Ballast Point now in the bag...

[sablesurfer]

....yep, bought up. I only ever managed to get Sculpin once on a road trip.

http://www.msn.com/en-us/money/comp...-point-brewing-for-dollar1-billion/ar-BBn4lS3

 

[unionrdr]

The owners of Ballast Point gotta be happy. I for one am not. where the bloody hell are the anti-monopoly laws when you need them?

 

[JKoravos]

1 Billion? Holy crickets. I didn't realize BP was that big.

I like their beer but only have it when shared by a friend. $15 a 6 pack? No thanks.

 

[JKoravos]

The owners of Ballast Point gotta be happy. I for one am not. where the bloody hell are the anti-monopoly laws when you need them?

Dude. There are over 3,000 breweries in the US. I don't think anti-monopoly is going to come into play in the brewing business...ever.

 

[Bosh]

1 Billion? Holy crickets. I didn't realize BP was that big.

I like their beer but only have it when shared by a friend. $15 a 6 pack? No thanks.

About $5 a bottle here in Korea. One of the cheaper American craft beers

 

[GilaMinumBeer]

The owners of Ballast Point gotta be happy. I for one am not. where the bloody hell are the anti-monopoly laws when you need them?

How is this sale a monopoly?

And how is this sale a bad thing? If anything it opens Ballast Point to a wider distribution area.

 

[unionrdr]

I term it as such because everyone is buying out everyone else. Too much of it going on sure smacks of monopoly to me. Except we don't pass go & get $200.

 

[GilaMinumBeer]

I term it as such because everyone is buying out everyone else. Too much of it going on sure smacks of monopoly to me. Except we don't pass go & get $200.

Ahhh. But this is not AB/InBev. Constellation is mostly wine but also has Modelo, Coronoa, and Pacifico.

 

[slym2none]

Well, it was sold to a wine & spirits maker, not a big brewhaus like InBev.

I can't see a problem here.

 

[unionrdr]

Well, if they already own 3 other beers, then they're following the lead of the big two & it's monopolizing. TR must be spinning in his grave.

 

[ColoHox]

Why do so many people see these brewers/founders as sell-outs, especially when they are continuing to brew/operate the business?

I would gladly hand over my baby for 1,000,000,000 dollhairs. Especially since that amount is far higher than the IPO they were considering. Way to go Ballast!

 

[Konadog]

Why do so many people see these brewers/founders as sell-outs, especially when they are continuing to brew/operate the business?

I would gladly hand over my baby for 1,000,000,000 dollhairs. Especially since that amount is far higher than the IPO they were considering. Way to go Ballast!

Hard to pass up 1 billion $$, and keep running the business the same way with the same employees. Sounds like a win for BP.

 

[brewshki]

Good for ballast point. Every business owner should have the ability to grow their business to its largest extent. The only bad part would be if the quality of their beer diminishes. Until then, it's just another craft brewer succeeding to the point where their product can be distributed nationally.

 

[Phunhog]

While I am happy for the owners it will be bad for craft breweries in general. Can you imagine trying to compete for shelf space/tap handles against Lagunitas (Heineken), Goose Island (AB), Golden Road (AB), and now Ballast Point (Constellation). Due to the economy of scale they can cut their margin down to close to nothing and still make money. Imagine walking into a bar and Sculpin is three bucks a pint...... A small brewer can't do that and survive.

 

[doug293cz]

Being bought up by a corporation isn't necessarily bad... until the corporate cost cutters show up.

I had the unfortunate experience of spending the last few years of my career at a company that could no longer grow revenues. So the only way to meet profit growth targets was cost cutting. Now, there is nothing wrong with cutting out truly unnecessary costs, but just doing that requires careful analysis, and is a lot of work. It usually gets implemented as "cut X% across the board," without regard to consequences. In a brewery, that eventually leads to using lower quality (cheaper) ingredients, and short cutting processes, leading to inferior results. We can only hope that BP avoids this fate.

Brew on

 

[agrazela]

Imagine walking into a bar and Sculpin is three bucks a pint...... A small brewer can't do that and survive.

I imagine if I walked into a bar and Sculpin was $3 a pint, I'd need a new pair of underwear.

I'd also imagine that it will never be that cheap--but if it WAS made a bit cheaper and of the same or better quality, the small brewer would have to come up with something better than Sculpin.

