Less than a month after we eagerly announced that you could soon buy shares of craft beer icon Ballast Point, the San Diego brewer announced it was selling to Constellation Brands for roughly $1 billion. Constellation isn't a household name like Miller or Molson, but the publicly traded beverage company owns Mexican brands Corona, Modelo, and Pacifico, as well as Svedka vodka, and Robert Mondavi wines.
On October 19, the makers of the much-lauded Sculpin IPA filed a Form S-1. The lengthy, and likely expensive, document laid out the company's finances and offered a prospectus to potential investors. However, Ballast Point was under no obligation to follow through with the $173 million IPO, says Sam Holloway, a University of Portland professor of entrepreneurship and founder of Crafting a Strategy. "By my estimation, somebody at Constellation saw the S-1 and got excited."
And that enthusiasm was certainly called for — Ballast Point's IPO showed rising revenue and profits, along with 100-percent production growth for 2015. Those factors are likely why the $1 billion price tag is the biggest yet for a craft brewer. "Constellation gave the owners an offer they couldn't refuse," says Holloway.
The press release from Constellation quotes Ballast Point founder Jack White with a say-nothing comment on how the corporation will be the right partner to help the brewery "produce great beer that consumers love and to do it the right way." Constellation's CEO Rob Sands, however, cut to the point, citing craft beer's fast growth and Ballast Point's role in it. The brewer is the first craft beer brand acquired by the company, whose previous best offering (in our opinion) was Negra Modelo.
Ballast Point's sale may not be the last we see this year, or month, as beverage companies with deep pockets want a foothold in the $20 billion craft beer market. "The way craft beer is growing and companies are scaling is very attractive to investors," says Holloway. Constellation expects the deal to close by the end of December.