Ballast Point’s Acquisition Drives Home the Increasingly Meaningless Nature of the Words “Craft Brewer”
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Not to beat on a dead horse, but it was almost two years ago now when we wrote that “craft beer,” as a term, had failed to possess any useful meaning. At the time, it was already the culmination of something we’d been feeling and observing for a while, and the rest of 2018 and 2019 have done little to alter our perception. We are solidly in the post-“craft” age now, despite efforts by the Colorado-based Brewers Association to give meaning to the words and imbue them with an importance that is easily grasped by the consumer. I don’t fault them for trying, but we should acknowledge when the landscape has simply become too complex and too strange to be bound by such terms.
And the simple truth is that this is exactly what has happened. You can attempt to hew to the current version of the Brewers Association’s “craft brewer” definition, but good luck avoiding the cognitive dissonance that seems almost inevitable when trying to reconcile why one “craft brewer” should be deemed worthy of patronage while another that is no longer considered “craft” is not. In some cases, it’s still easy to take a stance against supporting breweries owned by certain corporations—we believe there is room for personal choice here, on a case-by-case basis—but there’s unsurprisingly more shades of gray than ever. And yesterday’s sale of Ballast Point, for the second time in four years, throws it all into sharp relief.
If you somehow missed the story yesterday, here’s the short version: Four years after being acquired by Constellation Brands in a $1 billion deal that will go down as the biggest overvaluation in the history of the industry, Ballast Point has been sold again. That sale in itself wasn’t too shocking, but the fact that the buyers were veritable unknowns is what rocked the beer commentariat to its core. Headlines blared that Ballast Point had been acquired by a tiny, north Chicago suburban brewery named Kings & Convicts, but as we noted then, “the true story is that Ballast Point is being acquired by the group of investors behind Kings & Convicts, but that doesn’t make the story any less inscrutable.”
Those investors are essentially a total mystery, beyond Kings & Convicts original co-founders Christopher Bradley and CEO Brendan Watters, a former hotel chain owner who has been the public face of the announcement and transition. Four other people—silent partners—will hold ownership in the newly formed company, with various sites reporting that they largely hail from outside the beer industry. Watters, meanwhile, sold the Boomerang Hotels chain in 2015, and opened Kings & Convicts in 2017. This year, they’ll make a paltry 660 barrels of beer, which is probably less than one day of maximum production across the network of Ballast Point breweries and brewpubs, which will produce around 200,000 barrels this year. Note that this is way down from the brand’s peak of 430,000 barrels in 2016, thanks to the closure of several brewing facilities and the shrinking of various brands while owned by Constellation.
Edit: Only minutes after this story went live, The Chicago Tribune revealed the name of the company’s new largest investor, wine magnate Richard Mahoney, as acknowledged by Watters. Mahoney is the chairman of The Wine Group, which owns several major brands such as flipflop and Cupcake.
And at the end of the day, you can see why Watters and co. chose to present the sale as “Kings & Convicts” acquiring Ballast Point, as bizarre as that was to see. It manages to somehow give off the impression that a tiny, scrappy, upstart brewery has forged an alliance with a tarnished brand, and will lead it again into greatness with an infusion of positivity and can-do attitude.
No, what we really want to talk about here is the unprecedented fact that via that Brewers Association definition, Ballast Point has pulled off the strangest transition of all: They’re a former “craft brewer” who lost their craft brewer designation, but would now theoretically possess it once again, having shrunk by more than 50% since the time it was stripped away. The Brewers Association hasn’t yet put out any kind of official statement on this, of the sort they made acknowledging the sale of New Belgium to Kirin-owned Lion Little World Beverages two weeks ago, but by the definition as it exists today, there’s no reason why they shouldn’t refer to Ballast Point as a “craft brewer.” Suffice to say, this has never happened before, and it makes the idea of relying on a term like “craft brewer” seem even more impractical than it was before.
Let’s consider, for a moment, a handful of breweries and brewing entities that do and do not qualify for the BA-defined concept of “craft brewer.”
Boston Beer Co.
Boston Beer Co., once the nation’s largest BA-defined craft brewer before space was made for the inclusion of Yuengling, has several times been the primary driver of changes to the “craft brewer” definition. First, the definition was altered to increase the size of “small,” seemingly in an effort to keep Boston Beer Co.’s production numbers in the fold. Last year, in a considerably more cynical-looking measure, it was the requirement that a craft brewer primarily produce beer that was changed in the definition—something that was again necessary to keep Boston Beer Co. in the fold after its beer production slipped to such levels that it was surpassed by the booming cider (Angry Orchard), malternative (Twisted Tea) and hard seltzer (Truly Spiked & Sparkling) wings of the company. At this point, “Boston Malt Beverage Co.” would be a more truly accurate name, as the company continues to commit more resources toward non-beer products.
Current status: Craft brewer
I certainly look at this and think “craft brewer.”
New Belgium Brewing Co.
New Belgium was acquired by Kirin-owned Lion Little World Beverages only a few weeks ago, and it already feels like a lifetime in this news cycle. After 28 years as an independent entity, including a number of years of employee ownership, they are now owned by a multinational conglomerate that doesn’t fit the definition of “craft brewer,” so they too will no longer be addressed by the BA as such.
