Most of these large breweries were way more interested in getting big than they were in making money. Most acquisitions are done at a multiple of barrelage, and ownership’s exit strategy was/is to sell to someone bigger. More barrelage = better price. Brewing (like wine-making) is a difficult business. Only with a well thought-out business plan and good execution do you make money. The bigger you get, the more complex the issues become and the harder it is to attain suitable profitability.
So you think Constellation looked at it and said “we can’t make the numbers work at the scale we require”?
It’s shocking to me, I don’t know shit, but that’s quite a misstep if the case.
Very curious what Constellation sold it for because their original purchase was valued based on how they thought they could expand/leverage their distribution.
The guys buying it are clearly stating that the business is going to be downsized. That had to play into their valuation of the price.
Constellation ran Ballast Point into the ground. Ballast Point’s current barrelage is less than half of what it was at the time of the Constellation purchase, and Constellation massively overpaid.
Wow… imploded
They now own a brewing company lost at sea. Ballast Point’s 200,000 BBLs of production is less than half what it brewed at its peak in 2016, when it produced a reported 431,000 barrels of beer. From 2016 to 2018, Ballast Point shed 110,000 barrels of production. Following the sale to Constellation, layoffs in Ballast Point’s Craft & Specialty Sales Division, Midwest and South sales teams, and among brewpub and brewery staff soured employee morale. Executives, co-founders, and brewers departed just eight months after the deal closed. Without a dedicated sales and marketing team for the Ballast Point brand, sales declined and consumer interest waned. Two brewpub locations closed this spring. Ballast Point appeared to be floundering, and there was talk that Constellation was shopping around for a buyer. According to people familiar with the matter, prices as low as $100 million for the brand and brewery were in discussion.
More on Ballast
The Takeout: Nation’s oldest craft brewery saved in the nick of time.
I’m not sure if this is really saved. A contract brewer is taking over the label, and whenever someone else is making the beer, it will be different. Sleeping Giant is looking for a use for their excess capacity, so it may make sense for them, though selling beer in 29 states is a lot different than making beer for someone else. Boulder has seen a 44% decline in sales since 2015. They auctioned off their production equipment last week. I’m not sure if they are keeping a pilot system running for their brew pub (in other words, it’s unclear whether they are still a brew pub or just a bar), but if not, they are actually dead except in name.
After lots of rumours flying around the last few weeks, we had a buyout in Australia during the week that was a pretty big deal in the local beer news. Balter Brewing in the state of Queensland was bought by CUB (our biggest macro brewery that is now owned by Asahi). Balter is only a few years old but they started at the right place and time (the Gold Coast just near Brisbane, just has the craft beer scene was taking off there). An ownership group with some local celebrity surfers (Mick Fanning, Joel Parkinson, Bede Durbidge, Josh Kerr) probably helped them in front of people that wouldn’t normally give craft beer the time of day. There was certainly a bit of skepticism when they launched, but they earned respect in the industry here. The beers weren’t particularly spectacular or challenging but were pretty solid and consistent and the branding was recognizable. It is the second one to sell in Queensland this year after Green Beacon in Brisbane was sold to Asahi (directly, not through CUB) in August. It has been one of several in the last couple of years, mostly midsize breweries with national distribution
Oh shit…
Just four years after dropping $1 billion on craft brewing upstart Ballast Point, Constellation Brands (NYSE:STZ) is selling its record-making prize for an undisclosed sum (read, pennies on the dollar) to tiny operation Kings and Convicts Brewing just outside of Chicago. According to Constellation’s most recent quarterly filing, it valued Ballast Point at just $17 million. Yikes.
Craftworks, owners of Rockbottom, Gordon Biersch, and others filed for bankruptcy at the beginning of March and recently terminated 18,000 workers…
Laurelwood Brewing in PDX couldn’t make payroll after laying everyone off.
The McMenamins chain laid off almost everyone over a week ago and finally made good on payroll yesterday.
I imagine this will be a pretty common theme over the next month
I own a brewery and needless to, its a tough industry right now. I was most surprised by Boston Beer buying Dogfish (not really a merger) but we’re going to see continued consolidation both by breweries and distributors.
It will be interesting to see what the landscape looks like in nine months. A lot of Oregon breweries are scraping by with outdoor seating and home delivery. Outdoor seating is tough to do in October and November! Despite being somewhat open, draft is still dead. We have gone from 70% draft to about 5% draft. Luckily we have the reputation to sell into some new markets, which when combine with increased packaged sales locally, has allow us to maintain our production at pre-COVID levels. It is amazing how much time and effort we put into kegging though. We’ve probably saved 16 hour a week of work time due to the change.
I don’t have stats, but the local crafts in NYC seem to be chugging along just fine. They’ve pivoted to canning more beer since on-premise business is a fraction of what it was, but Other Half still can sell out of limited releases within hours or a day. Some releases that used to last only a day or two may last a week. I love, love, love the online ordering and curbside pickup option, it’s so much better than waiting hours in line to purchase a limited release. Other small guys like Root + Branch are teaming up with a rotating crew of beer shops and beer bars to parcel out their releases.
The tipped workers have been impacted the most.
Base Camp Brewing in Portland is closing this week. I was expecting this for some time. Many more to come…
and Ballast Point … and St. Archer … and … 
Two more breweries in Oregon just bit the dust. Small ones - Grixsen in Portland and Salem Ale Works. I expect more in the next six months.
COVID-caused decrease in business, Rick? If “yes,” how were these breweries doing pre-COVID, if you know.
Base Camp was in trouble before COVID. SAW and Grixsen are likely COVID casualties. These were both tap room reliant breweries and were likely on shaky footing anyway. They just stayed in business long enough to understand that even with some tap room activity, it wasn’t going to be enough to keep them afloat.
Good-faith question: Is it difficult to transition from tap-room reliant to canning/bottling?
I can understand struggling to make-up for lost commercial business (i.e. restaurants; airlines), but I would assume (perhaps incorrectly) that it wouldn’t be difficult to switch to canning and/or crowlers in lieu of tap-room business. Is my assumption wrong?