TwistedGray
El Jefe Brewing Company
Here's a copy and paste of what I just read...don't recall seeing this on the forum. Ignore if it's otherwise been posted; I can't imagine it hasn't but...?
Constellation Unloads $1 Billion Craft-Beer Acquisition Ballast Point -- Barrons.com
1:22 pm ET December 4, 2019 (Dow Jones) Print
By Mike Murphy, MarketWatch
This article originally appeared on MarketWatch, a sister publication of Barron's. We publish articles from other Dow Jones sites when we think our readers will enjoy them.
In a stunning deal that shows how much the craft-beer industry has changed in recent years, Constellation Brands (ticker: STZ) on Tuesday unloaded the Ballast Point beer brand -- which it bought for a record price in 2015 -- to a little-known Chicago-area brewer for an undisclosed sum.
Highwood, Ill.-based Kings & Convicts Brewing announced it has reached a deal with Constellation to acquire the Ballast Point brand, as well as its production facilities and brewpubs -- five in California and one in Chicago -- with the exception of a facility in Virginia that Constellation will keep. A price was not announced, though it is likely to be a significant discount from the $1 billion that Constellation spent when it acquired Ballast Point in 2015, the largest single amount ever paid for a craft-beer company.
Ballast Point was founded in San Diego in 1996 and grew to become one of the nation's largest and most respected independent brewers before its sale to Constellation, charging a premium price for its beer when few thought that craft beer could sell for that much more than mass-produced rivals.
It rapidly expanded under Constellation, but became overextended, closing three facilities in the past year, laying off workers, and canceling plans to open a brewpub in San Francisco. Ballast Point has sharply cut back production since its peak of 430,000 barrels a year in 2016, but is still expected to produce 200,000 barrels in 2019, and is distributed in 50 states and 17 countries, according to a statement.
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Kings & Convicts is a privately held brewer that launched in 2017 and operates a single 5,000-square-foot brewery and taproom on Chicago's North Shore, and is expected to produce just 660 barrels of beer this year, according to the Chicago Tribune. It is not well-known nationally, with only 200 Twitter followers before of the announcement, and its six beers are available only in the Chicago area and southern Wisconsin. In a statement, the brewer said it would take on all of Ballast Point's workforce -- which totals more than 500 -- and plans to use Ballast Point's distribution network to expand.
"As craft brewers, we have long admired the quality and spirit of the Ballast Point brand and team," Kings & Convicts CEO Brendan Watters said in a statement. "Our goal is to leverage Ballast Point's deep know-how, talented and passionate employee base, and outstanding operating team to grow both Ballast Point and Kings & Convicts together."
Watters, a former hotel executive, told the Chicago Tribune that the deal swims against the tide of consolidation that has swept up the craft-beer industry. "We're saying, 'Let's bring it back to independence and innovation and see what happens,' " he said.
For much of the past decade, giant brewing companies have been acquiring smaller craft brewers to capitalize on that segment's rapid growth. But craft-beer growth has slowed in recent years, and the Ballast Point deal is likely among the industry's biggest misses.
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"Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point," Constellation CEO Bill Newlands said in a statement. "Ballast Point remains one of the most iconic craft beer brands in the country and we're pleased to transition the business to an owner that can devote the resources needed to fuel its future success. At the same time, this decision allows Constellation to focus more fully on maximizing growth for our high-performing import portfolio and upcoming new product introductions."
Constellation has since shifted its attention to a different intoxicating substance that has provided questionable valuations to some companies: Cannabis. The company invested $4 billion in licensed Canadian cannabis producer Canopy Growth (CGC) last year and has established a majority of directors on that company's board, which dismissed co-CEO Bruce Linton in June amid unhappiness from Constellation with the company's direction.
Constellation also owns the Corona and Modello beer brands, as well as numerous wine and spirits labels. The Ballast Point deal is expected to close before the end of Constellation's 2020 fiscal year.
Constellation shares are down 1% in recent trading, at $182.71. They are up 13.6% year to date, compared with the S&P 500's 24.2% gain in 2019.
