To be fair, Ballast Point‘s output this year is probably higher than when Constellation Brands bought it on Nov 16, 2015. A press release issued by CBrands said the San Diego craft brewer was “on pace to sell nearly 4 million cases, or 290,322 barrels.
By 2016, production was nearly 431,000 barrels. Kings & Convicts, the small Chicago brewer which is acquiring Ballast Point from CBrands, said 2019 Ballast Point sales should “surpass 200,000 barrels.”
In short, from the time CBrands acquired Ballast Point until it sold the craft brewer, Ballast Point’s production fell roughly 90,000 barrels, or 31% — and that was despite nationwide distribution and a barrage of TV ads.
What went wrong? Our belief – and we stress belief – is that for the most part craft is a local business, and whether that business is owned locally or by some megabrewer it usually doesn’t translate well as a national brand. At least today.
But what about Samuel Adams? It began as a craft brewery in Boston and went national successfully, even if its output is still a sliver of Big Beer (Anheuser-Busch InBev and MillerCoors). True. But Samuel Adams went national well over two decades ago.
Today, there’s a craft brewery, it seems, on nearly every corner. Craft is decidedly a local business. It just doesn’t scale well.
Big companies require big brands, and CBrands control of Corona and other Modelo products in the U.S. are decidedly big brands. Ballast Point, even at 290,322 barrels was not a big brand. And CBrands was late to the party in terms of taking a local brand national.
There was another mistake, too, we think. In one week in July 2016, Ballast Point’s founder, CEO, CCO and head brewer, COO, general counsel and lead R&D brewer all left the company. That meant a loss of identity in stores and at the brewery. R&D efforts, which had created “hundreds” of beer a year to test with customers, were scaled back. The focus shifted to safe bets rather than leading trends.
That makes it sound like CBrands is totally incompetent. It’s not. Along the way, it bought two other craft brewers – Funky Buddha, whose sales rose nearly 40% in 2017-18 and is said to be headed toward another record year, and Four Corners, which jumped 74% in 2017-18.