Corona Marketer Constellation Buys San Diego Craft Brewer

$1 Billion Deal is the Latest Craft Acquisition by Big Beer

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Ballast Point
Ballast Point Credit: courtesy Ballast Point Brewing & Spirits

Corona marketer Constellation Brands is making a big move into the craft beer market by acquiring San Diego-based Ballast Point Brewing & Spirits for $1 billion.

The deal is Constellation's first acquisition of a craft brewer and follows similar moves by large brewers Anheuser-Busch InBev, MillerCoors and Heineken, which have all recently swallowed up fast-growing small brewers. Ballast brews 40 styles of beer, including Sculpin IPA and Grapefruit Sculpin IPA. Its beers are sold in more than 30 states. The brewer is on pace to sell nearly 4 million cases in 2015, which would mark more than 100% growth from 2014, according to the brewer, which expects to post sales of $115 million this year.

"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," Constellation CEO Rob Sands said in a statement. "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."

"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," Ballast founder Jack White said in a statement. "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."

The acquisition follows MillerCoors acquisition of a majority stake in another San Diego craft brewer, Saint Archer Brewing Co., in a deal announced in September. Also in September, Heineken announced it was taking a 50% stake in the Lagunitas Brewing Co., which is the fifth-largest craft brewer in the U.S. by volume. Anheuser-Busch InBev has been particularly aggressive in the craft beer category. The nation's largest brewer bought Goose Island in 2011, followed by East Coast-based Blue Point Brewing Co. in early 2014. More recently, A-B InBev bought 10 Barrel Brewing Company in Bend, Ore. and Seattle-based Elysian Brewing Co.

Earlier this year Constellation made a smaller move into the craft beer category by teaming up with celebrity chef Rick Bayless to create beers under the name of the Tocayo Brewing Company. The first brew, called Tocayo Hominy White Ale, is initially only available on draft in Chicago.

Beyond Corona, Constellation's beer division markets other Mexican imports such as Modelo Especial, Pacifico and Negra Modelo. Constellation also sells wine brands such as Robert Mondavi and Kim Crawford, as well as as Svedka Vodka.

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