 

[JKoravos]

While I am happy for the owners it will be bad for craft breweries in general. Can you imagine trying to compete for shelf space/tap handles against Lagunitas (Heineken), Goose Island (AB), Golden Road (AB), and now Ballast Point (Constellation). Due to the economy of scale they can cut their margin down to close to nothing and still make money. Imagine walking into a bar and Sculpin is three bucks a pint...... A small brewer can't do that and survive.

You're missing the end game here. These companies are looking for high margin products. Craft brewers are able to price at a premium but also suffer (in the relative sense) from a high cost operation. All of these acquisitions are plays for increasing margin by maintaining craft brew price points while trying to gain economy of scale from a larger pool of purchasing resources and potentially bringing in standardized business practices and sharing corporate resources.

These guys absolutely do not want to get into a price war, they want to ride the tide of craft brew prices higher while cutting costs. It's an absolutely outstanding investment because craft brew prices are only going higher and processing and ingredient costs are not following suit nearly as fast as the end product pricing. If you believe you can give a mid-sized brewing operation a cost advantage against the market and keep prices high you'll be printing money.

 

[JKoravos]

Being bought up by a corporation isn't necessarily bad... until the corporate cost cutters show up.

I had the unfortunate experience of spending the last few years of my career at a company that could no longer grow revenues. So the only way to meet profit growth targets was cost cutting. Now, there is nothing wrong with cutting out truly unnecessary costs, but just doing that requires careful analysis, and is a lot of work. It usually gets implemented as "cut X% across the board," without regard to consequences. In a brewery, that eventually leads to using lower quality (cheaper) ingredients, and short cutting processes, leading to inferior results. We can only hope that BP avoids this fate.

Brew on

Yes, unfortunately, that is where this is going in the long run. Although, I believe there will be a continuous stream of independent brewers being added to the market to take over the space left behind by brands that decline in quality due to overzealous corporate cost cutting.

 

[Jcruse]

....yep, bought up. I only ever managed to get Sculpin once on a road trip.

http://www.msn.com/en-us/money/comp...-point-brewing-for-dollar1-billion/ar-BBn4lS3

It's not very rare these days...they've had it at our Costco (Portland, OR) for a while now...

 

[slym2none]

*EDIT* This was a hideously stupid post. Pardon my jackassery.

 

[Teromous]

Corona, Modelo...Ballast Point

 

[JKoravos]

Dude. There are over 3,000 breweries in the US. I don't think anti-monopoly is going to come into play in the brewing business...ever.

Apparently the number of active breweries has gove over 4,000. Dang.

http://www.craftbeer.com/brewers_banter/u-s-brewery-count-surpasses-4000

“Given the strong pace of openings (approximately two openings/day with a net increase of 1.9/day factoring in closings), it is likely that later in 2015, or early in 2016, there will be more active breweries in the United States than at any point in our nation’s history.”

To hit an all-time high very shortly. Any brand that doesn't keep up their quality will quickly fall by the wayside.

 

[Bosh]

It doesn't make much sense to cut corners in a growing business. As long as beer that isn't light lager is a market that continues to grow I think we'll see the quality maintains. But it can't keep on growing forever, not at this rate. Eventually the crunch will come and we'll see some cost cuts that'll impact flavor.

But why give a ****? We can just brew our own no matter what the breweries do.

 

[slym2none]

Aren't hops already kind of scarce? What happens when we home-brewers can't buy hops because there are 10,000 craft breweries all over the USA???

 

[JKoravos]

Aren't hops already kind of scarce? What happens when we home-brewers can't buy hops because there are 10,000 craft breweries all over the USA???

Homebrewers use such a miniscule amount of hops it's not even on the radar. If the number of breweries continues to grow the hop acreage will continue to grow and push out less profitable crops. I doubt there will ever be a supply problem.

 

[Phunhog]

You're missing the end game here. These companies are looking for high margin products. Craft brewers are able to price at a premium but also suffer (in the relative sense) from a high cost operation. All of these acquisitions are plays for increasing margin by maintaining craft brew price points while trying to gain economy of scale from a larger pool of purchasing resources and potentially bringing in standardized business practices and sharing corporate resources.

