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Interview, Part 2: Constellation Beer’s Paul Hetterich On The Ballast Point Acquisition

December 8, 2016

EDITOR’S NOTE: With its Mexican portfolio thriving, last year Constellation Brands’ beer division jumped into the craft segment with the $1 billion acquisition of Ballast Point, the San Diego-based craft brewer. Since that deal closed, long-time Constellation executive Marty Birkel has been named president of Ballast Point, while the craft brewer’s founder Jack White and former top executives Yuseff Cherney, Jim Buechler and Earl Kight have all departed. (They’re now involved in a new venture, Cutwater Spirits, which owns former Ballast Point spirits brands Three Sheets Rum, Devil’s Share Whiskey, Fugu Vodka and others.) In this second part of SND contributing editor Terri Allan’s interview, Constellation Beer president Paul Hetterich explores how the Ballast Point deal has impacted Constellation—and whether new moves in the craft segment lie ahead.

SND: How has Ballast Point been merged into your brand family, with the appointment of Marty Birkel as the craft brewer’s president?

Hetterich: Marty Birkel has a lot of experience in the beer business, and he’s also a former chief sales officer for Constellation Brands’ wine and spirits division. That makes him a perfect fit. In all other respects, we’re leaving Ballast Point as an independent platform. Craft beer is very different (from imports) in the way it’s sold and marketed. In many ways, it’s like premium wine—a segment where we have a lot of experience. So far, Ballast Point’s sales are right on track with our expectations. In 2014, Ballast Point was the No.-31 craft brand. It moved to No. 11 last year, and it’s poised to finish even further up in the charts in 2016—while still in fairly limited distribution.

SND: What’s the progress report on the new Ballast Point brewery project in Virginia?

Hetterich: We’re retrofitting the building where the facility will be placed, and it’s set to come on line next year. We’ll have plenty of production capacity as we look to build out distribution. And in terms of our distribution plans, we expect to be in nearly all 50 states by the end of this year.

SND: Will you be making additional craft beer acquisitions?

Hetterich: We’ll do more in the segment over time. We expect craft beer to grow dynamically, even though it has slowed a bit recently. Right now, we’re very focused on driving Ballast Point and tapping into its potential. Ballast Point certainly will be the centerpiece of our craft beer strategy, but it will take more than that to achieve a 10%-15% share of the craft category, which is our goal.

SND: As the U.S. market’s largest beer importer, are you concerned with consumer gravitation toward local beers?

Hetterich: No. The high-end segment, which represents nearly half of all consumer beer spending, is growing. It will continue to capture more consumer dollars, but there’s no way all of it will be weighted to local beers. The routes to market simply aren’t available. So local beers will be important, but national and regional brands will continue carrying most of the weight.

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