Industry News

Ballast Point Cashes In for $1 Billion

No question about it. Acquisitions are craft beer’s number-one story in 2015. Today brought news that Constellation Brands, which owns Corona, Modelo Especial, and other Mexican beers agreed to buy San Diego-based Ballast Point Brewing Company. The price tag: $1 billion, or roughly $6,000 a barrel based on Ballast Point’s current-year production.

Constellation’s CEO, Rob Sands, found Ballast Point attractive because its beers are so profitable. Sculpin IPA typically sells for several dollars more than other brands of India pale ale, and Ballast Point’s revenue per barrel is nearly 25 percent higher than the craft beer industry’s average.

Ballast Point beers are currently available in 30 states. Constellation, which has relations wish large retail chains such as Kroger Company, intends to take the brand national.

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The Friday Mash (Fantasia Edition)

Seventy-five years ago today marked the premiere of Walt Disney’s Fantasia. The animated film opened to mixed reviews, but it is now considered one of the classic animated films of all time.

And now….The Mash! 

We begin in Great Britain, where a 2002 law granting excise tax breaks caused a proliferation of breweries. The country has more than 1,300, and ranks first world-wide in breweries per capita.

Football fans will soon see something new in Bud Light commercials. The National Football League has changed its rules to allow the use of game footage involving active players.

In Oregon, the craft brewing and newly-legalized marijuana industries have something in common: a proliferation of start-up businesses.

Guinness will soon become an all-vegan beer. The brewery will stop using isinglass, a by-product of the fishing industry that’s used to clarify the beer and make yeast settle faster.

Boston-area entrepreneur Adam Oliveri has started a boutique beer distribution business. His Craft Collective has already signed distribution contracts with 16 craft breweries from the Northeast.

How dangerous is a “beer belly”? Depends on one’s fat distribution. Otherwise slim people with a beer belly run a much greater risk of serious health problems than obese people with one.

Finally, San Diego Beer Week isn’t just an opportunity to taste great beer. It also gives new breweries a chance to introduce themselves. More than half of San Diego County’s 115 breweries are less than three years old.

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The Friday Mash (College Football Edition)

On this day in 1869, host Rutgers College defeated the College of New Jersey (now known as Princeton University), 6-4, in the first-ever intercollegiate football game. How much beer was consumed before and after the game is lost to history.

And now….The Mash! 

We begin in Richmond, Virginia, which is floating $23 million in bonds to finance the construction of a second plant for Stone Brewing Company.

Pro wrestler “Stone Cold” Steve Austin, who chugs cans of beer in the ring, has teamed up with El Segundo Brewing Company. The new beer is called Broken Skull IPA.

A start-up company in Belfast has invented a a beer-making machine called the BrewBot, which takes care of temperature and liquid pumping on its own.

Statistician Dr. Nathan Yau, using the website Flowing Data, figured out the most efficient route for taking a beer-tasting road trip around the continental U.S. The itinerary is 12,299 miles long.

Cara, a Canadian beer bar chain, has rescinded a dress code that forced Bier Markt’s female servers to wear revealing dresses. Some believe Cara was violating Ontario’s civil-rights laws.

South Korea’s exports in general have fallen but its beer exports are strong, partly because Iraqi Kurds and young Chinese drinkers prefer a beverage with a lower alcoholic content.

Finally, struggling presidential candidate Lindsey Graham flubbed his stint tending bar before taking part in a debate in Colorado. Graham, whose father tended bar, served up a pint with 15 ounces of foam.

The Empire Strikes Back

The mega-merger between Anheuser-Busch InBev and SABMiller will give the combined business a 30-percent share of the world’s beer market and control of eight of America’s top ten brands. And, according to Time magazine correspondent Brad Tuttle, it will pose a serious threat to the growing craft beer sector. The big brewers’ campaign against craft is being waged on several fronts.

Big Beer’s first line of attack on craft brewers is “crafty” beers such as Blue Moon and Shock Top. Critics call these products “crafty” because many, if not most, consumers are unaware that they’re made by big breweries.

The big breweries are also buying craft breweries whose products have a following, such as Goose Island, Elysian, 10 Barrel, Golden Road, and Blue Point. Even though there are 4,000 breweries in the U.S., Tuttle points out that strategic acquisitions of key craft breweries make it much more difficult for other craft brewers to succeed.

