New Mexico’s Santa Fe Brewing Retrenches to Focus on Local Projects

New Mexico’s Santa Fe Brewing has placed a renewed focus on “local” to connect with its core consumers in its home market.

The Santa Fe, New Mexico-headquartered craft brewery has pulled out of four states — Kansas, Missouri, Nevada and Louisiana — since 2017. That focus has paid off with sustained double-digit growth since 2016. Production increased 12%, to 40,001 barrels of beer, in 2020 for the 33-year-old brewery.

“We need to first focus on battening down the hatches where we make the majority of our money and sell the majority of our beer, which is in New Mexico,” Jarrett Babincsak, Santa Fe’s VP of sales and marketing, told Brewbound. “Every day, we want to do the best shot that we can to represent New Mexico. That’s who we are; we’re New Mexicans at our core.”

Founded in 1988, the brewery is the oldest in the state. Over the past five years, the company refreshed its strategy, focusing on expanding its local operations and updating its brand, including transitioning from bottles to cans.

Several brands launched mid-2017 helped drive that growth, including 7K IPA; Social Hour wit-style ale; and Pepe Loco Mexican-style lager. 7K alone accounts for 42% of Sante Fe’s production, while all three 2017 launches, along with a couple of ciders launched around the same time, represent about 70% of the company’s total sales, according to Babincsak.

Babincsak credits a large part of the success of the brands to 12- and 15-packs, which feature 7K, Social Hour, Pepe Loco, and long-time flagship Happy Camper IPA. This summer, Santa Fe launched Squeezer, a part hazy IPA, part seltzer made with fruit juice. The launch was so well-received that the brand will join Santa Fe’s year-round portfolio starting August 1. Babincsak said the company is also exploring a Squeezer four-flavor variety 12-pack to launch in 2022.

“We are always looking at our portfolio critically and turning over brands that aren’t holding their own,” Babincsak said. “Retailer space is too valuable, our wholesalers’ time is too valuable, and consumers have too many great choices for us to be complacent or marry ourselves to brands or packs.”

As the company has leaned more into a stronger-at-home strategy, it has reallocated resources from “non-productive” areas to strengthen its field sales team and chain business in its home market. Babincsak said the goal is to solidify the company’s relationship with its chain retail partners and wholesalers.

Additionally, Santa Fe focused on prioritizing its internal team and creating a welcoming working environment. For Santa Fe’s workforce, that means repeatedly asking, “What are you in service of?” Babincsak said.

“The reason we want to be successful isn’t to put more profit to the bottom line,” he continued. “It’s so that we can continue to build this culture and build this space where people are not just going there to work to earn a paycheck, and it’s [instead] really a big intrinsic part of their life.”

During the beginning of the COVID-19 pandemic, when breweries were forced to close their on-premise locations and many industry workers were facing job insecurity, Santa Fe set up a universal income program for its workforce based on the hours they traditionally worked. The program was extended to everyone in the company for three months until pandemic-specific unemployment benefits were laid out by the state.

Babincsak said the company’s commitment to its employees is paying off as normal life begins to resume. He noted that while many companies are facing labor shortages, Santa Fe is not.

“I think what’s happening is it’s a change of mindset shift in the economy, where people had a long, hard pause to live their lives [and] look at what they’re in service of, and why they’re doing what they’re doing, [and] who they’re doing it for,” he said.

Looking ahead to the end of the year, Babincsak said the brewery is on track to produce 45,000 barrels, with retail sales increasing despite the on-premise channel re-opening.

“We have built a lot of goodwill with not just our people, but also with our local community,” he said. “I think that’s been the reason that what we’ve done and the things that we put into the world, and the strategies that we put in place, are really resonating.

“There’s an authenticity and a groundedness to how we go about our jobs and that translates into the energy of the stuff that we put out into the world and it’s been a huge reason not just for our success last year, but for our success over the last five years since we really pivoted to this new strategy,” he continued.

As part of the strategy of going deeper at home, Santa Fe opened a new taproom last year at Tin Can Alley — an indoor-outdoor development made partially out of shipping containers, which houses nine other businesses. Santa Fe serves as the anchor tenant, using about 50% of the space, according to Babincsak. It shares the venue with local businesses Michael Thomas Coffee Roaster, Amore Neapolitan Pizzeria, S-A BBQ, On the Flip, Pho Kup, Guava Tree, Squeezed Juice Bar, Nitro Fog Creamery, and Brotique 505.

The building — located across from Balloon Fiesta Park in Albuquerque — opened May 30, 2020. Due to state health regulations, the location only served takeout for several months, before opening for limited on-site dining later in the summer. The attraction opened fully on July 1, 2021, including offering seating at the taproom bar.

“Now with things starting to reopen, the space is really starting to thrive,” Babincsak said. “This space is uniquely positioned as people come out of [the pandemic] as such a really cool spot for people to gather and to celebrate the local community.”

The company is also upgrading The Bridge — a concert venue formerly known as Santa Fe Sol, which the brewery bought in 2016. Babincsak said the brewery is “investing significantly” in updating the venue’s sound and lighting, greenroom, landscaping, and “overall aesthetic,” with “the goal of providing a one of a kind fan experience.”

Meanwhile, Santa Fe has plans to install a pilot system in its home taproom at the end of this summer, with the goal to be operational by October. The company is also planning to invest $1 million in its packaging line by the end of this year. The upgrade will allow Santa Fe to launch three new mixed 12-packs in the spring of 2022.

The investment will also allow to company to further explore the variety pack-driven seltzer segment and possibly other ready-to-drink canned offerings. Although the company has explored creating seltzers with real fruit juice, Babincsak said it is currently sitting out of the segment as the brewery’s size won’t allow for efficient packaging of mixed packs.

“We found out that if you’re not in a mixed-pack format, you might as well not do it, as far as the off-premise is concerned,” he said. “We’re at a place by next year we’ll have the ability to do that.”