Ballast Point going public

[Hobie]

Keep in mind the export side of these brews. Great brand, logo, visibility and demand, actually in Germany! Calif micro brews are hot overseas.

Heard they were recruiting ChemE grads on the east coast. Go figure.

[Hatfield]

I’m not a fan of Stone’s beer (generally too sweet and malty for me) but they’re opening a brewery in Berlin. Be interesting to see how that goes over.

[NotCranky]

Real men drink craft beer, can afford it, and can afford to lose money on the stock, so WTF?

[Hobie]

… “and a Pirates life for me! ” ho ho ho

[Anonymous]

[quote=Hatfield][quote=deadzone]Why is it so popular? Trust me there is nothing unique about these beers[/quote]

Not only is this comically incorrect, prefacing it with “trust me” just makes you sound like a jackass. In fact, San Diego is pretty much universally recognized as the birthplace of the West Coast IPA. You can state that it’s a style you don’t care for, but to claim there’s nothing unique about craft brews in general, and San Diego ones in particular, is just plain ludicrous.

Let me ask – do you smoke? Because it seems your taste buds are not working.[/quote]

You are the one that sounds like a jackass, you can’t even make a logical response to my point. I said nothing about IPA (although I do think it sucks), the point is there are dozens if not hundreds of brewers brewing the same beer. What makes Ballast Point stand out from all the others? You can’t answer that and I’ll be you couldn’t tell in a blind taste test.

Let me repeat, this is a niche market, not going to sustain hundreds of brewers. And very expensive. Not a winning recipe for mass sales.

[Anonymous]

[quote=Hatfield]As for the cost of beer, I’ll leave you with two links.

The first link is to every German beer that BevMo sells. You will see that there are a great many beers that sell for more than $10 a sixer, and a few that cost five bucks a pint. http://www.bevmo.com/beer-cider/imported-beers/shopby/germany.html

The second link is a cost breakdown for a typical US craft beer: http://www.huffingtonpost.com/2014/09/12/craft-beer-expensive-cost_n_5670015.html

Prost!

Dave[/quote]

Your links proved my point. Ballast Point is as expensive or more than the Premium German imports. That defies logic.

[livinincali]

[quote=deadzone]
You are the one that sounds like a jackass, you can’t even make a logical response to my point. I said nothing about IPA (although I do think it sucks), the point is there are dozens if not hundreds of brewers brewing the same beer. What makes Ballast Point stand out from all the others? You can’t answer that and I’ll be you couldn’t tell in a blind taste test.

Let me repeat, this is a niche market, not going to sustain hundreds of brewers. And very expensive. Not a winning recipe for mass sales.[/quote]

From the article
[quote]
Those India pale ales have propelled the brewery’s growth. In 2014, Ballast Point sold 122,890 barrels of beer, up from 37,161 in 2012, according to the SEC filing. Annual revenue totaled $48.9 million last year, compared with $14 million in 2012. Those numbers make Ballast Point one of the fastest growing breweries in California and possibly the nation, said Tom McCormick, executive director of the California Craft Brewers Assn.[/quote]

300+% growth over the previous 2 years says that they’re doing something right. There’s 1.63 billion barrels of beer produced each year worldwide. Even if Ballast could only get to 0.1% of the worldwide beer market that’s more than 10x from where they currently are.

I do agree with the what makes them so special but the same could be said for most product lines and companies. I don’t understand why people spend so much more on Apple products because there’s hundreds of phones or computers that can do the same things for less but people do. Marketing hype is real.

That said I expect the IPO ramp to make the company tremendously overvalued. Basically it will be priced like they already achieved the 10x growth from where they are, which I think might be possible over the next 5-10 years.

I do agree that there’s probably a craft beer bubble in San Diego right now and some of them are going to die out but I think craft beer is here to stay.

As for a German style beer these craft breweries make them. A fresh Liter of Hofbreau or Spaten in Muchen I’ll take that all day but a Hofbrau in a bottle that was in storage for 3 months and shipped 5000+ miles, I’ll take a Fresh Ballast Point Pescadero please

[barnaby33]

Deadzone, you are partially correct. There are lots of people doing basically the same thing, in terms of beer. It’s definitely a bandwagon effect. However that is still a far cry from the homogenization of past decades where you basically had watery soda pop flavored mass produced beers.

Inside every boom are people doing things of quality that are different. Those things, beer in this case hardly ever come to light without existing at first on the margins of crap for the masses. I could point you at 10-15 world class beers, 2 of which are made by Ballast Point. Modern Times has even started a sour program, yay!

