Constellation Brands to Acquire Ballast Point Brewing & Spirits

Well for their sake I hope people keep riding that grapefruit IPA wave for the next decade. From what I can tell a substantial portion of Ballast Points growth in sales are tied directly to Grapefruit Sculpin. If peoples tastes change or more breweries start making good fruit IPAs for less then they are not going to continue on the path they are on. I mean look at what has happened with pumpkin beers over the last two years...

 

I feel torn. I want to like your post for it being accurate but don't want to like AB.....

 

I think you're missing the point. We're talking about enterprise value, not the revenue stream. ;-)


You don't need to see any of the money from the sales to get the appreciation in the value. As a global brand proliferates and gains more market share, the aggregate brand value increases.

 

None of them advertised in BA magazine or Yankee Brew News? Lawson's isn't looking to make a buck with the Two Roads deal? Jack's Abby's first sales guy/consultant wasn't a former Miller National Acct Manager? Hell, many on BA assumed Jack's Abby was the pay to play brewery referenced when that story initially broke because of how quickly they gained market share around new england. If you dangled $1 billion in front of any of these guys or offered an attractive package to expand their distribution, they're going to listen and seriously consider the offer. Craft beer is still growing at a pretty rapid clip. If that slows, margins will become more important and we'll see how many indie artisan brewers survive.

 

I'd let then chop off my weiner for a billi

 

I can't blame them for taking the cash. Congratulations on becoming one of the 1%.
That said, in my book, constellation group is AB/InBev and I won't be buying it.

 

I'd sell my soul to the dark lord for a billion.

Glad I'll be seeing BP in Michigan soon.

 

What are these laws and restrictions that big brewers place on smaller brewers? Last time I looked states and our federal government are doing most of the regulations that make it hard for anyone to be in any kind of business. Big breweries pay much higher excise tax rates, big brewers can't self distribute (like small ones can in at least some states), big brewers undergo far more scrutiny from a variety of regulatory agencies.

If you're talking about the Small Brew Act, big brewers have no skin in that game - they are all over six million barrels so there is no excise tax rate change for them either way. Plus it only benefits brewers between 60,000 and 6 million barrels...that's hardly your "small, independent craft brewer" - JEEZ!!

 

My two cents. A billion is a lot of money. If someone offered me a billion dollars for my company, no matter how personal it is to me, I would still take it into serious consideration, before I made ANY decision. So, if the folks at BP have been at it for 20+ years there is a lot of sweat equity there I am sure, as well as probably some substantial debt that has been loaded on in the last 2 to 5 years. Let's hope that by taking this the owners walk away with a substantial sum of money in their pockets, this would be the only justification for years of sweat equity. Lets also hope that they have taken care of their staff at all levels with either cutting them in on the deal if they are some form of equity owners or that they have taken care of all of them on the back end with job security and/or substantial payouts. Let's hope that everyone of them has the option to stay on and continue should they desire. If BP leaves its staff holding the bag and they clear out only the top levels then that would be a great shame. Lets also hope they have written in a no changes policy for the new overlords so that quality is not sacrificed for profits. Either way I think that anyone would have a very difficult time saying no to a billion dollar offer for twenty years of hard work.

 

Anytime a brand is placed on the shelf for any reason besides customer demand, a craft brand is likely forced out. Like when their were suddenly Goose Island taps and shelf facings seemingly overnight. I know the business and the numbers here; they aren't top movers. But they rarely leave. Why? They're owned by a company that can 1) afford to wait out a price war, and 2) often dictates grocery store sets by tying other brands to favorable pricing and promotion from Bud.

Or when Not Your Father's Root Beer suddenly appeared in case stacks at retailers as the default "craft" option.

It's all fair business (well, most of it is, some of the tactics are illegal), and again, I'm not screaming "Everyone at Ballast Point should be egged and the beer is terrible now." I'm saying I have a choice as a consumer, and I have purchased my last drop of Ballast Point. And I'm saying people should inform themselves about the market works before announcing "Hey more Grapefruit Sculpin for me, sweet!"

 

The people who started Ballast Point aren't suddenly bad people. And the beer isn't suddenly bad. Further, there's no pressing reason to never buy anything from a large company;large companies many times create economies of scale that allow for lower prices and better access.

However, having worked in the craft beer business, I know what happens when a brand is acquired. A lot of taps and shelf facings get shoehorned in, because of price, promotional considerations...anything but customer demand. That's a defeat for the discerning customer, and I don't have to enable it.

 

I agree, a boycott is not an answer, but that doesn't mean that big beer isn't working on breaking down the culture. Then again, maybe I'm cynical and they just want to be a part of it.

 

So with about $4 trillion they can buy all the craft breweries.

 

I just call it "beer"

 

That's called salesmanship - brewers and distributors make a pitch and retailers either buy it or not. Some have the wherewithal to do it and some don't. The retailer decides what they offer; slotting fees are illegal in this country (unlike almost every other country where its all "tied house"). And I would feel too sorry for these poor independent brewers that cash out for billions, get big tax breaks, grow double and triple digit and sell for 25X EBIT. Can't you see its all still manipulating public perception?

 

I just find it curious that it was ok to buy beer from a company that was already worth 800 million or more but now all of the sudden they get bought out for 1 billion and you won't buy it anymore? I understand the reasons to boycott because of the negative things Ab InBev does with craft beer legislation but Ballast Point already was a large scale beer company before this deal was made. As long as they don't screw up the Sculpin I could care less.

 

Alpine was sold to GF last year. Distribution is a critical piece of a company's marketing plan. We are now getting Hoppy Birthday, etc. on Chicago shelves where it gathers dust.

If you don't think Cigar City a savvy and "emphatic" marketer, you don't understand the genius behind ticketed events and don't participate in social media. I get probably four or five tweets a day from CC. I could actually see them being the next domino to fall.

 

Doubt it. Constellation has to make their money back somehow. And maybe that's why Ballast Point was such an attractive target. Good, but overpriced, beers that sell enough to keep the company in business.

 

It will be interesting to see how the price changes with this buyout.