Constellation Brands to Acquire Ballast Point Brewing & Spirits

Interesting side note, I have seen BP appear in shows like Silicon Valley and Big Bang Theory. Not sure if they were trying to drum up interest in the IPO with that hidden marketing.

 

Constellation won't literally water down a sculpin into a pilsener overnight but if this "trend" you so passively address continues than his prediction isn't very far from the mark. What I don't understand is how advocates of capitalism and consumer choice think that this is fine. If this is a trend and it continues than beer will become monopolized. It's simple. These large companies dominating the market will protect their profit to an end that they inhibit new firms from entering and will make it more difficult for the small ones to continue to do business. No you cannot blame the owners of BP for accepting a billion dollar deal, no one would. But as craft*beeradvocates, we should probably not so casually brush off this trend if we want to continue to have options. Im not nostalgic because Im not old enough to be. But I want my favorite breweries (that are all tiny) to continue to have access to the basic raw materials they need to produce beer. But if Modelo Point is churning out enough Carulpin than my beloved craft breweries might not have access to that specialty grain and simcoe anymore. Not happy.

 

I don't know how they justify that valuation, but good for them.

It's basically a godfather offer.

 

If I remember correctly, they were looking to raise between $150-200 million from their IPO. If someone comes in to offer you 5x what you wanted to raise via IPO, that decision to go public gets much harder. Either the S-1 filing was prior to the offer from Constellation, or this deal was already in the works and Ballast Point wanted more $. The S-1 filing would simply be a bargaining chip for Constellation to up their offer. I'd put my money on the latter....

 

I could and probably should tear this down point by point, but clearly we live in different markets. I do love this conversation, and am interested in intelligent discourse, please message me if you'd care to discuss further.

 

This may be the dream, but it's certainly not the reality....

 

Maybe Lagunitas won't dominate the Mexican craft beer market after all.

I used to get excited when I could find Indio when I traveled to Mexico. Imagine how excited I'll be if I can get Grapefruit Sculpin or Sumpin Extra now!

 

It is becoming increasingly difficult to decide which beers are craft (and worthy of my hard earned dollars) and those that are part of the "system" Guess I'll just let my taste buds decide

 

Sweet profile pic. I'd be pumped to find more craft beer when I'm down in Mexico. Unfortunately Constellation doesn't have a beer footprint outside of the US currently. If that changes that'd be cool though.

 

You're in California, same as me. If you're having a hard time finding great beers to buy that aren't owned by a large corporation, you're not trying at all.

 

You know what's better than a billion dollars? Grinding your way at your job at the local toys R us and trying to figure out a way to pay your studio apartment rent. Now that is living.

 

Wow, did not see this coming, especially for this price. I can't blame them. I'm just curious if they the current head brewer, and others in charge, will remain in place. I love Ballast Point, and even though they're priced highly, I find their product worth it.

Hopefully, the quality doesn't decline.

Additionally, kudos to Stone, Sierra Nevada, and Sam Adams. They seem like one of the few BIG GUYS still in the industry without feeling out. If Ballast Point sold for a billion, I couldn't imagine the offers that they would receive.

 

"Ballast Point will continue to operate as a stand-alone company with its existing management team and employees running the day-to-day operations. The company is one of the most successful and respected craft beer companies in the country, with an expertise in brewing the most premium, highest quality award winning products, and a grassroots approach to innovation that engages beer lovers and home brewers in the process. The Ballast Point team will continue to build on its successful expansion across the U.S., and will now have access to Constellation`s strong financial position and willingness to invest in growth."

I don't see a problem with this. If everything is kept the same and they just bought them out too get a slice of the craft pie money wise I'm ok with that. If I see a drop in quality or a rise in price then I will simply stop buying it and buy more of something else, no harm no foul.

I doubt we will be seeing any Constellation CEOs or Senior Management going down to the brewery and trying to make beer. I'm sure they will be leaving that too the people of the company that they just spent $1B for and has made a name for themselves doing just what they do.

I also don't think we will be seeing a Sculpirita Lime or Sculpelada con Clamato brews anytime soon

 

It's like a press release saying, "Ok, we've got our shit in order, come on in and take a look. For sale!"

 

Sam Adams (NYSE:SAM) has a market cap of almost 3bil.

 

Just thinking off the top of my head, that's probably because they don't have the Grupo Modelo rights anywhere but the US. But now they could brew and sell what will now be their own Ballast Point beer, in Mexico....

 

"The argument you're making is that sales in the US (for Modelo brands specifically) translate into greater awareness and sales globally."

This is not an argument but a given, and its the very reason why many leading global consumer brands make the United States a "must-win" market to establish influence and prestige worldwide. If you think that greater sales, visibility, and market share for the Modelo brands in the United States does not increase the global brand value and drive sales in other markets, then I'd question your valuation matrix!

"So really its two brands, Corona USA and Corona Global."

Its not two brands dude - its a single brand with a single name, logo, and trademark known globally as Corona - just as there is Heineken USA and Heineken International, but there is only one "brand" known as Heineken - no matter which company controls the revenue stream.

But in the case of Corona (Modelo Group), it was placed into two companies (not two brands) solely to appease the DOJ so they could get the full acquisition of the brands completed for AB-InBev.

I'm sure AB-InBev would love to also own that facility in Piedras Negras and the import rights in the US through Crown Holdings (which is now owned 100% by Constellation) but ultimately that doesn't really matter, for these reasons:

1) the Piedras Negras brewery, while impressive, was just one of seven breweries owned and operated by the Modelo Group in Mexico. It was built solely for export to the US and that is why its right alongside the border.

2) AbInBev still owns the other 6 Grupo Modelo Breweries in Mexico.

3) Modelo has 63% market share in Mexico - 100% of which is controlled/owned by AB-InBev. Mexico is a massive beer market.

4) Modelo brands are on fire overseas, often running out of stock due to booming sales.


Its a small concession for Ab-InBev to have to sell the Piedras Negras (export) brewery to Constellation, as well as the import rights to the US, for what they get in exchange.

Its no different than Ab-InBev having to sell MillerCoors joint venture in the USA to Molson in order to complete their global acquisition of SAB-Miller. They still will sell a ton of SAB-Miller products globally, with the United States leading the charge for building the brands.

You can even argue its better for AbInBev - because now a separate company (Molson) actually pays for the cost of building the brand at their own expense in the United States, but they get absolutely no residual benefit outside of this market, as Ab-InBev reaps the benefit globally. ;-)

 

woo-hoo, now I can get a $9 12oz can of Sculpin when I see shows at CMAC!!

 

Slippery slope, no?

Do you exclusively only buy things that are from small businesses and such?

If not, then why stand up for craft beer only?

 

But, unlike the ABI-Grupo Modelo DoJ settlement in which Constellation owns the rights to the GM brands only in the US, the proposed ABI deal for SABMiller includes not only MolsonCoors buying SABMiller's share of MillerCoors but the domestic AND international rights to the traditional Miller brands.

Essentially, SABMiller will spin-off the "Miller" part of the company and sell it (breweries and brands) to MolsonCoors, before being absorbed into ABInBev. There will be no "Miller" brands brewed anywhere by ABI.