Ballast Point closes San Diego warehouse and Temecula brewpub

When Constellation Brands bought San Diego’s Ballast Point Brewing in November 2015, skeptics insisted the $1 billion pricetag was unrealistically high.

It seems they were right.

This week, Ballast Point closed its Temecula brewpub and announced that its 80,000-square-foot warehouse in Miramar will be shuttered within months. These moves came less than two weeks after Constellation CEO Bill Newland admitted that the seven-figure investment “has not met expectations...”

During an April 4 investor conference call, Newland noted that the company had “recorded a $108 million impairment charge related to the trademark value of Ballast Point.” In 2017, Constellation reported another $87 million impairment charge, or a reduction in an asset’s value, related to the San Diego brewery.

“While this investment has not met expectations as the craft marketplace has slowed since our acquisition,” Newland told investors this month, “it has increased our leadership position in the high-end of U.S. beer, and provided us an innovation in operating platform in the craft and specialty category to contribute to future growth.”

At Ballast, innovation will have to come without the 80,000-square-foot facility on San Diego’s Trade Street, which Constellation officials said will close within a few months. Since 2017, the brewery used this warehouse to store more than 1,400 barrels for barrel-aged beers; kept bacteria-laced sour ales in an isolated space, where they could not infect other beers; and operated a state-of-the-art laboratory where beers were tested for consistency and quality.

Ballast Point’s main production brewery, also in Miramar, still maintains a separate lab.

The Temecula brewpub closed Tuesday. Advertised as “a beer lover’s retreat in wine country,” it had opened in 2016.

Founded in 1996, Ballast Point is one of San Diego’s craft beer pioneers. Locally, it continues to operate a production brewery in Miramar, a brewpub in Little Italy and the Home Brew Mart in Linda Vista. Ballast Point also has an East Coast brewery in Daleville, Va., as well as brewpubs in Chicago, Long Beach and Anaheim’s Downtown Disney.

This week, though, along with the Trade Street and Temecula closures, Constellation announced it is dropping plans to build a San Francisco brewpub.

Ballast Point and Stone, San Diego County’s largest breweries, have both suffered recent setbacks. This month, Stone announced it is selling its Berlin brewery and restaurant to a Scotland’s BrewDog. That large German outpost had been a point of pride for the Escondido brewery, which had been the first U.S. craft brewer to own and operate a European plant.

Despite the recent retrenchment, industry analyst Vince Vasquez believes both breweries remain strong players in the U.S. craft beer market.

“The simple fact is that distribution is where the main game is,” said Vasquez, who spent years following the craft beer business for National University. “I think there’s more room to run with the tasting room model, having a neighborhood place where you sell your beers. But for overall access, it’s still more important to gain shelf space in supermarkets and Costcos and restaurants.

“Stone has an edge there,” Vasquez said, “as well as Constellation and Ballast Point.”