American Craft Beer The Best Craft Beer, Breweries, Bars, Brewpubs, Beer Stores, And Restaurants Serving Serious Beer.
(Courtesy Ballast Point)
Even as word spread of Constellation Brands $1 billion purchase of Ballast Point, industry insiders wondered “Is any craft brewery worth that kind of money?”…Well the short answer is NO. Especially in 2019.
It’s hard to look back at Constellation Brands’ announcement this week, that it was dumping its costly investment in San Diego-based Ballast Point, and claim to have not seen it coming. And the fact that the company unloaded it to an all but unheard of Chicagoland brewing venture, reeks of a fire sale mentality.
The Victor, NY-based drinks giant acquired the then popular brewery in 2015. It was the height of craft beer’s second boom when the segment was showing seemingly unstoppable double digit growth.
But still $1 billion dollars?
The successful business model back then was expansive distribution, and breweries like Boston Beer, New Belgium and Sierra Nevada were leading the way.
But still $1 billion dollars?
Fast forward to 2019 and consumers are transitioning from craft beer majors to uber-local taproom brands.
Having a huge distribution imprint is now a crushing burden. Boston Beer has acquired Dogfish Head to up its faltering beer game. The company’s growth isn’t even about beer….it’s about hard seltzers and teas.
Pending approval New Belgium will soon be owned by a Kirin subsidiary. And who knows how long Sierra Nevada will be able to stay independent?
Ballast Point struggled in Constellation’s hands after it took the brand national. And CEO Bill Newlands’ acknowledged those struggles in his announcement…
“Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point. This decision allows Constellation to focus more fully on maximizing growth for our high-performing import portfolio and upcoming new product introductions, including Corona Hard Seltzer, scheduled to launch this spring.”
The future?
“The company twice wrote down the value of the brand, by $87 million in 2017 and $108 million earlier this year” according to Motley Fool. And last spring “revealed it was shuttering two Ballast Point facilities and abandoning plans for a brewpub in Southern California.”
Though Constellation is clearly taking a bath on the sale, it was clearly desperate to move away from its expensive craft beer mistake. And it does call into question its more recent acquisitions of Funky Buddha in 2017 and Four Corners in 2018.
It also calls into question Constellation’s taking a 38% stake in the cannabis grower, Canopy Growth. So far that nearly $4 billion is looking like another expensive error.