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Comments? Email us at [email protected]
(END) Dow Jones Newswires
December 04, 2019 13:22 ET (18:22 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Constellation Unloads $1 Billion Craft-Beer Acquisition Ballast Point -- Barrons.com
1:22 pm ET December 4, 2019 (Dow Jones) Print
By Mike Murphy, MarketWatch
This article originally appeared on MarketWatch, a sister publication of Barron's. We publish articles from other Dow Jones sites when we think our readers will enjoy them.
In a stunning deal that shows how much the craft-beer industry has changed in recent years, Constellation Brands (ticker: STZ) on Tuesday unloaded the Ballast Point beer brand -- which it bought for a record price in 2015 -- to a little-known Chicago-area brewer for an undisclosed sum.
Highwood, Ill.-based Kings & Convicts Brewing announced it has reached a deal with Constellation to acquire the Ballast Point brand, as well as its production facilities and brewpubs -- five in California and one in Chicago -- with the exception of a facility in Virginia that Constellation will keep. A price was not announced, though it is likely to be a significant discount from the $1 billion that Constellation spent when it acquired Ballast Point in 2015, the largest single amount ever paid for a craft-beer company.
Ballast Point was founded in San Diego in 1996 and grew to become one of the nation's largest and most respected independent brewers before its sale to Constellation, charging a premium price for its beer when few thought that craft beer could sell for that much more than mass-produced rivals.
It rapidly expanded under Constellation, but became overextended, closing three facilities in the past year, laying off workers, and canceling plans to open a brewpub in San Francisco. Ballast Point has sharply cut back production since its peak of 430,000 barrels a year in 2016, but is still expected to produce 200,000 barrels in 2019, and is distributed in 50 states and 17 countries, according to a statement.
Read more: Marijuana Drinks Are Finally Brewing at Canopy Growth
Kings & Convicts is a privately held brewer that launched in 2017 and operates a single 5,000-square-foot brewery and taproom on Chicago's North Shore, and is expected to produce just 660 barrels of beer this year, according to the Chicago Tribune. It is not well-known nationally, with only 200 Twitter followers before of the announcement, and its six beers are available only in the Chicago area and southern Wisconsin. In a statement, the brewer said it would take on all of Ballast Point's workforce -- which totals more than 500 -- and plans to use Ballast Point's distribution network to expand.
"As craft brewers, we have long admired the quality and spirit of the Ballast Point brand and team," Kings & Convicts CEO Brendan Watters said in a statement. "Our goal is to leverage Ballast Point's deep know-how, talented and passionate employee base, and outstanding operating team to grow both Ballast Point and Kings & Convicts together."
Watters, a former hotel executive, told the Chicago Tribune that the deal swims against the tide of consolidation that has swept up the craft-beer industry. "We're saying, 'Let's bring it back to independence and innovation and see what happens,' " he said.
For much of the past decade, giant brewing companies have been acquiring smaller craft brewers to capitalize on that segment's rapid growth. But craft-beer growth has slowed in recent years, and the Ballast Point deal is likely among the industry's biggest misses.
Read more: Marijuana Stock Acreage Holdings Has Slumped This Year. Why an Analyst Thinks It's Time to Buy
"Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point," Constellation CEO Bill Newlands said in a statement. "Ballast Point remains one of the most iconic craft beer brands in the country and we're pleased to transition the business to an owner that can devote the resources needed to fuel its future success. At the same time, this decision allows Constellation to focus more fully on maximizing growth for our high-performing import portfolio and upcoming new product introductions."
Constellation has since shifted its attention to a different intoxicating substance that has provided questionable valuations to some companies: Cannabis. The company invested $4 billion in licensed Canadian cannabis producer Canopy Growth (CGC) last year and has established a majority of directors on that company's board, which dismissed co-CEO Bruce Linton in June amid unhappiness from Constellation with the company's direction.
Constellation also owns the Corona and Modello beer brands, as well as numerous wine and spirits labels. The Ballast Point deal is expected to close before the end of Constellation's 2020 fiscal year.
Constellation shares are down 1% in recent trading, at $182.71. They are up 13.6% year to date, compared with the S&P 500's 24.2% gain in 2019.
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Bullish on Altria, Salesforce, and a Look at Tesla's CyberTruck
Comments? Email us at [email protected]
(END) Dow Jones Newswires
December 04, 2019 13:22 ET (18:22 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
