Forget everything you heard about Apple's staggering $3 billion acquisition of Beats Electronics. Hit the bricks, Facebook's $2 billion purchase of Oculus Rift. The hot category for sky-high valuations in the corporate mergers and acquisitions world is—wait for it—craft beer.
That's right. Remember the time you tried to make hooch in your parents' bathtub? Well, you should have stuck with it, because a couple of dudes who were roommates at UCLA and began home brewing in their college apartment just sold their craft brewery for $1 billion.
Before you drown in self-loathing, we ask you to hold onto your moans of "why couldn't that be me?" and listen up. There's a bubble in the craft beer market that rivals Dot Com 1.0 and 2.0—and it's not too late to get in on it.
Well, maybe it is too late for the likes of us. But the founders of Ballast Point Brewing & Spirits are presumably ordering their private jets right now.
Big Beer is snapping up craft breweries as if there will no longer be any beer available after next Tuesday. Constellation Brands—which makes Corona Extra and Modelo Especial—is spending the big bucks in this latest acquisition of Ballast Point, which is based in San Diego.
But this is just the latest in a string of crazy-ass craft brewery purchases. Sales for big beer labels like Bud are stagnating, so the heavyweights in the category are buying up craft brewers in the hopes that they will continue to grow at exponential rates.
But here's the thing. Ballast only expects to sell about 4 million cases of beer in 2015. That puts net sales forecast to hit $115 million. So how is a company with $115 million in annual sales worth a billion dollars?
There's a lot of hope in that number. According to the Brewers Association, craft beer sales grew by almost 18 percent last year. Constellation is hoping that Ballast will grow at that rate or more. In fact, their sales doubled last year.
Constellation is not the only one making that hopeful calculation. Anheuser-Busch bought Elysian Brewing from Seattle and 10 Barrel Brewing from Bend, Oregon over the past two years. SABMiller bought London's Meantime Brewing Co., a leading UK craft beer, earlier this year.
Industry consolidation has been going well beyond the confines of the craft brewery world. AB InBev announced recently that it would acquire SABMiller for a cool $100 billion. That's an example of the big merging with the bigger in the beer world.
So if all of this looks like a bubble to you, you're probably not crazy. But by the time you get your act together and start seriously producing some quality stuff out of the apartment you share with your roommates, the market could be a bust.
Just drink up, friends. Some of us are just meant to imbibe and not create.