Constellation BrandsConstellation BrandsConstellation Brands, Inc., a Fortune 500 company, is an international producer and marketer of beer, wine and spirits. Constellation is the largest beer import company in the US, measured by sales, and has the third-largest market share of all major beer suppliers.en.wikipedia.org(NYSE: STZ) is on watch after selling its Ballast PointBallast Point Brewing CompanyBallast Point Brewing Company is an American brewery founded in 1996 by Jack White in San Diego, California. Ballast Point Brewing Co. started in the back of Home Brew Mart, a homebrew supply store White founded in 1992. As of 2015, it was the second largest brewer in San Diego Co…en.wikipedia.orgcraft beer unit toKings Convicts Brewingfor an undisclosed amount. Constellation acquired Ballast Point in 2015 for $1B. The transaction is expected to close by the end of FY20.
Should Constellation Brands have bought Ballast Point Craft Beer?
Constellation Brands certainly didn’t have much luck after buying the craft beer brand Ballast Point. (Whether they could have had better foresight and knowledge is up for discussion.) In 2015, Constellation — which was better known for wine before acquiring the popular Mexican beer brands Corona and Modelo — paid $1 billion for Ballast Point.
Could Ballast Point be a sustainable national brand?
And sure, Ballast Point may not generate the kind of excitement it did back when Sculpin IPA was taking the world by storm, but they at least have a chance to become a sustainable national brand with the right guiding hand. That said, Constellation probably never hoped that Ballast Point would become a losing venture for them.
What is Constellation Brands’ vision for the beer market?
Constellation, which also owns a number of popular wine and spirits labels, has maintained that it wants to be a “leader in the high-end of the U.S. beer market.”
What states does Kings and Convicts sell ballast point products in?
Those include California, Colorado, Florida, Illinois, Massachusetts, Nevada, New Jersey, New York, Texas, Virginia, Washington and Wisconsin.
How much did Constellation pay for Ballast Point?
Since acquiring Ballast Point for roughly $3,500 per barrel, Constellation has failed to grow the brand nationally, and the company has admitted to overpaying for the brand by recording nearly $200 million in impairment charges in 2019 and 2017.
What is Watters acquisition?
For Watters, the acquisition represents an opportunity to renew the “David versus Goliath” narrative that helped build craft beer over the last decade.
How much did E&J Gallo sell for?
In April, the company announced it would sell about 30 lower-prices wine and spirits brands to E&J Gallo Winery for $1.7 billion. Cowen analyst Viven Azer welcomed today’s news, writing in a note to investors that the divestiture would allow Constellation to “redeploy resources.”.
How many barrels of ballast point are there?
Constellation’s decision to sell Ballast Point comes after two consecutive years of declines – production dipped from a peak of 431,000 barrels in 2016 to 320,000 barrels in 2018, according to the Brewers Association.
Where is Ballast Point beer?
Ballast Point beer sits on a shelf at a store in Ottawa, Illinois.
Is Ballast Point still a craft beer?
Nevertheless, Newlands contends Ballast Point is still “one of the most iconic craft beer brands in the country ,” even as the number of breweries has swelled beyond 7,500.
How much is Ballast Point worth?
According to Constellation’s most recent quarterly filing, it valued Ballast Point at just $17 million. Yikes. Ballast Point will fall under the definition of "craft" again, which will likely make craft beer aficionados and fans of Ballast Point’s flagship Sculpin IPA happy.
What does it mean to sell Ballast Point?
It means beer as an investment — at least here in the U.S. — is a tough nut to crack. Constellation selling off Ballast Point means it’s the smartest mega-brewer around — the company realized its mistake, admitted it, and moved on.
Who is Nicholas from Motley Fool?
Nicholas has been a writer for the Motley Fool since 2015, covering companies primarily in the consumer goods and technology sectors. He is also the founder and president of Concinnus Financial, a Registered Investment Advisor based in Spokane, WA.
The craft beer brand was a bad investment almost from the start
Constellation Brands ( STZ -0.34% ) is waving goodbye to Ballast Point, four years after it acquired the brand. The Corona-distributor is selling the craft brewer to Kings & Convicts, a privately-held Illinois brewery founded in 2017. The price was not disclosed, but it is certainly less than the $1 billion Constellation paid for the brand in 2015.
The craft beer boom has gone bust
Implicit in Newlands’ statement is the admission that the company misread the story in the craft beer segment. Though sales in that niche are still growing, with volume up 4% last year and dollar sales up 7%, outperforming the overall beer industry, the momentum has slowed considerably from the double-digit growth earlier in the decade.
What’s next for Constellation
Though Constellation is clearly taking a bath on the sale, ditching Ballast Point at this point is probably the right thing to do.
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