This morning there are some major news coming from the adult beverage sector, and it has nothing to do with the Anheuser Busch Inbev SA (ADR) (NYSE:BUD) and SABMiller Plc (SAB.L) deal. Constellation Brands, Inc.(NYSE:STZ), the beer brewing company that is responsible for brewing beers like Modelo and Corona made a huge announcement this morning. The company indicated that it will buy Ballast Point Brewing & Spirits for about $1 billion in efforts to compete with others in the sector.
Ballast Point Brewing & Spirits is a San Diego based beer manufacture which focuses on IPA beers, they take credit for brands like Sculpin IPA and Grapefruit Sculpin IPA. Due to the resurgence of IPA beers the company is expecting to have net sales of nearly $115 million by the end of 2015.
It is becoming the norm now for consumers to drink craft made beers made by the smaller independent companies and the big companies are starting to take notice. There is a different motto for the two, the smaller companies depend on the quality of beer while the bigger companies just depend on volume.
The bigger companies are now taking the acquisition approach, they believe that acquiring these smaller companies will help them stay above their rivals as the markets are quickly changing.
The deal is expected to close by the end of the quarter and it would add about 6 cents to each share of Constellations overall earnings. Look for more acquisitions throughout the sector as now the smaller craft beers are the new norm.