Published By : 16 Nov 2015 | Published By : QYRESEARCH
Constellation Brands said on Monday that it will be buying Ballast Point Brewing & Spirits, a California based craft brewer, for a whopping US$ 1 billion, the record amount paid for a US craft beer company.
The deal indicates that the craft beer industry has gone beyond its threshold and emerged as a massive business that will continue to expand over the coming years, according to large brewers. The craft beer industry accounts for a share of roughly 10 per cent of the US beer market. This deal is the largest and the fourth craft deal that has been undertaken this fall and comes after the acquisitions of California craft brewers by MillerCoors LLC, Anheuser Busch InBev, and Heineken NV. These companies purchased 50 per cent of Lagunitas Brewing Company in September, in a deal that is valued to be over US$ 800 million.
The rise in acquisitions of craft breweries is being fueled by changing tastes of the US consumer. Drinkers have been spurning low priced light beers and lagers in favor of India Pale Ales. According to the Brewers Association, which is known to represent over 3,000 craft brewers across the country, the craft beer industry is likely to account for a 20 per cent share of the US$ 100 billion beer market in the nation by 2020.
Some of the largest brewers in the world have been responding differently to consumer trends in the United States. Last week, AB InBev announced that it will be acquiring rival SABMiller PLC for about US$ 108 billion in order to support the largest brewer in the world by expanding businesses in Latin America and Africa and reducing its reliance on the United States. The US market has been witnessing the dipping volume sales of Bud Light and Budweiser.