It’s not even a contest, is it? The idea that Ballast Point Brewing Co., for which Constellation Brands paid $1 billion only four years ago, is being acquired by a small Chicago suburban brewery with less than 200 Twitter followers has got to be the strangest, most inexplicable beer industry story of 2019. Everything about the headline “Kings & Convicts Brewing Co. acquires Ballast Point” beggars belief to the point that many in the beer community seemed to doubt whether the story was even real when it broke this evening. Of course, 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.
Here’s the long and short of it: After massively overpaying for Ballast Point right before growth in the craft beer industry began to slow down, Constellation Brands seemingly developed a serious case of buyer’s remorse. Ballast Point production decreased by 13% in 2017 and again by 15% in 2018, down hugely from its peak of more than 430,000 barrels in 2016. What has followed has been a wave of cost-cutting measures, including the dismantling of Ballast Point’s sales network and the closure of several brewpub location. Now, only four years later, Constellation is calling it quits and passing the brewery off to Highwood, IL’s Kings & Convicts brewery for an undisclosed sum.
The question, naturally, that passed like a lightning bolt through the entire beer world, was something along the lines of “who???” Kings & Convicts is a veritable unknown in the industry, open only since 2017, and apparently producing a mere 660 barrels of beer this year. And now the company has acquired Ballast Point, which will make almost 200,000 barrels in 2019.
Clearly, none of this adds up, but at the very least it points to extremely deep pockets on the part of the new ownership group at Kings & Convicts, which has expanded to six people: CEO Brendan Watters, co-founder Christopher Bradley, and four silent partners, who Watters told The Chicago Tribune “love Ballast Point, but don’t want notoriety and want to remain quiet.” Watters, on the other hand, is a former hotel exec at Boomerang Hotels, who sold the chain in 2015, presumably making a pretty penny in the process.
Even with the pockets to purchase the Ballast Point brand, though, the idea of a brewery the size of Kings & Convicts acquiring a national chain (sold in 49 states) is a bizarre one. This differential in scale was highlighted when the Kings & Convicts website immediately crashed thanks to the surge of traffic after the news was announced. Visiting the now-live site again, one can’t help but notice how humble and lacking in professional glitz the site and company seem to be. In fact, the site lists only six beers in basic styles, with names like “King’s Bitch” and “Stew’s Brew.” The feel is decidedly “neighborhood brewpub,” rather than “national powerhouse.”
Weirder still is the fact that this change would presumably allow Ballast Point to once again qualify for the Brewers Association definition of being a “craft brewer,” a title they were stripped of when owned by Constellation. It would certainly help offset some of the volume being lost from the Association’s official production statistics when the recently acquired New Belgium’s production is no longer counted, but when a formerly “non-craft” brewery is bought out by a former hotel CEO, how hard is it to rationalize that the non-craft has become “craft” once again? How difficult does it become to continue acting as if that word has specific, concrete value?
For what it’s worth, Watters and Kings & Convicts are claiming that all currently existing Ballast Point facilities will remain open, with all jobs preserved—even the shocked Ballast Point employees who found out this afternoon along with everyone else, like the guy who created this reddit thread. Watters told the Chicago Tribune that the intent was to let BP behave “like a small brewer again and see where it goes,” noting that “We will build up a new Ballast Point sales force and let the innovation go and get back to the roots. I think it just needs some love and focus and it’ll be fine.”
Does it sound to anyone else like Ballast Point is a sad Christmas tree in this particular Peanuts analogy? Just wrap ‘er up in a blanket, stick a few ornaments on her, and surely things will turn out for the best.
We’ll bring you more information on this truly strange story as it develops into 2020.