More evidence today that the craft beer industry is making a major impact on the overall market. The largest craft beer buyout ever went down today as Constellation Brands acquired San Diego-based Ballast Point Brewing & Spirits. The deal, worth an approximate $1 billion, is the latest—and by far the biggest—agreement to feature a craft brewery. While obviously a great deal for Ballast Point, it’s also great news for beer lovers in markets that Ballast Point will now have the opportunity to serve.
In a press release issued Monday, Nov. 16, Constellation Brands’ CEO Rob Sand said, “Along with imports, craft beer is a key driver of growth and premiumization within the beer industry, with craft doubling its share of the U.S. beer market in the last five years. Ballast Point has certainly been a key driver of that growth.” He went on to state that Ballast Point “is arguably the most premium major brand in the entire craft beer business.”
That’s hard to argue, as the brewery (perhaps best known for its Sculpin IPA) is expecting to see sales of $115 million in 2015. That’s roughly 4 million cases. Not bad for a business started by homebrewers in 1996.
Constellation’s release stated that Ballast Point will operate as usual, with its management teams and employees continuing to do what they do so well. The deal will greatly aid Ballast Point’s distribution, which currently hits 30 states. Now beer lovers in the rest of the country will have a better chance of finding Ballast Point at their local bar and on store shelves.
This is just another sign of the major impact craft beer is having on the market. “We see the craft category continuing to grow double digits for the foreseeable future and take a significant share of the beer business over the next 10 years,” Sands told the Wall Street Journal. The Journal backs that up by stating the Brewers Association “expects the craft-beer industry to become 20% of the nation’s $100 billion beer market by 2020.”
Before the deal was announced, Jack White, founder of Ballast Point, was in the process of going public to help the company continue its record growth. “To achieve that vision, we needed to find the right partner,” he said. “The team at Constellation shares our values, entrepreneurial spirit and passion for beer, and has a proven track record of helping successful premium brands reach the next level of growth and scale.”
Constellation, which currently brews Corona and Modelo, landed itself a good one with Ballast Point. The deal is set to close by the end of the year. Many people fear this will affect the quality we’ve come to love over the last 19 years. Like with the Lagunitas and Firestone Walker deals, only time will tell. One thing is for sure, however. The little guy is making an impact—and for the better. Craft beer continues to prove to be an undeniable force and deals like this benefit all parties. Craft brewers can gain the capital and distribution they need to continue to grow their passion, Big Beer will continue to be influenced by that passion and consumers will gain access to some really great beer!
You can read more about the acquisition here: http://www.cbrands.com/news-media/leading-craft-brewer-ballast-point-joins-constellation-brands
