Ballast Point Hooks a Big One
San Diego’s superstar brewery sells to Constellation Brands for $1 billion!
Ballast Point Miramar | Photo by Bruce Glassman
Wow. I was still reeling from the idea that Ballast Point was planning an IPO for $173 million… and then I saw the news about the purchase by Constellation Brands. I guess the Ballast Point guys figured the $1 billion dollar deal was the better move (smart guys!).
How on Earth could a San Diego brewery be worth that kind of money? I mean, a billion dollars is what Facebook paid for Instagram less than three years ago! It’s not like Ballast Point is one of the world’s largest breweries—it’s not even San Diego’s top-producing brewery (though it is second, only to Stone). What Ballast Point is, however, is San Diego’s most exciting brewery. It’s a company that—from its humble beginnings as Home Brew Mart in 1992—has always stayed faithful to its home brewing roots and has always let creativity drive its vision. I’m constantly asking brewers who they think is doing the coolest stuff in town, and, inevitably, Ballast Point is the brewery that comes up.
Ballast Point has been able to stay faithful to its vision largely due to the steadfast leadership of its founder, Jack White, who started the company in 1996 and has remained dedicated to keeping it innovative and supportive of experimentation. Jack is a tall, soft-spoken guy with an unassuming air and an easy smile. He’s what I would call a real “gentleman.” Despite his outwardly calm demeanor, Jack is also a guy with great ambition and a drive to succeed—all tied together by an acute business sense.
When Jack first opened Home Brew Mart, it was the direct result of the fact that—as a home brewer himself—he couldn’t find quality ingredients or equipment. One of the first customers to come into the store was a young and very talented home brewer named Yuseff Cherney who, as it turned out, shared Jack’s passion for beer. The next day, Yuseff became Home Brew Mart’s first employee (he’s now the COO). “Before that,” Jack recalls, “it was just me. I was the owner, the founder, the CEO, the brewer, and the stock boy, too.” The spirit of that small store in Linda Vista has permeated everything Ballast Point has done since. When the company expanded to much larger quarters in Scripps Ranch, the Home Brew Mart brewhouse became a dedicated R&D facility. That’s where specialty brewer Colby Chandler and other employees were encouraged to develop unique and exciting riffs on classic beer styles by working with new ingredients and brewing techniques.
As an outside observer looking in, I have always felt that the true genius of Jack White’s management style—and the essence of Ballast Point’s success—was the simple fact that he has always been willing to take a shot with new ideas and to “go with his gut.” Even as the company enjoyed massive sales growth with numerous beers, not the least of which was Sculpin IPA (created by Home Brew Mart employees as a result of homebrew-style collaboration and creative exploration), Jack—though gratified—always had a sense of wonderment about it (he has lovingly referred to the beer as “a freak of nature”). Sculpin was not the product of years of market research or consumer focus groups, it was just a delicious beer that everyone loved, so they made it. The same thing happened with the idea to branch out into spirits. The long and the short of it: Yuseff loved distilling and wanted to get into it. So he convinced Jack and they did it. Now Ballast Point has a huge presence in the spirits marketplace and has won great acclaim for its bourbon, vodka, and gin, among other things. The company also produces a line of mixers as well as a line of pre-mixed cocktails in cans. No other major brewery that I know of does all that.
I still remember the first time I sat down with Jack, Yuseff, and Colby to talk about the phenomenal growth they were experiencing in the wake of the 2010 World Beer Cup, where Ballast Point was crowned Champion Small Brewer and Sculpin won a gold medal in the IPA category. Jack characterized himself and his crew as “just regular guys,” and—though it can seem like false modesty with many people—it really was true. Jack attributed their success to “keeping their passions in focus” while they “quietly work at making the beer that we love.” This strategy, Jack pointed out, kept the company growing by double digits every year. What was true then is even more true now. Today, the company has 440 employees and operates four locations in San Diego—one of which has the largest footprint of any brewery in town. All together they produce more than 50 kinds of beer and 14 kinds of spirits; they’re on track to top $115 million in sales this year. And now, Constellation Brands figures Ballast Point’s worth is $1 billion. Predictably, Jack’s reaction to the acquisition reflects his humility and reverence for his company’s humble home brewing roots: “We are proud to have built Home Brew Mart into Ballast Point, a thriving craft brewery, and are eager to keep growing our brand with the help of the folks at Constellation. They are brand builders and value our culture of creativity and grassroots approach to innovation. Our ultimate goal was to make the best decision for the long-term success of our business. For us it’s the best of both worlds… keep doing what we are good at and making the beer we like while providing a return for long-term employees and investors.”
No matter how you feel about “big beer” taking a stake in craft beer (Constellation owns Corona and Pacifico among many other brands of wine, beer, and spirits), there’s no denying that an acquisition of this magnitude is a major milestone for the San Diego brewing industry. A billion-dollar deal confirms that San Diego brewing has truly arrived and that the San Diego “brand” has real value in a worldwide marketplace (not that we ever doubted it). And the bottom line for the brewers in this town is that acquisitions like this one will fundamentally benefit everyone in the long run. Chris Cramer, co-founder of Karl Strauss Brewing Company, has nothing but praise for what Ballast Point has accomplished: “Jack White, Yuseff Cherney, and the team at Ballast Point are first-class brewers and true leaders in our San Diego craft brewing community. Such financial success could not have happened to nicer or more deserving people, and I am absolutely delighted for them!”
Ballast Point has ushered the San Diego beer industry into a new era, one in which we begin to play on an even larger stage and become even better known by more people all over the world. And, whether or not you’re a brewer with similar dreams of growth for the future, it should cheer you to know that a small homebrew supply shop can grow into a billion-dollar company right here in our own backyard.