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Top Dog

Costa Mesa beer maker Chihuahua Cerveza is the fastest-growing new microbrewery in the U.S., but officials with the startup have visions well beyond being a niche player.

Formed in 2017 and with a handful of Mexican-style lagers introduced over the last two years, Chihuahua has sold some 2 million bottles and cans across a quickly expanding base of grocers and restaurants, not to mention its 1,600-square-foot taproom near the entrance to the Balboa Peninsula.

Its 2020 goal is to sell more than 130,000 cases, or roughly 3.3 million bottles of its Rico, El Primero and Limón brands, said co-founder and President Phil Jamison, during an early-January meeting at the flagship Chihuahua restaurant at The Landing, a shopping center owned by Gary Jabara.

Jabara, one of Orange County’s wealthiest executives with a variety of business interests, also owns Chihuahua (see story, page 7).

Top 5

Mexican beer makers dominate the U.S. import market. Five of the top 10 importers bring brews from Mexico, including No. 1 import Corona, which does some $2.2 billion worth of sales in the U.S.; Pacifico is the smallest of the five and brings in about $115 million annually, according to trade reports.

The good news for Chihuahua is that after the top five, there’s little competition for Mexican-style beers domestically, Jamison said.

That’s not the case for craft breweries and other domestic brewers, where it’s a free-for-all to gain shelf space and consumer attention, Jabara said.

Go to a grocery store and “you’ll see 500 IPAs,” Jabara said. “It’s so noisy.”

Going after the smaller Mexican beer sector “is a better approach,” Jabara said.

By brewing their beers domestically and emphasizing the product’s freshness, as well as leaning on a long-brewed collection of relationships he and his team have crafted in the industry, Jamison thinks Chihuahua can elbow its way into the Mexican beer section of shopping center aisles and grab more business from the big dogs.

“Our goal is to get 1% to 2% of the Mexican beer market,” he said.

“We’ll take 2%,” added Jabara.

The top five Mexican beer companies did about $4.6 billion in sales domestically in 2017, according to industry data. A 1.5% market share would translate to about $70 million in annual sales for Chihuahua, a far cry from where it is now.

It will take time, Jamison admits. “It’s a three- to five-year process,” he said of the company’s growth plans, while noting the firm is far from profitable and counts an annual marketing budget of $800,000—a drop in the bucket for larger beverage companies.

Near-term goals for the company include buying its own brewing facilities, expanding in new U.S. markets, and more restaurant-taprooms; the Newport Beach site opened in late 2018.

He and his team are still scouting other OC locations for restaurants, which offer tacos, burritos and other eats along with its brews.

Budweiser Road

Jamison was director of sales and marketing at beer goliath Anheuser-Busch InBev and executive vice president of sales and marketing at L.A.’s Golden Road Brewing (bought by Anheuser-Busch in 2015 on undisclosed terms).

The experience has served him well with the startup, which has about 25 employees, not counting the restaurant.

“It’s an industry all about relationships,” he said. Those relationships have helped the company secure its first local distribution deal with Straub Distributing Co. in Anaheim, as well as others; it now has relationships with a dozen wholesalers in Southern California.

Relationships have also helped expand the company in markets outside California, particularly Florida.

A deal with Southern grocer giant Publix “got us in a thousand stores overnight,” Jamison said.

Chihuahua can now be found at more than 2,700 locations; restaurants serving its suds include Buffalo Wild Wings.

Plans call for expanding to Georgia, Arizona and Texas in the first half of this year.

The company is looking to brew its beer in California and Florida, to help woo customers by emphasizing freshness. It’s best to drink a Mexican lager within a month of bottling, Jamison said. That’s a problem for importers, he said.

His tip for preserving freshness of any brand: store it dark and cold.

The company is also looking to compete on cost, but not through heavy discounting. A typical Chihuahua six-pack might be “at parity or 50 cents less than Corona,” he said.

Building a Base

Mexicans and Mexican-Americans are roughly half the buyer base for the largest imports from south of the border. Jamison said his company is looking to build upon that base through positioning its brand as “the Original Mexican-American Beer.”

A new generation here “cherish their Mexican heritage and traditions, but are celebrating them in new, progressive and culturally relevant ways,” he said.

In brewing and style, the only difference between Chihuahua and its larger competitors “is the border.”

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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