Current status: Not craft brewer
Brooklyn Brewery
Here’s where things start getting goofy. Brooklyn also had its own partial acquisition by Kirin a few years ago, but it was calculated to stop short at a mere 24.5% of the company—just under the 25% threshold that a brewery must maintain under the current BA definition in order to be designated a “craft brewer.” Brooklyn, likewise, owns minority segments of 21st Amendment Brewery and Funkwerks, meaning that even more rides in the balance here. If Kirin were to somehow increase their stake of Brooklyn Brewery ownership by 1%, all three breweries would theoretically (if all investments were more than 25%) no longer be “craft brewers” overnight.
How can you not ask yourself, reading that, whether there would really be any kind of difference at the 24% or 26% ownership levels? Would anyone even try to make a case that there somehow would be a difference?
Current status: Craft brewer
Founders Brewing Co. and Avery Brewing Co.
Both now acquired by Spanish brewing conglomerate Mahou San Miguel, the ownership situation with Founders/Avery highlighted the very scenario we were speaking of above with Brooklyn. For several years, before the recent controlling acquisition of the company, Mahou San Miguel owned a mere 30% of Founders and Avery, but that additional 5% made all the difference in the eyes of the BA definition of “craft brewer.”
Beyond that, consider the fact that Mahou San Miguel, as a company, doesn’t actually distribute or sell its primary products (the Mahou line of lagers) in the U.S.A. How much of a detrimental force is ownership by a conglomerate that doesn’t even sell its Spanish-produced products in this country? How can you really compare that to being purchased by AB InBev, which is the most dominant brewer and distributor in the country, wielding powers that Mahou San Miguel will never possess here? It’s very difficult to see this as black-and-white when there’s so much gray involved.
Current status: Not craft brewer
CANarchy
Now a collection of seven breweries owned by private capital (Fireman Capital), the CANarchy group has seen good results and strong growth for some of its biggest members (Cigar City, Oskar Blues), even as a few of the smaller ones (Perrin, Wasatch, Squatters) have had more struggles during the industry growth slowdown. Together, despite being all owned by a single entity, the group qualifies collectively as “craft brewers,” thanks to the fact that the capital backing them exists otherwise outside of the beer industry. Nevertheless, by the very definition of private capital, those breweries will presumably be shopped again at some point … to what buyer, it’s impossible to say. But if those breweries are for sale a few years down the line, and an entity like AB InBev is buying, does that affect how the craft beer consumer sees CANarchy? They would like to project the look of being an “artist collective” of sorts, but the second one of those companies is sold from within the collective, does it not become the equivalent of a big box store showroom? It hasn’t happened yet, but ask just about any beer writer if they’re waiting for that announcement and see what they say.
Current status: Craft brewers
If buyers come knocking, which of CANarchy’s breweries will be for sale?
Which brings us to Ballast Point. At the beginning of this week, with the company owned by Constellation Brands, they existed solidly within the “not craft brewer” camp. Now, acquired by a hotel magnate, his partner, and four unnamed investors from outside the beer industry, it’s “craft brewer” once again.
But honestly—what has changed? If you’re the Brewers Association, and you’ve been spending the last four years telling drinkers to support “small and independent” by not consuming Ballast Point products, can you rationalize suddenly proclaiming that very brewery as worth championing again, just because it flipped hands? If you’re a consumer, can you ignore the fact that the second largest “craft brewer” in the country mostly makes cider, hard tea and hard seltzer, but gets to use the title, while well-respected breweries like New Belgium or Avery can’t? Can you succinctly explain why it’s unimportant when a brewery is 24% owned by a non-craft brewer, but important when it’s a 26% stake?
The conclusion is clear: The days of a concrete definition for “craft brewer” or even “craft beer” being viable are long behind us. The Brewers Association does all kinds of great work in promoting “better beer” throughout the U.S., and in promoting things like diversity within the brewing industry, but its ability to be an effective arbiter of who is and who isn’t a “craft brewer” has irreversibly slipped away as the myriad contradictions and illogical leaps have piled themselves up around the term. And the solution isn’t to amend the term even more; it’s to throw the term away.
This is not to say that we at Paste don’t believe in taking some kind of personal stand in terms of which breweries you choose to support and which you don’t, for reasons based around both the beers themselves and the way these companies conduct business. But those stances will ultimately be based on individual values and areas where you place importance, rather than the arbitrary notion of whether any given company lives up to a set of standards that no longer make any practical sense.
Case in point: I haven’t been shy, in the past, of stating that I don’t really care for AB InBev, and that I don’t choose to purchase beer from AB InBev-owned breweries. I might have once stated that their lack of status as “craft brewer” played into this decision, but it’s no longer a factor, because it doesn’t have to be. There’s no shortage of reasons for me to decide not to buy AB InBev products. I don’t like their business practices. I don’t like their marketing. I don’t like the way they fund regressive, anti-craft beer legislation via lobbying at the state level. I don’t like their shameless attempt to corner the market and establish a veneer of fake “choice” at bars and restaurants that are increasingly free to carry only AB InBev products while projecting an image of having a decent beer selection. More than anything, I don’t like the antiseptic, homogenized beer landscape I believe they’d like to build.
But New Belgium? Founders? Avery? Perhaps I’ll choose not to purchase beer from one of them for other reasons—Founders’ racial discrimination suit, for instance—but to act as if they’re the exact same case as an AB InBev-owned brewery like Golden Road or Goose Island is something I simply am not going to do. They all lack the “craft brewer” title, but they’re by no means equal in my mind. And the only solution, for me, is to stop giving any specific value to the idea of “craft brewer” as a title.
We’ve simply outgrown those words. And it’s up to beer drinkers to come to their own decisions on who they choose to support.
Jim Vorel is a Paste staff writer and resident craft beer guru. You can follow him on Twitter for much more drinks writing.