THE GIST
On April 15, Paso Robles, California-based Firestone Walker Brewing Co. announced it would acquire the Cali-Squeeze brand of fruited Hefeweizens from nearby San Luis Obispo, California’s SLO Brewing. Financial terms were not disclosed.
The deal shows Firestone Walker’s attempt to play catch-up in the growing fruit beer category, which showed the highest percentage growth of about a dozen IRI-tracked style categories last year. It indicates the brewery, which is owned by Duvel USA, recognizes the need to diversify its Blonde Ale- and IPA-heavy portfolio—and potentially explore beyond-beer products like flavored malt beverages (FMBs) down the road.
In purchasing Cali-Squeeze, Firestone Walker adds a growing fruit beer brand to its lineup without the research, development, and initial marketing spend required to launch a new product. Cali-Squeeze already has proven itself in chain retail, where it’s grown the last two years by +77% (2019) and +54% (2020). It represents half of SLO’s sales tracked by IRI in convenience, grocery, liquor, and other chain stores. It sold about $508,000 last year, the same as BrewDog's Punk IPA and New Belgium's Old Tuffy Premium Lager in the same stores.
Cali-Squeeze is available in three flavors: Mango, Blood Orange, and Tropical P.O.G. According to Brewbound, SLO Brewing produced 8,000 barrels of Cali-Squeeze beer last year, roughly equivalent to the total production for breweries including Crooked Stave Artisan Beer Project and Payette Brewing Co. in 2019, the most recent year of data. The swap frees up SLO Brewing to focus on its non-beer products such as Tio Rodrigo canned micheladas, Porch Pounder canned wine, and Rod & Hammer's SLO Stills whiskey.
WHY IT MATTERS
The Cali-Squeeze buy makes sense for Firestone Walker, a company that’s sat on the sidelines as fruit beer sales accelerated during the pandemic. Fruit beer grew IRI sales volume by +36.3% last year, twice as much as #2 IPA, which increased +18.7% (although on a much larger base of volume). Fruit beer added $20 million more in sales than craft Lagers. They communicate clear flavor expectations, a factor that’s also driven sales of non-beer products like ranch water, hard seltzer, and ready-to-drink cocktails.
Adding a plug-and-play fruit beer line to its portfolio finally gives Firestone Walker an offering in this category, which was gaining steam even before the pandemic. Fruit beer was one of the few styles to show volume growth in 2019 (+3.8%, while Pale Ale was -1.6% and Wheat beer was -5.3%). Fruit beers sold $70.7 million in Nielsen-tracked groceries, drug stores, and liquors stores over the 52-week period ending April 13, more than a +10% increase from the same period a year ago.
Despite fruit beers’ growth, they’ve been a hole in Firestone Walker’s lineup. In California, the U.S.’s largest beer market, that space potentially leaves millions of dollars in sales on the table. (California-based Golden Road Brewing’s Fruit Cart series of fruit beers makes up over half that brewery’s sales in chain retail stores, netting almost $30 million in sales last year.) Cali-Squeeze is a ready-made gap-filler.
David Walker, co-founder of Firestone Walker, hints that Cali-Squeeze is just the first in what could be a range of fruit beers from Firestone, broadly referred to as “Fruits with Benefits.” Asked explicitly whether there will be future releases in that line, Walker says it’s too early to say.
“SLO Brew has done an amazing job of focusing boldly on consumer trends and fruit-forward beers, ergo our desire to call these beers ‘Fruits with Benefits’,” Walker says. “This new brewing platform allows us to experiment in a way that doesn’t impact our traditional beer programs.”
Currently, just two beers make up the majority of Firestone Walker’s chain retail sales: 805 Blonde Ale and Mind Haze IPA, which together account for 78% of the brewery’s sales year-to-date. The company has laser-focused on these brands, expanding their core range by adding spin-offs including 805 Cerveza, a Mexican Lager version of 805, and Double Mind Haze IPA, a 8.3% ABV version of Mind Haze.
This streamlining has its upsides—805 has grown dollar sales in chain retail 78% since 2017, to $19.6 million—but it comes with opportunity cost. Firestone Walker beers that aren’t 805 or Mind Haze are roughly interchangeable in sales dollars. The brewery’s Luponic Distortion rotating IPA has declined in IRI-tracked sales the past three years; new 100-calorie Flyjack simply replaced Easy Jack in the brewery’s lineup and may not have a long lifespan in the portfolio.
There’s no clear number-three brand, but the full Cali-Squeeze line could easily become it.
Cali-Squeeze also represents something of a test case for Firestone Walker, inching the brewery closer to non-traditional beer beverages, like hard seltzer, which it has so far avoided. Hard seltzer is a $4 billion market in the U.S., and Firestone Walker’s peers like Stone Brewing and the CANarchy Brewery Collective are invested. Stone earlier this month announced its line of Buenavida Hard Seltzer, and CANarchy has leaned in hard with its Wild Basin Boozy Sparkling Water line, which sold $4.6 million in chain retail last year.
SLO Brewing produces a line of Cali-Squeeze hard seltzers which are not included in the deal with Firestone Walker, but Firestone Walker tells Brewbound it is evaluating the possibility of later acquiring these seltzers. Pressed on the likelihood of that, Walker tells GBH the seltzer line is still “very young” but it’s not Firestone Walker’s intention to brew them.
Of course, that’s for now, as breweries increasingly position themselves as beverage companies. Kansas City’s Boulevard Brewing, also owned by Duvel USA, has jumped head-first into non-beer products in recent years, including Quirk Spiked & Sparkling seltzer and Fling canned cocktails. Boulevard calls itself “Boulevard Beverage Company” on the Quirk section of its website, and Molson Coors officially adopted Molson Coors Beverage Company as its name in 2019. These moves into non-beer products come as the beer industry as a whole is struggling to compete against spirits and has watched its share of the alcohol market decline for two decades.
As the larger alcohol market changes dramatically, traditional beer programs are on the defensive from non-beer, heavily flavored products. Firestone Walker may be hedging its bets.
Words by Kate Bernot