Constellation buys craft brewer for $1bn

Constellation Brands is to acquire San Diego-based Ballast Point Brewing & Spirits for US$1 billion in a bid to strengthen its position in the premium US beer market.

Ballast Point was founded in 1996 by a group of home brewers, and now counts more than 40 different beers among its portfolio.

Announcing its plans to purchase the company this morning, Constellation said the acquisition would provide it with a “high-growth premium platform” that would enable it to compete in the craft beer sector, strengthening its position in the premium US beer market.

“We started this business nearly 20 years ago with a vision to produce great beer that consumers love and to do it the right way,” said Jack White, founder of Ballast Point Brewing & Spirits.

“To achieve that vision, we needed to find the right partner. 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.”

Ballast Point is on track to sell nearly 4 million cases in 2015, which would represent growth of more than 100% compared to 2014. Net sales for 2015 are expected to reach $115 million, with volume and net sales growth from 2012 to 2014 averaging at more than 80%. Ballast Point currently produces beer from four facilities in the San Diego area and sells its beer in over 30 states. Following its acquisition, the brewery will continue to expand across the US, now with the added financial backing of Constellation.

“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”, said Rob Sands, chief executive officer, Constellation Brands. “Ballast Point has certainly been a key driver of that growth. Their business philosophy and entrepreneurial spirit perfectly align with our culture and we look forward to strengthening our position in the high-end beer segment with what is arguably the most premium major brand in the entire craft beer business.”

Constellation Brands plans to purchase Ballast Point Brewing & Spirits for $1 billion, with the transaction expected to close by the end of 2015. Ballast Point will continue to operate as a stand-alone company with its existing management team and employees continuing to manage day-to-day operation.

This acquisition follows a raft of purchases made by Constellation in recent months. This year alone Constellation has diversified its portfolio by purchasing a minority stake in Chicago-based cocktail company Crafthouse Cocktails, bought Napa-based wine brand Meiomi for $315 million, increasing its footprint within the US premium wine market, and invested $2 billion in its beer business in Mexico.

Its brands include Corona Extra, Corona Light, Modelo Especial, Negra Modelo and Pacifico, as well as Robert Mondavi, Clos du Bois, Kim Crawford, Rex Goliath, Mark West, Franciscan Estate, Ruffino and Jackson-Triggs. The company’s premium spirits portfolio includes SVEDKA Vodka and Black Velvet Canadian Whisky.