High Net Worth Accounting
Craft beer accounted for 11% of U.S. beer sales in 2014 and market share is rapidly increasing. Just this week, the owner of Corona and Modelo, Constellation Brands in Upstate NY, purchased Ballast Point for roughly $1 billion.
Ballast Point started selling beer commercially in 1996 and growing at a rate of 80% over the past two years. According to Brewer’s Assn, it is the 31st largest craft brewer in the country. Ballast Point is available for sale in 30 states and Sculpin IPA is their hot seller. Overall, Ballast Point produces approximately 300,000 barrels annually and the sale does not include Ballast Point Spirits, which makes rums and whiskeys.
To put this into perspective, Constellation Brands will be paying 20 times Ballast’s revenue in 2014. And if Ballast’s revenue increases 100% in 2015, then the multiple is 10 times revenue, which is still a stiff premium.
And while demand for craft brews explodes, demand for watered down national brands like Bud, Miller, and Coors is flat which is creating a trend towards consolidation. For example, AB InBev’s takeover of SABMiller for $107B.
While the acquisition of craft brews is nothing new, the valuation on this purchase is eye opening.
Mark E. Feinsot, CPA is a New York City CPA Firm servicing business owners that would like to eventually sell their business for more than $1B. If you are searching for an accountant to help with your new growth phase, call 212-631-0320 and ask for Mark Feinsot. Our initial consultation is free.