Constellation Brands has offloaded its ailing craft brewer Ballast Point which it purchased just four years ago at staggering USD 1 billion. The sale to the relatively unknown company Kings & Convicts Brewing Co. at an undisclosed sum marks the end to a story, which has never been a success.
In order to adjust capacity to a declining demand for its products, Constellation Brands announced in April to close its one-and-a-half-year-old sour beer and barrel-aging facility in San Diego’s Trade Street, as well as its three-year-old brewpub in Temecula, California. In addition, the company stopped building its new San Francisco-based brewpub, which was scheduled to open this year (inside.beer, 17.4.2019).
Current volume of Ballast Point is expected to surpass 200,000 barrels (235,000 hl) in 2019. The brewer makes over 50 styles of beer which is available in all 50 U.S. states as well as internationally in 19 countries including South Korea, Sweden, Australia, and New Zealand.
According to a press release, Kings & Convicts has signed an agreement with Constellation Brands to acquire the Ballast Point brand and a number of its associated production facilities and brewpubs, excluding Constellation’s Craft & Specialty operations in Daleville, Virginia.
As part of the transaction, Kings & Convicts will acquire Ballast Point’s four brewpub locations in California, including Downtown Disney/Anaheim (inside.beer, 25.1.2018), Long Beach, Miramar, and Little Italy, as well as the newest Ballast Point brewpub located in Chicago’s Fulton Market District which opened in May of this year and Ballast Point’s original homebrewing supply and tasting room in San Diego’s Linda Vista neighborhood.
This transaction is expected to close by the end of Constellation’s fiscal 2020. As part of this agreement, Kings & Convicts will retain all 560 positions within Ballast Point’s existing workforce, with plans to hire additional resources to support the future growth of the business.
If someone wonders how a microbrewery like Kings & Convicts can buy a brewery which is more than 330 times bigger, one has to notice that Kings and Convicts is owned by “a small group of investors who are passionate about the Ballast Point brand and who are focused on the long term,” as the company states in its own media release.
“Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point,” justifies Bill Newlands, Constellation Brands president and chief executive officer, the sale. “Ballast Point remains one of the most iconic craft beer brands in the country and we’re pleased to transition the business to an owner that can devote the resources needed to fuel its future success. At the same time, this decision allows Constellation to focus more fully on maximizing growth for our high-performing import portfolio and upcoming new product introductions, including Corona Hard Seltzer, scheduled to launch this spring.”
Kings & Convicts was co-founded in 2017 by Englishman, COO and head brewer, Chris Bradley, and Australian and CEO, Brendan Watters. The name of the brewery derives from the origin of the two founders. It is a privately held company backed by a small group of investors. Kings & Convicts brews about 600 barrels (700 hl) of ales and lagers out of its 5,000 sq. ft. Highwood, Illinois brewery and taproom in the North Shore of Chicago. The beers are available on draft and in cans at the taproom and in bars and restaurants across Chicagoland and Wisconsin.
“We are going to get back to being craft, we are going to start innovating again,” said Brendan Watters, Kings & Convicts’ chief executive officer. “We’re excited to welcome the team at Ballast Point into the Kings & Convicts family. As craft brewers, we have long admired the quality and spirit of the Ballast Point brand and team. Their best-in-class brewing standards will remain unchanged, delivering the same high-quality, award-winning beer the company has become known for over the years. Our goal is to leverage Ballast Point’s deep know-how, talented and passionate employee base, and outstanding operating team to grow both Ballast Point and Kings & Convicts together.”
“We look forward to engaging the community and getting a connection back to the local markets through our distributor partners, on and off-premise retailers and our dedicated salesforce ambassadors,” said Chris Bradley, Kings & Convicts’ chief operating officer. “Ballast Point has well-established R&D programs and we want to continue fostering that innovation and experimentation by listening to our consumers and serving specialty and local beers in each market.”