Big Beer Buys Big Craft Distillery with Anheuser-Busch Acquisition of Cutwater Spirits

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In its first major investment in the U.S. distilled spirits market, Anheuser-Busch InBev is playing it safe with its acquisition of Cutwater Spirits in San Diego, California. Rather than diving into the deep end of the distilled spirits pool, AB InBev is more or less sticking its big toe into the water.

Cutwater Spirits is a result of the sale of San Diego based Ballast Point Brewing & Spirits having been sold to Constellation Brands in 2015.  When that acquisition took place the spirits side of the business was not included in the sale. According to a 2017 San Diego Reader story the spirits side of Ballast point started in 2008. At the time Earl Kight, now the Chief Sales & Marketing Officer at Cutwater said, “The distillery was kind of a hobby, to tell you the truth. It was not even secondary. Our secondary business was our mixers.”

A Rather Large Craft Distillery

Now, when I say AB InBev is dipping their big toe in the water it’s more like a super-sized big toe. Since the founders of Cutwater Spirits started in the brewing business since 1996 they know how to talk beer and spirits to their new partners at AB InBev. Founded in 2016 by former Ballast Point executives the Cutwater Spirits facility is 50,000 square feet and home to a full service 220 seat restaurant, bar, expansive outdoor patio and a distillery featuring five stills including a 40′ tall Vendome Copper and Brass Works column still. The operation can generate up to 30 barrels of spirits a day. I guess there was some cash laying around after the sale of Ballast to Constellation for $1 billion.

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Similar to Beer Market, Cutwater Spirits Leads with the RTD Cans

Cutwater Spirits does make its own spirits but when you visit their website unlike most distilleries that lead with their spirits bottles, Cutwater leans heavily into their canned ready-to-drink (RTD) low-alcohol spirits. The spirits maker has quickly become a leader in the premium ready-to-enjoy cocktail market with its high-quality ingredients, transparent packaging and innovative combinations. A format that AB InBev is very familiar with. 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.

Cutwater Spirits - Founder Yuseff Cherney

Cutwater Spirits Founder Yuseff Cherney.

“We’re thrilled to have found a partner that understands our vision for Cutwater Spirits and will give us the tools and resources to grow and thrive. We’re excited to join Anheuser-Busch and work with the team there to bring our spirits and canned cocktails to the world,” said Yuseff Cherney, Cutwater Spirits Founder.

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.

What Did Anheuser-Busch InBev Pay for Cutwater Spirits Sell for?

As is often the case with these deals the terms of the sale of Cutwater Spirits to AB InBev were not disclosed.

The partnership with Cutwater Spirits is subject to regulatory approval.

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