations can propel the brand “to the next level.”
As for SLO Brewing, the company does not expect to shed any workers following the sale, as it projects enough growth of its remaining brands to maintain its staffing levels.
“At this point in time, we have enough volume and future growth in Tio Rodrigo, Rod & Hammer’s SLO Stills and other new innovations to be able to sustain our existing team,” the company wrote in the FAQ.
With Cali-Squeeze out of its portfolio, SLO plans to turn its attention to growing its other brands. Tio Rodrigo, a line of ready-to-drink micheladas, is expected to increase volume by 150%, to roughly 3,000 barrels, in 2021. Rod & Hammer’s SLO whiskey is projected to increase sales to 4,000 cases in 2021, up from 200 cases a year ago, according to the FAQ.
SLO does not intend to shop Tio Rodrigo or Rod & Hammer’s to potential buyers at this time.
“Our focus is on building up Tio Rodrigo and Rod & Hammer’s to the same level that we have successfully done with Cali-Squeeze,” the FAQ read. “We are some way yet from achieving that, but if down the road it becomes as big a success as Cali-Squeeze then we will cross that bridge when we come to it.”
Firestone Walker’s acquisition of Cali-Squeeze represents the second craft-on-craft deal by top 10 Brewers Association-defined beer companies in 2021. Earlier this year, Deschutes Brewery acquired fellow Bend, Oregon-based craft brewery Boneyard Beer.