If you think there is a bubble in beer, and I am not disagreeing that overall there probably is, where is your evidence? Because every brewer I talk to has growth pressure problems. It simply isn’t true yet that there is too much craft beer, even if most of it is mediocre. When we start to see breweries going out of business then you’ll be right.

Based on the way businesses behave in cycles if were are in a bubble it still has lots of legs, as the growth by acquisition phase is just starting to get underway.

Also you are sounding like a pedantic schmuck.
Josh

[Anonymous]

I don’t know what pedantic means but fact is there is a bubble in craft beers, it is obvious and it will always be a niche market. If the big brewers thought Ballast Pt had major national sales potential they would have bought them out by now and there would be no talk of going public. Will Ballast Pt. somehow remain the big fish in the niche market, and outlast the weaker competition when the inevitable craft beer bubble bursts, perhaps.

[livinincali]

[quote=deadzone]I don’t know what pedantic means but fact is there is a bubble in craft beers, it is obvious and it will always be a niche market. If the big brewers thought Ballast Pt had major national sales potential they would have bought them out by now and there would be no talk of going public. Will Ballast Pt. somehow remain the big fish in the niche market, and outlast the weaker competition when the inevitable craft beer bubble bursts, perhaps.[/quote]

Heinken entered into global partnership with Lagunitas.
https://lagunitas.com/heineken-and-lagunitas-brewing-company-partner-to-take-craft-beer-global

Golden Road, LAs biggest craft brewery got bought by Bud.
http://la.eater.com/2015/9/23/9384413/golden-road-brewing-anheuser-busch-acquistion-los-angeles-craft-beer

Frankly it’s pretty hard to go public. It would have been much easier for Ballast to sell themselves out to major but I guess they want to maintain some control over the brand and based on way I’ve seen the deal they will. Doesn’t mean there won’t be investor pressures but the voting majority will still be held by the Ballast Point founders. Maybe they have bigger plans to not just be another niche player.

[barnaby33]

Sorry, I meant tendentious. As in clinging to your opinion, but offering no proof yourself.

[NotCranky]

Can’t Ballast point have an option agreement with a big brand already? I don’t do
business on this level but is that common? Or not?

I would lean toward the side of limited market potential. The craft beer thing seems to have a lot of “my local beer is better cooler than your local beer” . These micro breweries and beer houses are everywhere , why is someone in Seattle ,or some other large population center , in the U.S. or abroad going to pick a San Diego beer to be their standard? Why will it become a standard when a lot of people see that the fun in craft beers is trying a large variety of them, the latest, the limited, or because it has a cool sticker on the bottle?

I don’t really know , but these seem to be natural questions.

[FlyerInHi]

Thing about the history of food and beverage in America.

The market used to be much more fragmented. Then the big conglomerates convinced parents that buying the big national name brands for their families is a sign of well-being/success.

There’s a reverse trend going on. People now want local/artisanal. That’s how better-off people differentiate themselves. It used to be clothes, but now it’s food.

You see international merger because the rising population in emerging markets likes big brands. For example, among Hispanics, using Tide detergent means that you’re taking good care of your family. Drinking Budweiser means that you’ve become more American.

[Anonymous]

At $12 a six pack, there is going to be limited growth potential for these companies, even if they didn’t have all the competition.

As others pointed out, If I am in Seattle for example, for a certain price point I can choose from among dozens of local Seattle craft beers, any number of premium world famous imports, or Ballast Point. How does Ballast Pt win that?

Also, if Ballast Pt costs $12 at a store here in town (walking distance to the brewery), what do they charge for the same pack in New York?

[no_such_reality]

[quote=deadzone]
As others pointed out, If I am in Seattle for example, for a certain price point I can choose from among dozens of local Seattle craft beers, any number of premium world famous imports, or Ballast Point. How does Ballast Pt win that?
[/quote]

You’re thinking the trap of stocks since the mid-80s. Growth, growth, growth.

Ballast point wins by being sustainable. Capitalized on growth, then maintain a $100 Million a year in revenue and kick out dividends and fat paychecks for the founders. Win.

For IPO buyers, maybe not so much. To win, they don’t have to be best, they don’t have to be cheapest they don’t have to largest, they just have to be a viable artisanal choice to the scale of the product they produce. For as long as the foodies are willing to pay $12/6-pack.

[Author]

Posts