Four Corners is the Anti-Ballast
Photos: Four Corners
Two and a half years ago, Constellation Brands, the international drinks company behind Corona and Modelo, made a big move into the US craft market by purchasing Ballast Point for a staggering $1 billion. Ballast was at peak popularity at the time, with $15 six-packs of fruit IPAs flying off the shelves. Constellation thought the brewery was poised to become a major national brand, and was projecting large growth and toying with an East Coast brewery. It was the last year of double-digit growth in the industry, however, and Constellation didn't anticipate how vigorous the competition was in the craft segment.
A year ago, they made a second craft purchase, Florida's Funky Buddha, and admitted they had learned a few things in the interim:
“At the time we acquired Ballast Point, we thought there would be more national brands that broke out. Things went more local, and it doesn’t appear that you’re going to be able to build new national brands in the space really quickly. That made us recognize--we need a lot more brands in the portfolio to build up a reasonable presence in the craft space overall.” (Constellation's Paul Hetterich)
All of this is important prelude to a quiet little announcement yesterday:
Constellation Brands will expand its reach in the craft beer segment with the acquisition of Texas’ Four Corners Brewing, the New York-based beverage alcohol company announced today.... According to a press release, sales of Four Corners beers have increased “five-fold” since 2014, and the company has the capacity to produce 25,000 barrels annually. Industry trade group the Brewers Association, which represents the interests of small and independent craft breweries, estimates that Four Corners produced 11, 560 barrels in 2017.
The purchase of Funky Buddha was an acknowledgement of a newly risk-averse, regional strategy. ("It should be in a market or an area that is big enough; if the beer only stays local, you could still have a meaningful business there," Hetterich said at the time.) But Funky Buddha was a safe and uninspiring choice--a chastened response to the Ballast blunder. The purchase of Four Corners is much more interesting. One of the Dallas-based founders is Latino, and the company's brand is inflected with Spanish language text and Hispanic themes--what the company calls a "bi-cultural" identity.
This is both directly in Constellation's wheelhouse, and also a mirror image of their first craft purchase. Ballast looked like the perfect vehicle to mass popularity--a white-hot flagship, broad distribution, and an accessible if not overly specific brand. Constellation saw in Ballast a potential audience of all craft drinkers--but as the market got tight and the fruit-IPA trend waned, discovered that the lack of distinctiveness and "localness" made it just as easy for those same drinkers to move on. Four Corners is small and particular in all the ways Ballast was general and mass-market ready. It has a distinctive character and a built-in audience to expand, a cool brand with great labels, and sense of place. (I have no idea what the beer's like.) Ballast was huge, which meant Constellation ended up trying to defend shelf space and tap handles. Four Corners is tiny, which means it can follow organic growth and build more loyal fans as it goes.
It's hard to wrap my brain around the idea that the Ballast deal is only two and a half years old. Because the market has shifted so much, it seems far longer ago. The purchase of Four Corners charts the distance big companies' thinking has shifted in that short span, and although this was a small deal and even smaller news, it may be more consequential down the road than some of the other anonymous purchases made in the past.