These guys absolutely do not want to get into a price war, they want to ride the tide of craft brew prices higher while cutting costs. It's an absolutely outstanding investment because craft brew prices are only going higher and processing and ingredient costs are not following suit nearly as fast as the end product pricing. If you believe you can give a mid-sized brewing operation a cost advantage against the market and keep prices high you'll be printing money.

Good point. I guess I look at it from the "everyman" perspective. On the rare occasion that I buy beer at the grocery store do you know which one I buy? The cheapest "craft" beer. Every time! I think most beer drinkers, craft or macro are that way. So for whatever reason my local grocery store usually has a Lagunitas beer on sale so that is what I buy.

 

[Brew_G]

I imagine if I walked into a bar and Sculpin was $3 a pint, I'd need a new pair of underwear.



I'd also imagine that it will never be that cheap--but if it WAS made a bit cheaper and of the same or better quality, the small brewer would have to come up with something better than Sculpin.

I can't imagine walking into a bar and seeing *any* beer for $3 a pint. Haven't seen prices like that in over a decade...and it's hard to find a beer for that price even during happy hour, never mind a decent one!

 

[1977Brewer]

I can't imagine walking into a bar and seeing *any* beer for $3 a pint. Haven't seen prices like that in over a decade...and it's hard to find a beer for that price even during happy hour, never mind a decent one!

I was thinking the same thing. $2.50 Bud Light at the taco joint is probably the only sub $4 beer in my town.

 

[brewshki]

Does no one else walk into a good liquor store or a bar and say "I wonder if they have something I have never had before?" I do all the time. I have favorites of course, but I love finding a local craft beer I have never tried or a new beer from a great local brewery. There must be more people like me out there. This is a good thing because it will always give brand new little breweries a chance. That is all they need. If their beer is good enough, a chance to get people to drink it is all they need.

 

[singybrue]

I don't think they are planning on starting any price wars.
Quoted from the article linked above:

Constellation Chief Executive Officer Rob Sands said in an interview that Ballast Point’s value comes in its fast-paced growth and high prices. Constellation prides itself on being the biggest provider of growth in beverage alcohol in the U.S., and Ballast Point will help the company keep that title by getting into the rapidly expanding craft beer industry, he said.

With average selling prices at about $355 per barrel, Ballast Point also lies on the very premium end of craft beer, which typically run at about $270 per barrel, he said. That makes Ballast Point well-positioned to join Constellation’s portfolio of premium brands including Opus One wines, which costs $250 per bottle.

“We have no interest in anything below the high end of beer, so this is a particularly good opportunity," Sands said. "Ballast Point is so premium that it actually enhances our premium position in beer even above where it is."

 

[Calichusetts]

Kind of over the "shock" of buy-outs. For a couple reasons:

1. Recent sell out are now on selves around me. So, yes, buy out do lead to better distribution.

2. What is a business's end game here. They invest millions...for what? Think of this from there perspective. You invest millions, get paid A BILLION...LITERALLY, and still can brew your beer.

3. Most likely, lower prices.

4. Unfortunately, more pressure on stores and bars. Talked about it today with an owner of one of the best craft beer stores around. He joked he may have to sell bud soon.

Ballast reached a tipping point and chose a buy-out over an IPO. Imagine rich-investors having a major say in the company?!? For everyone that says they will never buy from them again...more for me. And yes, I buy plenty of local so that point is moot.

 

[Qhrumphf]

Anti-trust laws aren't going to apply here, because Contellation's increase in market share from buying BP is insignificant. Anti-trust laws come into play with the big ones. When AB-InBev bought Grupo Modelo (they actually OWN Corona and associated, Constellation handles the marking/importing/distributing, basically all the US operations), anti-trust got involved, and that's how Constellation has them- ABI had to sell them. Same with the talk of AB-InBev acquiring MillerCoors. US regulators would likely make them give up US operations, which would then likely be sold to Molson.

Good on Ballast Point. If I were to own a brewery and want to cash myself out, I'd sooner sell to my employees and let them own the place instead, like New Belgium did, but I can't fault them for wanting to cash in bigger.

 

[Phunhog]

I don't think they are planning on starting any price wars.
Quoted from the article linked above:

Constellation Chief Executive Officer Rob Sands said in an interview that Ballast Point’s value comes in its fast-paced growth and high prices. Constellation prides itself on being the biggest provider of growth in beverage alcohol in the U.S., and Ballast Point will help the company keep that title by getting into the rapidly expanding craft beer industry, he said.

