Ballast Point sells for $1 billion, Anchor Brewing sells for $85 million. What’s the big difference?

When we reported that Ballast Point Brewing Co. had been bought by Constellation Brands for a whopping $1 billion in 2015, a little shock turd came out of our collective sphincters. One billion American dollars? Christ almighty.

In 2011, Goose Island sold to Anheuser-Busch InBev for a measly $38.8 million (man, what a deal). AB InBev also bought Blue Point Brewing Co. in New York for $24 million, Oregon-based 10 Barrel Brewing Co. for an estimated $50 million and Elysian Brewing Co. in Seattle for an estimated $60 million. The initial 50 percent sale of Lagunitas Brewing Co. to Heineken was reportedly worth close to $500 million, and recently Lagunitas announced it had sold the remaining 50 percent for an undisclosed amount.

These numbers seem to indicate that top tier craft brands can go for a ton of cash, yet reports are that Anchor Brewing Co. was sold for a middling $85 million. Why? Is it just that the market’s softening? Anchor certainly has one of America’s richest histories in craft brewing and definitely some of its most recognized brands (Steam Beer!). It ranked No. 31 in the biggest beer brands overall in America last year in volume sold, yet sales have been slipping for lots of large, heritage craft brands like Anchor.

Monday, Chris Furnari posted an interview with Keith Greggor, CEO of Anchor Brewers and Distillers. Former Skyy Vodka executives Tony Foglio and Keith Greggor and their Griffin Group investment firm purchased Anchor from Fritz Maytag in 2010 for an undisclosed amount. In the interview Furnari asks why Anchor was only sold for a reported $85 million?

[Greggor]: I won’t comment on the reported purchase price, and I don’t know how large organizations have looked at their acquisitions. But it is not insignificant that Constellation took a big impairment charge on its Ballast Point acquisition.

There was rampant enthusiasm and exuberance for the value of craft breweries, which was a blip. There is a reality that is settling in now, as to where the correct value may lie. Our objective was not to maximize the sale [price] of Anchor but to ensure Anchor’s legacy in San Francisco. We are not going to become pariahs in the city. We have other business interests, and we see this as doing the right thing for Anchor.

I am also on the board of directors at BrewDog, and we just had a £1 billion valuation. I have seen a spectrum on how people do things. But there is a difference between a modern, scalable brewery and one that is looking to preserve a heritage. You can do things with a Ballast Point that you can’t do with an Anchor.

Like what?

KG: Scale it. We are in a city, and we’ve got premises around us. We are not infinitely scalable, nor is our method of manufacturing. Where we are, how we go about it – that is not easy for big companies who are worried about short-term profit.

Everybody thought Anchor was a gem — no question about it. But whether Anchor being a gem was something of interest to them [buyers] … maybe the numbers didn’t add up.

The interview’s a great read (check it out here).

Did Constellation overpay for Ballast Point? Maybe, but consider this: In 2014 (before being bought), Ballast Point was the 37th biggest brewer in America. Two years later, in 2016, Ballast Point was the 13th largest brewer in America (and we assume much bigger internationally). It’s an impressive growth spurt, and it shows the gargantuan potential that craft brands can have if they are quickly and sufficiently scalable.