Advertising is another weapon in the mega-brewers’ arsenal. The craft-bashing Budweiser commercial that ran during the last Super Bowl, poking fun at hipsters who fuss over pumpkin peach ale, is the most notorious.

The big brands still dominate distribution, and the three-tier system isn’t going away anytime soon. In some states, such as Colorado, A-B InBev has bought distributors outright—a practice that may lead to antitrust investigation by the Justice Department.

Finally, consolidation helps offset the big brands’ sagging sales growth by cutting costs. Advertising is one such cost. A-B InBev and SABMiller spend billions on sports sponsorships to promote their brands. Now that the two companies are no longer competing, they’ll have more negotiating power with the sports industry and will demand lower fees for their “official sponsorship” status.

Judge Rejects BA’s Definition of “Craft Beer”

Last week, U.S. District Judge Gonzalo Curiel rejected, at least for the time being, the Brewers Association’s definition of craft beer: production under 6 million barrels a year, less than 25-percent controlled by a big brewer, and using “only traditional or innovative brewing ingredients.”

G. Clay Whittaker of The Daily Beast argues that Judge Curiel has in effect given every brewer in America the green light to describe its beer as “craft.” (Which is ironic considering that Anheuser-Busch InBev, during Super Bowl 49, ran an ad making fun of the entire segment.)

Judge Curiel gave the plaintiff, Evan Parent, the opportunity to amend his complaint, which might eventually lead to a legal definition of what craft beer is. Then again, the phrase “craft beer” could go the way of “the Champagne of bottled beers,” an advertising slogan that expresses a meaningless opinion about the product.

The Friday Mash (Widespread Panic Edition)

On this day in 1938, Orson Welles’s Mercury Theater company broadcast a radio play of H.G. Wells’s novel, The War of the Worlds. Contrary to popular belief, the performance didn’t cause widespread panic, because the audience was so small. It did, however, make Welles famous.

And now….The Mash! 

We begin in Orlando, where a sports bar called The Basement is helping fans cope with the University of Central Florida’s 0-8 football team. It’s offering free beer during UCF games until the losing streak ends.

PicoBrew, a Seattle-based startup, will market a home brewing system similar in concept to Keurig’s K-Cups. The system, which makes beer in five-liter batches, will retail for around $1,000.

In Georgia, a brewmaster has launched a “government rant” series of beers to protest restrictive state laws. The menu’s fall offering: “Why does the state legislature not want to create jobs by allowing us to do growlers of this IPA?”

Could beer hold the key to stopping the alarming decline in the honeybee population? Scientists have found that placing hops beta acid near a honeycomb improves the bees’ chances of survival.

Louisville’s Against the Grain Brewery will launch a beer honoring pro wrestler Randy “Macho Man” Savage and two other members of the famous Poffo wrestling family. The beer will be called—of course—Poffo Pilsner.

On Thanksgiving weekend, Dark Horse Brewing Company will pour 130 of its beers at the HopCat beer bar in midtown Detroit. It will be the largest single-brewery tap takeover on record.

Finally, an editorial in Monday’s edition of USA Today called attention to the big breweries’ latest effort to thwart craft beer. They’ve been buying distributors in three of the top five craft-brewing states. The U.S. government is investigating these transactions.

The Friday Mash (Gangland Edition)

Eighty years ago today, organized crime kingpin Dutch Schultz and three other men were fatally shot at a saloon in Newark, New Jersey, in what became known as “The Chophouse Massacre.”

And now….The Mash! 

We begin in England, where Cheltenham Racecourse has teamed up with Arkell’s Brewery to brew a beer honoring a famous racehorse named Arkle, whose daily diet included two bottles of Guinness.

This fall, Pawtucket, Rhode Island-based Foolproof Brewing Company is bucking the trend by adding peanut butter to its Raincloud Robust Porter. It’s “as far as you can get” from pumpkin ale.

Niraj Dawar and Charan K. Bagga have put together a graph that illustrates the branding power of the combined Anheuser-Busch-InBev SAB Miller mega-brewing company.

