John Gallegos is a serial entrepreneur.
The founder and CEO of OC’s fifth-largest advertising agency by revenue, Gallegos United, earlier this year quietly became majority owner of San Diego craft brewer SouthNorte Beer Co.
The brewer is now ready for its largest advertising campaign to date, under the majority owner’s agency.
The “A New Frontier in Beer” campaign, created by Gallegos United and spearheaded by recently hired Vice President of Sales and Marketing Breanne Heal, consists of 30-second spots in English and Spanish set for broadcast on Univision, Fox, Connected TV and local San Diego NBC, in addition to social and digital.
The campaign, which launched just ahead of the Fourth of July weekend, promotes the brand and its SeaSeñor flagship beer. It marks the company’s first-ever TV push, and sets the stage for ambitious expansion plans beyond the San Diego market.
Last year, the company was reported to have sold some 2,500 barrels of beer in San Diego and Tijuana.
It’s good timing with the company’s switch to bolster its off-premise business amid the COVID-19 pandemic.
As restaurants and bars shuttered, more recently reopened and then days later buttoned back up, SouthNorte’s nabbed new accounts, such as Target and Trader Joe’s, adding to its roster of between 350 to 400 accounts throughout San Diego County in places such as Vons, Albertsons, Ralphs, BevMo and Whole Foods.
“We always look at it through the lens of what’s the impact to the audience? What’s going on with the consumers?” Gallegos said. “There’s a pent-up anxiety [due to COVID]. Beer and spirits, they tend to be part of the socializing aspect of what you do. You go out, you share a beer. You have fun and when that’s being shut down, the brand and the category really have an opportunity to say ‘OK, how do we play not just logistically, but how is the market playing out?”
Growth Plans
The SouthNorte executive team expects to expand into Los Angeles in the fourth quarter, with multiple beers also in the development pipeline, led by founding partner and brewmaster Ryan Brooks.
“It’s definitely been a bit of a roller coaster with the [bar and restaurant] closures, especially for us, if you look at our business. There’s three [revenue] channels,” Heal said.
About 70% to 80% of SouthNorte’s business pre-COVID was coming from restaurants and bars and it’s since shifted to about 90% grocery and other chain retailers. Gallegos estimated when the market begins to normalize and bars and restaurants reopen, the revenue split will likely bear out to be 60% off premise and 40% on premise.
In fact, SouthNorte notched its best-selling week leading into the Fourth of July weekend.
“That’s really exciting and now there’s some momentum coming and a bit of a light at the end of the tunnel,” Heal said.
Gallegos’ advertising agency was first tapped to handle the creative and communications for the SouthNorte brand before he decided to invest.
“It was just such an interesting project for us because we got to create a brand that lives much of the essence that we are about, which is being culturally attuned and creatively driven for growth,” Gallegos said.
He and the rest of the team see momentum potential for the brand’s Mexican-inspired craft beers straddling two cultures.
It’s a similar business proposition to that of Costa Mesa’s Chihuahua Cerveza, a fast-growing brand which is backed by Newport Beach telecom infrastructure exec Gary Jabara.
Opportunities
The first thing Gallegos focused on following his investment was to pump money into sales and marketing. In March he hired Heal, a nearly 15-year veteran in the craft brewing industry who has worked at Constellation Brands and Diageo USA.
Gallegos United is part of United Collective, an umbrella communications group that also includes consultancy Poly United, content and post-production agency Luna United, digital agency Canvas United and public relations agency Rox United.
Gallegos, earlier this year via his Huntington Beach-based Oak Leaf Productions, also launched digital entertainment media company espacio.live.
Gallegos is also co-owner in a publication that’s aimed at professional contractors.
“There’s gaps out there in the marketplace I see when it comes to cultural audiences,” he said. “We’re building for where the audience is going and so we do things like [invest in other businesses] because we don’t want to lose our entrepreneurial roots.”
Pandemic Effects
On the advertising side, Gallegos United has fared well the past few months, according to Gallegos. The agency did not have to furlough employees with much of its client roster outside of sectors such as travel and hospitality that were hit hard by the pandemic.
“The clients we have, while some have had some minimal reductions, they seem to be bouncing back,” Gallegos said. “But maybe it’s because we’re independent, we were prepared for potentially rocky seas. We’re busier than we’ve probably been in a while, so we’ve been really focused on reinventing how we can help clients at this time.”
