Ballast Point Files Paperwork for IPO

With the interest in craft beer I would expect that this IPO will be valued highly. A big bump in the IPO after that and the owners remaining shares are worth a lot more than they might be valued without the IPO.

 

As long as they stay true to their slogan "Dedicated to the craft", then I have no problem with this.

 

I know everybody is different in terms of budget, but realize for a lot of people that the cost of beer is more time related than money related. I can only drink one or two beers in a night, so for me if a beer is 15% better than the competition then I am willing to pay more than a 15% premium in dollars.

Some people are extremely cost sensitive and drink nothing but bud light. Some people are more quality sensitive and drink nothing but BCBS/etc. Most of us are somewhere in between, and we are all on a different point in the cost vs quality spectrum.

 

Crazy. Sixtels of Sculpin in Chicago are $105.

 

Contribution margin....volume is up on (hopefully) the same cost base.

Great news for an investor. A sign of a well run business that is scalable.

 

I kind of agree with the sentiment that they are overhyped.

I've never been able to source any of their products in bottles that aren't over three months old for some reason. Granted, their distribution is very limited in PA and NJ, and Union in NY keeps their cases in the warehouse for three months before shipping them to stores, which is a major issue for ipa's in general.

And the their inflated price points isn't helping their cause either.

 

A lot of national chains prices fluctuate weekly with TPRs and ad activity. 13.99 one week, the next 12.99 then in ad for two weeks for 8.99 each when you buy 3. Kroger and Von's(Safeway previously, unsure who now as I haven't dealt with them in a few years) had iRI data. What type of iri has the packages retail price?

Fluctuation in pricing in different areas isn't all because of ballast point. Different distributors run different pricing to retailer but it's likely the cost is nearly the same from BP to distributors across the country. Also post off(discount) schedules can influence the pricing, though that comes down on the distributor as well, ie: run a $2 discount on cases 6 packs every two weeks, make a bit less margin but sell more product. I checked a post off sheet for the distributor out here but ballast point wasn't listed so it's irrelevant and is all front line no discount schedule

 

http://blogs.wsj.com/atwork/2013/01/15/want-to-kill-innovation-at-your-company-go-public/

Yeah, that's why I didn't say "every single publicly-owned company ever crashes and burns instantly".

 

http://www.business2community.com/b...public-companies-01345204#5xEX5u8Ctq84QLOC.97

It's a noticeable characteristic of many companies that have gone public. Risk-averse stockholders can put the brakes on long-term visions in exchange for short-term returns.

 

That's what underwriters do. They divvy up the IPO stock among brokerages and try to make sure the stock is distributed fairly. So if Morgan Stanley gets 20% of the iPO stock to sell they make it available to their best customers first and anyone else only if there are leftovers. A lot of IPOs you can't even buy the stock when it's first released because there is not enough to go around. It's not uncommon for IPO's to go up over the release price within a day of two of release because of exuberance for the IPO and then for it to go down not too much later when reality sets in. A really bad IPO is when there is not enough demand for the quantity of stock released. This can happen if the stock price is deemed too high or if there is a change in general market conditions. If that happens it can get canceled so the underwriters perform an important job of making sure the initial offering gets sold out.

 

I have been buying Dorado for $13.99 a 6 pack, that is a great price for 10% ABV of a delicious DIPA. Sculpin at the same pricell is expensive, but still better than bomber prices. They date the cans or bottles now, don't even try to call them Rogue.

 

Actually, kind of. Their sixtel prices have always been that high for Sculpin, but now their other stuff is creeping up there too. A sixtel of Grunion is almost just as much.......and that's crazy. I'll pay that much for Sculpin which is a world class beer to me, I won't pay that for Grunion.....and I like Grunion. I also think their packaged beer has gone up. When Grapefruit Sculpin was first released in six packs, it was $18.99 here in PA and people were beating down the doors to buy it. Now that it's all over the place, I see the prices have gone down a little. Is part of the problem retailers? Probably, but I also think the prices BP is charging have gone up.

 

Well, as you know, there are two steps in the distribution chain that allow for other folks to tack on their own price increases.

 

It doesn't get a fraction of the hype that beers like SoS get and it's easily as good.

 

I think that Sculpin has passed Stone IPA as the gold standard for new-school West Coast style IPA that is widely distributed, and they did it at the extreme high end of the price scale for six packs, which is a pretty impressive feat. For a beer that has a pretty lousy shelf life in my experience, that's a market coup for the most part. Couple that with their impressive spirits division (they are absolutely world class distillers, maybe even better than their beer) and you have a powerhouse business that needs a lot of cash influx for capital investment right now to keep growing. They have been doing most of their expansion recently on the cheap, with old used equipment for the most part, and I totally understand why they want a pile of cash to buy some shiny new steel and QC equipment to ensure that their quality and efficiency stays high. Expanding at the level they are approaching takes a ungodly amount of cash to sustain, and even their high margins aren't going to cover it.

 

Re: Ballast Point prices - Is a Mercedes really worth that much more than a Ford? Depends on which one you drive, I guess.

 

The same people on here that scoff at $15 sixers of Sculpin would gladly pay $10 for a similar bomber from a smaller brewery that doesn't produce sixers yet. Think TG bombers before the outsourcing. Sculpin is a damn fine beer that's easily worth $2.50 per bottle/can. I know math is hard for some people, but 72 oz of excellent beer for $15 is a better value than 22 oz for ~$10.

 

I love Sculpin and its premium pricing model. But I question how much growth they can achieve with the high margins. Ballast Point seems to already be available in all the big population states. So increased distribution range is not low hanging fruit. Would hate to see them advertising like the majors but maybe that is where craft beer is headed.

 

Jack White (BP founder, not the musician) is retaining most of the voting stock so there is no concern about a takeover from whomever. Edit: I haven't heard anything about this being a retirement issue with anyone involved with BP.

To those who are saying BP is overrated or an average brewery, well, it's better than Stone IMO and second only to Alpine in the greater San Diego area. IMO, no one can touch Alpine for their ales but Sculpin and Big Eye are solid. I will defer to those who say Sculpin is overpriced but I always buy it in the growler. Nothing like living in San Diego, and BP was found by a Bruin. And how many of us are old enough to remember the hype of (shitty) Coors back in the early and mid-70s? BP does put out a great product but they shouldn't be penalized for the hype caused by others. If anything, good for them to ride it to an IPO.

Had draft Pliny (Elder) and draft Sculpin side-by-side in May and I preferred Pliny, though Sculpin is my go to beer in San Diego.

Calm Before the Storm beats Hess' Vienna cream ale coffee, and BP's pumpkin ale, though not consistent, is superior to ay other SD microbrewery that I've compared to BP.

 

Good for them. I would buy them more if they lowered their prices.....or if I owned some stock