Ballast Point, a pioneer in U.S. craft brewing, will close two sites and stop working on a new brewpub in order to adjust capacity to a declining demand for its products. Constellation Brands, the parent company of the San Diego based craft brewer confirmed on Wednesday the closure of Ballast Point’s one-and-a-half-year-old sour beer and barrel-aging facility in San Diego’s Trade Street, as well as its three-year-old brewpub in Temecula, California. In addition, the company will stop building its new San Francisco-based brewpub, which was scheduled to open this year and would have been Ballast Point’s eighth beer serving location in California and the tenth in the U.S.
Besides the aforementioned, Ballast Point runs in California four other operations in San Diego (Homebrew Mart, Miramar, Little Italy and The Kettle Room) and one in the downtown Disney district of Anaheim (inside.beer, 25.1.2018) and Long Beach each. The two locations outside of California are in Daleville, Virginia, and Chicago, Illinois.
The closures mark a turning point in its strategy for Constellation Brands. When the company bought the pioneering craft brewer for $1 billion at the end of 2015, Ballast Point was the 17th largest brewery in the country based on sales volume and had all its production and outlets centered in San Diego. Since then, Constellation has more than doubled the number of locations with all of them, except the sour beer facility, being outside of San Diego. The aim was “to create a brand experience” for those customers that aren’t based in San Diego and to build a “local presence” in those markets.
However, it seems that the New York based drinks giant underestimated the strength of local competitors in the markets where it opened new locations. Furthermore, Ballast Point “lost its soul”, according to people close to the matter, when leading managers including CEO Jim Buechler, CCO Earl Kight, COO Yuseff Cherney and founder Jack White left the business after the sale in 2015 to split off and run the distilling side of the business, which was renamed Cutwater Spirits and recently sold to AB InBev (inside.beer, 1.3.2019).
Constellation Brands may not be very happy with the performance of its billion-dollar venture. The Chicago Tribune reported that total sales volume of Ballast Point declined about 14% from 2016 to 2017. Sales of 2018 and the first three month of 2019 do not show a reverse trend, according to IRI figures.
Last August, Constellation Brands took first measures and announced to lay off about 60 of its 100 sales reps involved in selling the company’s craft and specialty beers (inside.beer, 16.8.2018). The closure of Ballast Point’s locations is now the next step and is most probably not the last one.