Ballast Point now in the bag...

[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.

 

[bob1852]

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.

I don't know about where you are, but where I am - beer diversity at bars and in stores has never been higher.

I'm just not seeing this shelf space competition everyone is talking about. What I'm seeing is 2-3x MORE shelf space to accommodate all of the different brands out there (most of which is the result of increased distribution due to either the big breweries buying up smaller breweries, or the big breweries consolidating distributional lines).

The best time in the history of beer in America is NOW!

 

[Paps]

At the local Wal-Mart grocery store (where i'd bet the bulk are buying their beer from)
It's 90% plus inbev products.
B-M-C check
B-M-C with a different name/label check
the only non B-M-C items i can think of that they have are Boulevard beers, Sam Adams, & StrongBow Hard Cider.

 

[murphyslaw]

I don't know about where you are, but where I am - beer diversity at bars and in stores has never been higher.

I agree. My local grocery store sells bud, bid light, bud lime, something called "strawbeerita", goose island, blue moon, shock top, kona, red hook, bass, magic hat, Leinenkugel, bass, becks, boddingtons, michelobe, natty light, rolling rock, Stella, spaten, st pauli girl, widmer, omission....the diveristy is fantastic.

goose island is really the only on one that list that interests me, though. I just cant figure out why they stock so many mediocre brands to the exclusion of so many other great craft breweries.....

 

[V1nny]

It has to be only a few months ago that Stone and Ballast Point were equal in price, and because I liked sculpin more, I would buy that when given the option. At $17 after taxes, I almost never buy any ballast point beers in the store. I like to search for ones ive never tried but if im in a store with lagunitas, stone and ballast. ill go for the cheaper option knowing theyre all good.

I dont know why their prices have surged recently but 25 cents an ounce is pushing it when i can buy and equally good beer for half that.

 

[JKoravos]

They rpobably raised prices to probe out their high end appeal for the eventual buyout. Any brand that can maintain sales at high end prices plus volume will be ripe for a buyout.

 

[govner1]

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 drank Sculpin at my local Brixx last night for $1.95/ pint! In fact, all the draft pints were $1.95.

 

[JKoravos]

It's been a while since i've seen anything half decent for less than $5/pint. $6-7 is much more common around here for something like Sculpin.

 

[grizzly2378]

I keep hoping all these acquisitions lead to me being able to buy some of these beers in South Dakota. So far, no such luck, other than Goose Island.

As I saw posted on Twitter, if Ballast Point is worth $1 billion, how much is Sierra Nevada or New Belgium worth???

 

[Calichusetts]

Just remember that a majority of the price of the beer you get in a store has nothing to do with the brewery. Over 50% of the cost is that of retail and distribution. Most bars are upping the price 5-6 times what they got it for.

Everytime prices go up, people get made at the brewery, when 99% of the time, its not on them. Packaging, on the other hand, is a way that breweries can increase price in a more subtle way. Often going from 6-packs to 4-packs.

 

[hunter_le five]

Just remember that a majority of the price of the beer you get in a store has nothing to do with the brewery. Over 50% of the cost is that of retail and distribution. Most bars are upping the price 5-6 times what they got it for.

Everytime prices go up, people get made at the brewery, when 99% of the time, its not on them. Packaging, on the other hand, is a way that breweries can increase price in a more subtle way. Often going from 6-packs to 4-packs.

Our establishments typically charge a 3-4X markup for beer and 3X wine, and that's cheaper than what a lot of the other places around here are charging.

 

[Baja_Brewer]

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

Seriously. Knowing nothing about their cash flow aside from the fact that they must just be raking it in @$15-16/6-pack (retail, post distribution - I know, I know) I'd still be laughing all the way to the bank with a $1b check in my hand.

 

[smcinco]

I keep hoping all these acquisitions lead to me being able to buy some of these beers in South Dakota. So far, no such luck, other than Goose Island.

As I saw posted on Twitter, if Ballast Point is worth $1 billion, how much is Sierra Nevada or New Belgium worth???

Not to try to rationalize the price, which I think is crazy, but I don't think they would appeal to the same buyer. Ballast Point is a much more premium brand. I would equate those two to Lagunitas, which definitely did not achieve a 20x sales valuation.

In any event, having been in the Home Brew Mart 20 or so years ago when they were setting up the initial BP system, I am really gratified to see them find such a stupid buyer.

 

[MaddBaggins]

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

One trick pony? Hardly.

 

[JKoravos]

I keep hoping all these acquisitions lead to me being able to buy some of these beers in South Dakota. So far, no such luck, other than Goose Island.

As I saw posted on Twitter, if Ballast Point is worth $1 billion, how much is Sierra Nevada or New Belgium worth???

Boston Beer Co is traded publicly. They have market cap of ~$2.8 Billion. That should give you a rough idea of what SNBC and New Belgium are worth.

 

[aprichman]

One trick pony? Hardly.

Personally I don't think ANY of their beers are outstanding and outside of their "fruit juice" IPAs I rarely see their beers at bottle shops or bars.

 

[sd_brewbie]

Having lived in San Diego most of my life I guess I am really spoiled by our selection of beer. The large number of breweries and selection in our stores is amazing. I generally prefer to find the smaller breweries. While I might enjoy Ballast Point beer from time to time Ballast Point is too huge for me to enjoy as my regular watering hole. I have a few places where I can walk in, they know my name and I can chat with the owners/brewers.

Ballast Point has 4 tasting rooms here and while the newer location in Miramar is cool, it is big and crowded. I do enjoy Ballast Point's Home Brew Mart which is a their original location and also a home brew store (though I prefer the homebrewer for my supplies). Ballast Point does run their experimental brews out of Home Brew Mart and you can find beers that you won't find at their other locations to those thinking Sculpin is the only good thing they got going.

I don't think their sale will be a problem. If they do drive Ballast Point into the ground (and I doubt that will be the case) there are plenty of other great breweries here in San Diego.

 

[GilaMinumBeer]

One trick pony? Hardly.

Ballast Point doesn't distribute here. Turns out they do have a huge lineup. That no-one says anything about.

All anyone talks about is the degrees of Sculpin.

 

[seefish]

The prices will never go down, unless they decide to cut corners. Likely in some cases the prices will go up. Goose Island has been slowly raising Bourbon County prices since bought by AB-Inbev and have stopped selling 4-packs. The benefit being that they now have a ginormous barrel house and filled 4500 barrels with bourbon county alone.

 

[Grannyknot]

I see the ridiculous purchase price is proportional to their ridiculous beer prices.

 

[QuadConPana]

I'm happy.

Ballast Point is a good enough brewery, that it will be great to be able to buy Sculpin at the grocery store. But, it's not like they're DFH or Stone. It won't be all that earth shattering if they end up losing a little bit of craft mojo.

I will say, though that I looked at some of their new owners wine holdings. They own Arbor Mist and Wild Irish Rose on one end, and Ravenswood and Clos du Bois on the other. If those can coexist, then so can Ballast Point and Corona.