How Much Are Microbreweries Worth?

In my earlier post I discussed the rapid increase of the craft brewery market and the integration of the microbreweries into a bigger realm of the beer industry. But since then new developments have occurred. Yesterday it was announced that San Diego’s Ballast Point Brewing & Spirits Company is being bought for $1 Billion. The buyer is alcoholic beverage conglomerate, Constellation Brands Inc. This buy out is Constellation’s biggest brand addition since 2012 when it purchased the remaining 50 percent interest in Crown Imports LLC for $1.85 Billion. As Bart Watson, Chief Economist for the Brewers Association, put it in a LA Times article “It’s hard to digest.” The buy out is shocking as this is one of the largest purchases made for a microbrewery. It just goes to show the growth that is accumulating around craft beer.

According the Brewers Association the U.S. Craft Beer market is worth $19.6 billion at the moment and is continually growing. Last year the market increased 18 percent in barrel volume while the U.S. beer industry as a whole has only increased by 0.5 percent. The demand and spending for craft beers has been growing immensely in the past 5 years, even though the per capita spending on alcohol is currently stagnant. This is the reason why large distributors and producers are buying out microbreweries.

Companies like Heineken and Millercoors are these industry giants that see the potential for profitable investment in microbreweries. In September, Heineken purchased a 50 percent stake in Lagunitas Brewery Co., residing in Petaluma, California. Lagunitas is fairly well known craft beer on the west coast, being sold at stores from San Diego, California to Tacoma, Washington. It expects to sell 800,000 barrels of product in 2015, which would put the company’s value at more than $800 million. Lagunitas has been set to continue to grow as well, even being the third largest microbrewery in 2014.

The investment details of Heineken’s buy out hasn’t been released to the public, but it seems like the price must have been hefty. Constellation Brands paid $1 Billion to acquire 250,000 barrels of product and $100 million worth of revenue that is predicted to come from Ballast Point. Lagunitas more than triples that production, which means that Heineken could have paid around $2 Billion to receive a 50 percent stake in the company. These massive distributors are setting new prices for these microbreweries, which have many people within the industry shocked. The acquisition of craft brewing companies by huge international distributors is going to fuel the integration of craft beers from local to worldwide distribution. Now all that the distributors have to do is just hope that these “microbreweries” will remain popular when their craft beers are brought to such a large market.

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