Ballast Point sells to Constellation for $1 Billion. Is the Craftageddon here?
One BILLION dollars.
That’s what San Diego’s Ballast Point reportedly received for selling their company to Constellation Brands last week. Ballast had the No. 1 selling beer in San Diego (Sculpin) and is second only to Stone Brewing Co. in terms of size. Started in 1996, they built a significant craft beer empire, and cashed in.
That’s news. But the bigger news is that San Diego is now the Silicon Valley of craft beer. Long the capital of America’s craft beer movement, led by Stone (which, from the beginning, has railed staunchly against the anti-competitive practices and tyranny of big brands), San Diego is now the Land of Craft Beer Acquisition.
Expect to see speculators from Diageo, AB InBev, Heineken, Constellation, MillerCoors and other international beverage brands kicking the tires of the craft beer routes in Miramar, Mira Mesa and Escondido/San Marcos very soon. It’s a craft beer land-grab in these here parts, and you can bet other giant corporations don’t want to be the last one in on the action.
What does this all mean? Well, it means craft beer is now popular enough that it makes economic sense for big brands—who have always been more interested in the commodification of beer rather than the artistic pursuit—to gobble up as many of the successful craft brands as possible.
Is this a sign of the Craftageddon?
Some San Diegans I’ve spoken to this week are enraged. “Sell outs!” they scream. Others are a little discouraged, feeling that San Diego is losing the most distinctive identity we have in the food and drink world: Craft Beer City, U.S.A. Now our “craft beer” scene will be owned and operated by Giant Corporations X, Y, and Z, who don’t live here.
But calling someone a “sell out" seems a preciously naïve view on the world. Ballast Point has invested 20 years of hard work, financial risk and investment into building their brand to the tipping point that lured Constellation. Who the hell are we, as consumers, to begrudge them for wanting to take a huge payday for their work? If you build a brand from the ground up and have the financial opportunity to take care of your family for generations to come (not to mention buy a killer surf paradise somewhere in Costa Rica, and maybe a private jet), you’re telling me you would pass up that opportunity?
Well, kudos, purist.
When I was a music journalist, indie-rock fans used to call bands “sell outs” when they licensed their music to national brands for commercials. I was guilty of the name-calling in the beginning of my career. But after a few years in the job—seeing countless musicians with great music and “critical acclaim” wallow in poverty—it struck me how incredibly unfair the entire “sell out” concept is. Begrudging an artist (and craft beer has definitely imbued themselves with the aura of art) monetary compensation for their work, even on a gigantic scale, is the selfish tact of artistic communists. Some would consider artistic communism a great thing, of course. But America isn’t a thriving environment for communists to survive or thrive. Never has been.
If you work to build something special, and are presented with an opportunity to sell it to someone and guarantee financial security for you and your loved ones, especially at this point in the lackluster era of the American economy—go for it!
Near the end of my tenure as the music editor for San Diego CityBeat and host of an indie-rock TV show in San Diego called “Fox Rox,” young bands would often come up and ask for advice in regards to commercial licensing of their music. My answer was always: “Sell out! For the love of god, sell out! Don’t let a morally bankrupt company use your music and paint you as someone who supports sweatshops and unfair labor practices that oppress the poor, but sell out to the right people without hesitation!”
So I’m not begrudging Ballast Point or Saint Archer a thing. Most businesses are built with “exit strategies.” Meaning the very intent is to build a worthwhile brand and then sell it to the highest bidder. There is nothing wrong with that. They built it with their own two hands. They can sell it with their own two hands, too.
That's my thinking. Or... it WAS my thinking until this morning when I spoke with a few craft beer insiders in San Diego, and they brought up a startling point that I can’t ignore.
I’ll reveal their insight into the craft beer gold rush in my next post this week…