Congressman Peter DeFazio offers yet another reason to drink American craft beer. The Oregon Democrat contends that buying local craft products helps reduce the nation’s balance-of-trade deficit.

“No forests, no beer”, says Matt Miller of the Nature Conservancy. Forests are the home of headwaters streams, where most of the nation’s water supply originates.

Beer, always been a part of Cincinnati’s culture, has enjoyed a renaissance in recent years. Garin Pirnia of Paste magazine offers a comprehensive beer traveler’s guide to the Queen City.

Finally, the Kansas City Chiefs will reward 800 season-ticket holders who are flying to London to see their team play Detroit on November 1. The Chiefs have rented a pub, and will serve free beer Friday afternoon.

The Friday Mash (World Anesthesia Day Edition)

On this day in 1846, William T.G. Morton first demonstrated ether anesthesia at the Massachusetts General Hospital. Each year the medical community honors this breakthrough with World Anesthesia Day. If ether “isn’t right for you”, we suggest having a beer instead.

And now….The Mash! 

We begin in Iowa City, where the informal University of Iowa “Beer Band” has suspended itself—at least for the time being—after townspeople complained abou X-rated song lyrics.

Beer author John Holl interviewed Dr. Chris White, the founder of yeast provider White Labs. Topics include sour beer, brewer education, and White’s new facility in North Carolina.

Chicago restaurateur Rick Bayless is introducing genuine Mexican-style beers. He’s opened a brewpub, and has also formed a brewing partnership with Constellation Brands .

Years ago, graphic designer Harvey Shepherd fell in love with beer packaging. He’s turned his avocation into the recently-published Oh Beautiful Beer: The Evolution of Craft Beer and Design.

Business consultant Chip Martella has good news and bad news for craft brewers. The dreaded industry shakeup has arrived, but a scrappy craft brewer can still succeed in this environment.

Carla Jean Whitley of details the revival of brewing in Alabama. Now that lawmakers have eased many Prohibition-era restrictions, the state’s brewery count has risen to 28.

Finally, declining sales of American light beer have forced breweries to rethink their advertising strategies. Their new ads will stress product quality, and will carry more woman-friendly messages.

Dogfish Head Does Deal With Private Equity Firm

On Monday, Sam Calagione, the CEO of Dogfish Head Craft Brewery, Inc., told his employees that LNK Partners, a New York-based private equity firm, has taken a 15-percent stake in the brewery. As part of the deal, LNK would be given one seat on the company’s board of directors.

Calagione made it clear that Dogfish Head will remain a family-led and -controlled business. He also said that LNK was in accord with his instance that the deal wouldn’t lead to an initial public offering, interfere with the brewery’s “off-centered” culture, or stress fast growth over “smart growth”.

Dogfish Head, the nation’s 13th largest craft brewery, produces 175,000 barrels a year.

The Friday Mash (Tiffany’s Edition)

On this day in 1837, the retailer now known as Tiffany’s was founded by Charles Lewis Tiffany and Teddy Young in New York City. The founders called their store a “stationery and fancy goods emporium.” However, Tiffany’s didn’t serve breakfast, let alone Founder’s Breakfast Stout.

And now….The Mash! 

We begin in Sacramento, where the inaugural California Craft Beer Summit took place. This two-day festival attracted the biggest names in craft brewing, who talked about the state of the industry.

Listen up, class. Sylvester Schneider, the owner of Zum Schneider in New York City, has prepared a video to show you how to pour wheat, pilsner, and lager beer like a German.

A boarding school in Zimbabwe has slapped a ban on breakfast cereal. Students mixed it with brown sugar, water, and yeast, then left it in the sun to ferment into beer.

The recipes for New Belgium Brewing Company’s dubbel and trippel Belgian-style ales are getting a makeover. The changes, which include a different yeast strain, will make the beers more authentically Belgian tasting.

A video of six Scottish men, drinking beer at the bottom of a swimming pool while on vacation in Florida, was viewed more than 1.8 million times on YouTube in the week after it was posted.

Greg Koch, the founder of Stone Brewing Company, is stepping down as CEO. He’ll stay on as executive chairman, and he promises not to sell out to one of the big breweries.

Finally, even though China is a huge beer market, intense competition has made it tough for breweries to make much of a profit. That problem could get worse as the country’s economy slows.

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