With average selling prices at about $355 per barrel, Ballast Point also lies on the very premium end of craft beer, which typically run at about $270 per barrel, he said. That makes Ballast Point well-positioned to join Constellation’s portfolio of premium brands including Opus One wines, which costs $250 per bottle.

Interesting. I would think the hard core beer fan, people who post on BA or RateBeer or are homebrewers, those who are willing to pay top dollar for beer would object to a brewery being owned by a multi-national corporation. It will be interesting to watch and see if BP will lose credibility in the beer snob (which is really their market)world.
Almost all my friends drink craft beer but they buy whatever is on sale at the grocery store. They don't actively seek out beers or even breweries.

 

[Turkeyshot]

Go watch the movie Beer Wars and you will think a lot differently about the problem with bigger companies buying up all the small breweries. It might be a few years old but it gets the point across. http://beerwarsmovie.com/

 

[murphyslaw]

No bad feelings towards BP--they make great beer and now they've made a ton of money. Good for them.

But its sad to see the market getting more and more consolidated. You can quote the number of breweries out there but the name of the game is market share.


The biggest fear is diminished quality and squeezing out the competition through anticompetitive practices when it comes to distribution and retail. I've read that InBev tries to get distributors to drop any other competitor so smaller breweries have a hard time getting their beer on shelves. It also lets InBev crowd out others on the shelves at grocery stores.

But its smart by the people who have real interests. Obviously, BP made a ton of money. And didn't they start as a homebrew store? I also read a Q&A on reddit with a brewer from Bud who was asked why they don't just make their own IPAs. He said they can, and they have (in-house) but they know that the people who like IPAs will refuse to buy anything they make. So this is their only option.

 

[Bosh]

Kind of over the "shock" of buy-outs. For a couple reasons:

1. Recent sell out are now on selves around me. So, yes, buy out do lead to better distribution.

This is the only real danger with the buyouts. The buyouts lead to better distribution and we've seen some big companies buying distributors and they're rumored to be using their control of the distributors to squeeze out the competition. What we could see if the ones that haven't been bought out being squeezed out of distribution while the customer still sees a big shelf of craft beer at the store (the ones that have been bought out with the independent ones increasingly shut out).

 

[aprichman]

A billion dollars?! That seems like a massive over evaluation of Ballast Point who is largely a one trick pony IMO.

 

[Cyclman]

I struggle with my thoughts on large breweries buying out smaller ones. There are many benefits- better distribution, economy of scale in purchasing ingredients / materials, efficiency with laboratories / QC, sales efficiencies, access to capital- those just came off the top of my head. And a business owner has every right to maximize the return they can get from their business, which can include selling to a legit buyer.

And since I don't buy my clothes from a local tailor, or my foods all from the local farmer's market, why should I rebel against "big beer" when a high percentage of what is in my home is from huge multinationals.

But I guess beer is romantic to me, I prefer knowing the brewer from a local brewery to some massive corporate machine cloning beer (even if doing it very well) all around the country or even the globe. Beer is personal, but corporations are not. So, maybe it is about the approach of the owners / brewers. Jim Koch is a great example, he is huge, but he still has a genuine passion and love of brewing that results in lots of creativity and many excellent beers.

I think for the most part, I will buy local whenever I can. But for brewers who sell and the offspring maintains quality, innovation, and passion, I can continue to respect that.

 

[treacheroustexan]

Kind of over the "shock" of buy-outs. For a couple reasons:

1. Recent sell out are now on selves around me. So, yes, buy out do lead to better distribution.

2. What is a business's end game here. They invest millions...for what? Think of this from there perspective. You invest millions, get paid A BILLION...LITERALLY, and still can brew your beer.

3. Most likely, lower prices.

4. Unfortunately, more pressure on stores and bars. Talked about it today with an owner of one of the best craft beer stores around. He joked he may have to sell bud soon.

Ballast reached a tipping point and chose a buy-out over an IPO. Imagine rich-investors having a major say in the company?!? For everyone that says they will never buy from them again...more for me. And yes, I buy plenty of local so that point is moot.

Well said.

 

[hunter_le five]

Go watch the movie Beer Wars and you will think a lot differently about the problem with bigger companies buying up all the small breweries. It might be a few years old but it gets the point across. http://beerwarsmovie.com/

Nope.