$1 Billion for This Tiny Craft Brewer. What Does It Mean for Boston Beer?

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What was Constellation Brands (NYSE:STZ) thinking? The owner of Corona beer and Svedka vodka recently announced it was buying craft brewer Ballast Point Brewing & Spirits for $1 billion.

 

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Since it had just $50 million in sales last year, that assigns a valuation to the brewer of more than 20 times sales. Even though revenues are expected to more than double to $115 million this year, that’s still a valuation of some 10 times sales.

If Ballast Point can command such a lofty valuation — and it is on track to sell 4 million cases of beer this year — what does that say for the valuation of the craft beer industry’s leading brewer Boston Beer (NYSE:SAM), which sold more than 4 million barrels of beer in 2014? Well, for one, that it’s significantly undervalued.

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