Ballast Point is the first California craft brewery to file for an IPO – Los Angeles Times
Ballast Point Brewing and Spirits Inc. won over California beer aficionados with its Sculpin IPA, and now the San Diego craft brewer is betting that an even wider audience will want to try its hoppy beer.
The 19-year-old brewery has filed plans with the Securities and Exchange Commission to sell shares to the public. Ballast Point is just one of a few craft breweries — and the first in California — to file for an initial public offering.
The move is the latest example of the booming popularity of craft beers, especially India pale ales.
Craft brews continue to outperform the overall U.S. beer market, where it makes up 11% of volume. Retail sales of craft beer in 2014 totaled $19.6 billion, up from $8.8 billion in 2010, according to Ballast Point’s IPO filing.
California alone is home to nearly 600 craft breweries, the most of any state, according to the California Craft Brewers Assn.
Part of the appeal of craft breweries is Ballast Point’s specialty: IPAs.
“As we’ve seen the craft beer trend really go upward, IPAs have really led the charge,” said Nick Petrillo, industry analyst for IBISWorld. “They’re the complete antithesis of macro beer.”
The American IPA, which became popular about a decade ago, has distinguished itself from the standard English IPA with its wide range of aromatic hops, with lots of bitterness but enough malt to balance it all out, he said.
Ballast Point produces more than 15 kinds of beer year-round, in addition to seasonal offerings and craft spirits, but the bulk of its sales comes from its Sculpin IPA and Sculpin Grapefruit IPA. In its filing, the brewery said those two beers alone likely will count for a large portion of revenues for the foreseeable future.
“Our future operating results, particularly in the near term, are significantly dependent upon the continued market acceptance of these products, and in consumer preference for IPAs,” the brewery said in the filing.
Those IPAs have propelled the brewery’s growth. In 2014, Ballast Point sold 122,890 barrels of beer, up from 37,161 in 2012, according to the SEC filing. Annual revenue totaled $48.9 million last year, compared with $14 million in 2012.
The brewery said in the filing that it would use the money raised by the IPO for “working capital and [to] general corporate purposes,” though it said a portion of the funds could be used to acquire or invest in firms and products that “complement” their business.
An IPO can help a company raise funds quickly, but the downside of going public can be trickier for breweries, Petrillo said.
Craft brewers often want to remain independent and keep control over their beer quality, which can clash with the revenue demands of a public company, he said.
“I think a lot of brewers are very proud of their product, and they don’t want this conflict to begin at all,” Petrillo said. “I think when you go public, I think you invite that.”
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