We woke yesterday, November 17th, to the news
that the owners of Ballast Point Brewing were accepting a $US1b offer for their
business. The buyer is to be Constellation Brands.
We’ve been importing the beer of Ballast Point since 2010,
at first as Hashigo Zake and more recently under the banner of our own
importing and distribution company, Beer Without Borders. Ballast Point has
become BWB's best selling supplier. We attribute this to them getting all three
things we need in an overseas brewer pretty much right – beer quality, being
stylistically adventurous and having good branding and packaging.
On occasions like this the sellers deserve only our
congratulations. They’ve generally earned their payday and in Ballast Point’s
case it was massive. (To put it in perspective, they make one third as much
beer as Lagunitas, whose brewery was also valued at $1b in a recent sale.)
But while we congratulate the sellers, we’re always uneasy
when these transactions happen. In particular we generally worry about the methods
and ethics of their new owners. We actually know very little about
Constellation, although we’re learning a bit.
Back in 2012 the Emersons Brewery was sold to Lion Nathan. I
have an enormous grievance with Lion Nathan. They, DB, Independent and a growing
number of small breweries make payments to liquor outlets (generally bars) in
return for not stocking other
suppliers’ products. The damage to New Zealand’s brewing industry from this practice has been
enormous and in spite of all the recent fuss made the industry is ten years behind where
it should be. More to the point everyday consumers have been denied choice in
bars for decades. I personally think that the practice is against the spirit
and maybe even the letter of New Zealand competition law, although the Commerce Ministry disagrees.
So I had no reservation in turning my distaste for Lion
Nathan into a policy that Hashigo Zake wouldn’t stock their beer and those of
their subsidiaries. After all, once Emersons were bought, Lion Nathan’s
distribution meant they suddenly had hundreds of additional, tied customers, and
those more than made up for losing Hashigo Zake as an outlet. Meanwhile we
could dedicate ourselves to stocking product from breweries who didn’t pay for
play.
We at Hashigo Zake took some criticism for that stand and
there are signs that some of those critics are looking at us now for any sign
of a double standard following Ballast Point’s sale. No doubt they’ll find what
they’re looking for, rightly or otherwise.
So at Hashigo Zake, where we launched Ballast Point in New Zealand
and which is still one of very few Wellington bars prepared to put their insanely
good beer on tap, we’ve got a month or two to consider what to do next. (The
sale hasn’t been finalised and it will take a little longer before post-sale product
is on the market in NZ.) This transaction has left us with a huge dilemma that
we’re going to need all that time to grapple with.
Beer Without Borders, however, remains Ballast Point’s New
Zealand importer/distributor. As such we have obligations to our supplier and
to our customers that we have no choice but to honour, regardless of what we
might think of the sale. End of story.
p.s. a big hat tip to Brian Watts of 8 Wired who just last Friday told me that Ballast Point’s planned IPO was merely a manoeuvre to elicit the kind of
offer that Constellation made.
