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Cocktails

In a boozy case of deja vu, San Diego’s Cutwater Spirits is bought by Anheuser-Busch

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Cutwater Spirits in San Diego’s Miramar neighborhood.
(Courtesy Cutwater Spirits / )

Cutwater Spirits, a Miramar-based craft distillery built by the founders of Ballast Point Brewing, has been sold to Anheuser-Busch.

Cutwater’s line of canned cocktails was “a wonderful fit” for the brewing behemoth’s “Beyond Beer” portfolio, said Anheuser-Busch’s Marina Hahn.

“This is the time to really do our best to dominate a new category,” said Hahn, vice president of new business.

For industry watchers, the sale was a boozy case of déjà vu. Several Cutwater executives — including founder/brewer Yuseff Cherney and chief sales officer officer Earl Kight — were leaders of Ballast Point when it sold to New York’s Constellation Brands in 2015.

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That sale met with an immediate backlash. Some argued that the brewery, a local brewing pioneer, had betrayed its local roots to join a multi-national corporation with enough marketing power to crush smaller rivals. The sales price also drew disbelieving gasps: $1 billion.

Cherney, Kight and Ballast Point co-founder Jack White used their shares to transform a sideline, Ballast Point Spirits, into Cutwater. Making bourbon, rum, gin and other spirits, the distillery eventually moved into a 50,000-square-foot facility that includes canning and bottling lines plus a restaurant.

Cutwater’s products are distributed in 34 states, Cherney said, but he insists the company has greater potential. Enter Anheuser-Busch.

“One of the things we always battle with is getting out products into the consumer’s hands,” Cherney said. “To be able to open that up with the Anheuser-Busch marketing network is huge for us.”

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Financial terms of the deal were not revealed. Cherney said Cutwater’s management team will remain intact.

He was unsure how this sale will be greeted by the county’s distilling community, but hoped it would be applauded.

“To have this happen with the largest brewing company in the world,” he said, “for me, it’s something to be proud of.”

Unlike Ballast Point, Cutwater is not a “craft distillery.” While Cutwater does not publish sales figures, annual production exceeds of 100,000 gallons a year, the maximum amount for the craft designation, according to the American Distilling Institute.

Still, details of this move were closely followed by members of San Diego’s small but growing community of craft distillers.

“Congrats to Yuseff and his team,” said Geoff Longenecker, owner of San Diego’s Seven Caves Spirits.

“To everyone in the San Diego craft beer world (and beyond) who will no longer frequent Cutwater out of a dislike for InBev, Constellation, or any of the big alcohol conglomerates,” Longenecker added, “there are many of us small spirit producers who are endeavoring to make exceptional grain to glass products on a daily basis.”

peter.rowe@sduniontribune.com (619) 293-1227 Twitter: @peterroweut

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