When you think of a cocktail, you probably imagine yourself in a bar. They require multiple liquors, juices, garnishes, and other flavors. Then, you’re left with a big bill.
While you’re imagining a cocktail, you’re not likely to have an aluminum can in the picture. Yet you can buy beer in a can, and there’s no reason cocktails can’t be consumed the same way. Customers aren’t accustomed to being served cocktails, and this narrative can be quite profitable. Removing the bartenders and fancy mixing glasses can trim the cost of a cocktail significantly.
In San Diego, Cutwater Spirits has been working to reinvent the way we think of cocktails. This means customers can go to a grocery store and pick up a four-pack of their favorite drink for the price of a single order at the bar. They’re riding a wave of success that resulted in a Superbowl ad, and there’s no sign of slowing down.
The Birth of Cutwater Spirits
San Diego seldom gets recognition for its contributions to the US beer and spirits market. Tourists may overlook this industry, but San Diego County has more breweries than any other county in the United States. Based on the number of businesses in the industry, we’re bound to see some innovations come out of San Diego.
If you’re not from San Diego, you’re most likely to recognize Ballast Point as one of its more popular breweries. This is where Cutwater Spirits was formed. It was initially born as part of Ballast Point’s Brewing and Spirits, but became a standalone brand when Ballast Point was acquired by Constellation Brands in 2015. This could have been their downfall, but it seems to be a catalyst for their growth. Standing on its own, Cutwater started using higher quality spirits and offering more varieties. This encouraged people to try the brand, and sales grew.
Perhaps the biggest success for Cutwater came through a 2019 acquisition from Anheuser-Busch InBev. The company, who owns major beers like Budweiser, recognized Cutwater for its potential to grow their beyond-beer line of products. With new ownership, Cutwater also had the potential to extend its reach and earn more partnerships.
Cutwater’s Rise in 2020
It seems logical that Cutwater would be able to thank Ballast Point for its success. This is only partially true, as another competitor put a spotlight on the canned cocktail industry. Hard seltzers have become very trendy toward the end of the 2010s and early 2020s. These drinks are low in calories and offer a good alternative to beers and wine coolers. This was a smart idea, but consumers were underwhelmed by the taste of seltzer brands like White Claw and Truly.
In the eyes of most consumers, hard seltzers are designed to emulate a vodka soda. While these drinks do not actually have vodka in them, they’ve helped to create the illusion that cocktails can come in a can. In 2019, White Claw became so popular that retailers couldn’t keep them in stock. The brand was thriving in a ready-to-drink alcohol sector that was once dominated by beers and wines. Now that customers had more variety, they became more adventurous.
The change in market trends demonstrated that Cutwater had a lot of room to grow. Between 2019 and 2020, with the backing of Anheuser-Busch, the premium canned cocktail industry grew by 50%. The brand entered 2020 with a lot of momentum, and a their model was perfectly positioned to survive the struggles of the pandemic.
Many restaurants and bars saw decreased business in 2020, and customers were forced to stay at home due to lockdowns. This created the perfect environment to encourage customers to try a cocktail in a can, and results were generally positive. Cutwater’s cans tell you exactly what you’re drinking and the amount of alcohol included. This let customers know these are real cocktails (unlike White Claw), just like the drinks bartenders mix at the bar.
2020 allowed Cutwater to grow 120% from 2019. As people start returning to bars and restaurants, growth may slow. However, the exposure received in 2020 can be used to establish a permanent spot in the US spirits market.
Canned Cocktails: Post Pandemic
Like many successful brands, Cutwater isn’t alone in its industry. Most competitors specialize in a specific spirit or beverage such as High Noon who’s focused on vodka drinks. Cutwater’s variety distinguishes it from other distillers. They offer most of the most popular cocktails in a can and continue to expand their selection. Looking for a spikes horchata cold brew? Cutwater has that.
Variety has tempted a larger audience to try Cutwater’s cocktails, but its growth occurred under unique circumstances. Their real competition will come from bartenders, mixologists, and people looking for an uncanned cocktail. Fortunately, there are still many opportunities to grow.
If you go to the Padres, you can find Cutwater. It makes sense to offer a San Diego brand in a San Diego park, but it’s not just a regional bond. Concession stands may want to offer a bigger variety of drinks. They don’t want to hire bartenders for speed reasons, nor do they want glass in the stadium. So Cutwater allows customers to drink something other than beer without inconveniencing staff.
Canned cocktails will make a huge splash in the catering and concessions industry as vendors realize how easily they can be incorporated into their menus. This is especially true in a post-pandemic world where people still have some hesitancies. Single-serve cans reduce contact and increase the speed of transactions. This is something you’ll never be able to replicate at a traditional bar, even if they’re able to offer more variety and customization.
Cocktails Reimagined
A lot of people have a favorite bar and a favorite drink. For those people, a canned cocktail isn’t a satisfactory replacement. In other environments where people want simplicity and variety, canned cocktails make the process much easier. This is Cutwater’s niche, and even though it’s only 3% of the US spirits industry, it’s a multi-billion dollar sector.
Cutwater isn’t going to kill the restaurant industry, but it is going to make a big impact in other areas. The fact that a cooler can be filled with bloody Mary’s, margaritas, tequila palomas, and Moscow mules will change the way people enjoy events. Cutwater isn’t defined by a single spirit or drink, so they check the boxes on convenience and variety. People have taken notice, and now they’ll never need to settle for just beer and wine on a night in.