AB-InBev acquires San Diego’s drinks company Cutwater Spirits

USA | What do you call a career that weathers two company sales in short succession? The answer is: lucrative. Cutwater Spirits, an upstart distillery from San Diego, has sold itself to AB-InBev for an undisclosed sum. The transaction, which is AB-InBev’s first in the distilling industry, was disclosed on 20 February 2019.  

The Cutwater brand began incubating as Ballast Point Spirits at the craft brewery Ballast Point in 2008, when the head brewer Yuseff Cherney started playing around with gins, rums, whiskeys, and vodkas for a hobby.

After Ballast Point abandoned its USD 170 million IPO, and instead sold itself to Constellation Brands for USD 1 billion in 2016, Mr Cherney was adamant that the drinks side of the business was not to go to Constellation.

By August of 2016, Ballast Point’s founder Jack White, President and CEO Jim Buechler, Chief Commercial Officer Earl Kight III, and Mr Cherney had all departed. Soon after, Messrs Kight and Cherney hatched the plan to build a swish 4,600 sqm distillery-cum-restaurant with some of the proceeds from the Ballast Point sale and call it Cutwater. Opened in 2017, it is located just blocks away from Ballast Point’s flagship brewery in Miramar, San Diego.

What must have attracted AB-InBev to Cutwater, a firm with an estimated USD 10 million in turnover, was not its line of craft spirits but its canned cocktails business. At present, Cutwater sells 14 different cocktails in cans. Internally called RTEs (ready-to-enjoy), they are Cutwater’s real money spinner.

With the addition of the spirits company, AB-InBev now features a full portfolio of alcohol options, from beer to flavoured malt beverages (Ritas and Bon&Viv hard seltzer) and wine (Babe Rosé; Electric Sky). It also owns Hiball energy drinks.

It was reported that, under AB-InBev, Mr Cherney will stay on as head of distilling, while Mr Kight will be head of sales. In other words, the two have cashed out and kept their jobs.