Cans of Ballast Point beer stack high in it's Miramar production facility. The brewery estimates it will sell four million cases this year.
The San Diego beer scene is seeing dollar signs this week with the announcement that Ballast Point sold for a whopping $1 billion. The buyer is Constellation Brands, a multinational beverage conglomerate that deems itself "the world's leading wine company." Its dozens of wine brands include well-known Robert Mondavi, Ravenswood, and Clos du Bois.
It's also the third-largest beer producer in the U.S., though until now its beer portfolio has been craftless, composed entirely of Mexican brands Corona, Modelo, Pacifico, and Victoria.
It's quite the trajectory for Ballast Point, started by a small group of homebrewers nearly 20 years ago. The company had recently filed with the SEC to pursue an estimated $172.5 million IPO, but that seems like chump change in retrospect.
Cans of Ballast Point, soon to be distributed by the nation's third largest beer company, Constellation Brands.
The billion-dollar price corresponds to the worth of another California craft beer entity, Lagunitas Brewing Company, which sold a 50-percent stake to Heineken for $500 million in September.
As with Lagunitas, and Miramar's Saint Archer (now a part of MillerCoors), the Ballast Point team insists neither brewing personnel nor recipes will change. According to Ballast's Facebook page announcement of the sale, "We will continue to be a stand-alone company, brewing the beer that we like to drink with our team in place."
In a press release, Ballast Point reports an anticipated 2015 sales increase of "more than 100 percent versus calendar 2014." Founder Jack White suggested the sale was motivated by an urge to continue growing the brand. In a statement, he lauded Constellation's "proven track record of helping successful premium brands reach the next level of growth and scale."
The size of the investment certainly suggests Constellation will push the brand far and wide. Ballast Point expects to sell four million cases of beer in 2015, or roughly 290,000 barrels. Considering the Wall Street Journal's estimation of a brewery's worth to be at $1000 per annual barrel, the billion dollar price tag exceeds that by more than triple. It's basically $13.89 per pint brewed in 2015 — a pretty good deal for Ballast ownership.
And it might make room in the local market for some smaller craft breweries. Fan reactions on Ballast Point's Facebook announcement were largely negative, suggesting local drinkers will stop drinking its beers. One commenter responded, "I hope the access to new distribution networks makes up for the loss of loyal craft beer fans."
Another pondered, "As a local San Diegan and long-time supporter of your brewery, why should we continue to support Ballast Point and not other local craft breweries like you once were?"
Other commenters ranged from more direct to blunt, adding, "Ballast Point will never be in my fridge or cooler again," and, "Fucking sell outs."
Thus far, other local beer companies have remained pretty quiet about the sale. However, Modern Times did issue a typically playful tweet, highlighting the idea Ballast Point's most popular beer, Sculpin IPA, will share corporate stewardship with another high profile Constellation-owned beverage: "Tonight, we'll drown our sorrows in tasty Manischewitz and/or San Diego's leading IPA, both brought to you by the same folks. Crazy times!"