When Ballast Point Brewing Company was sold to Constellation Brands in 2015 for $1 billion it made big news. It made even bigger news this afternoon when tiny Chicagoland brewery, Kings & Convicts Brewing Co. announced they had purchased the San Diego-based brewery.
While talks between Kings & Convicts and Constellation began in July of this year, Brendan Watters, Kings & Convicts’ CEO and Co-Founder noted that their relationship with Ballast Point team extends even further back.
“We’ve become friendly with some of the senior people,” Watters said. “They helped us when we were building out our Wisconsin site and Ballast Point was more than happy to share info and resources with us.”
According to Watters, talks of the deal began in July when he was sharing a beer with a Constellation employee and asked what the company was planning to do with Ballast Point.
“I asked what they were doing with Ballast Point and he said ‘Why?’ I said I wanted to buy it,” Watters said. “We got our things in order and flew out to San Diego in the first week in August. We raised some capital and here we are today.”
Watters, along with Kings & Convicts co-founder Christopher Bradley, brought in two more investors to join their group to help with the purchase, which includes six Ballast Point locations that consist of brewpubs and production facilities in California, as well as their Chicago taproom facility.
A former hotel executive, Watters sold his chain, Boomerang Hotels, back in 2015, and at the time decided he wanted to get back into home brewing. His wife didn’t want him brewing in the house, so he rented a small space and that’s when Bradley asked if he wanted help. Bradley, who comes from a background of mobile technology, sold his own company and the two began to take brewing more seriously.
“We could keep doing this as a hobby or see where this thing (craft beer) is going,” Watters said. “Long-term is this something we can continue rather than me get back into the hotel world? That’s what I asked myself and I knew we could make this work.”
Watters said he expects the deal to be completed in about two to three months. Watters added that he negotiated the deal without a financial advisory firm and purchased the brand along with about a “half dozen private investors.”
The sale of the Ballast Point brand had been rumored for months. Watters said the deal came about after he asked an unnamed Constellation employee in July if he could buy the brand.
“Sometimes you just gotta ask,” he said.
Located in Highwood, Illinois, about 30 miles north of downtown Chicago, Kings & Convicts, with its nine employees, is projected to brew approximately 600 barrels of beer in 2019. Ballast Point in contrast, has approximately 560 employees and is producing around 200,000 barrels of beer.
Restoring the Ballast Point Brand
Watters sees this opportunity as an opportunity to shake up the industry and get Ballast Point back to the brand it was before the sale to Constellation.
“When everyone is zigging, we want to zag,” he said. “Ballast Point is quality beer with quality people and a great foundation. Let’s continue that but without the constraints of having to be corporate. We want to make this beer fun again and make it fun for the people.”
Asked what he sees in Ballast Point, Watters said it was a brand with “incredible liquid” and a lot of “real energy in California.” For Watters, the Ballast Point brand needed more love than Constellation Brands was giving it, as well as a return to an “independent” status and “not part of some conglomerate.”
Currently, Watters is in San Diego and will be addressing the entire Ballast Point team tomorrow morning at 8 AM. He’s met with the leadership team already.
“When I walked in they said ‘Holy Shit, who are you,’” Watters laughed. “We told them what our plan and strategy was and they’re very excited about having the shackles pulled off and their independence again.”
Watters and the Kings & Convicts team know they will be leaning heavily on Ballast Point.
“We haven’t got all the answers, but here’s what we do know, we love Ballast Point, we love where things are heading, we have great people and we want to unleash the people who love beer back into the market,” he said. “This is a great brand and it’s a big brand.”
The Future of Kings & Convicts
While terms of today’s acquisition were not able to be disclosed, Watters did note that the purchase was under Constellation’s original billion-dollar purchase price. Additionally, when pressed about whether more acquisitions were a possibility involving other breweries, Watters remained guarded but open-ended.
“I’m sure, to be honest,” he said. “We’re tiny. We didn’t even brew a thousand barrels last year. But if the opportunity presents itself, we’re in a position to be flexible.”
In addition to acquiring Ballast Point, the 2-year-old Kings & Convicts will open a 48,000 sq. ft. production facility in Pleasant Prairie, Wisconsin, next year.
Watters said the plan is to continue Kings & Convicts as a regional Midwest brand, while maintaining national distribution for Ballast Point.
The sale of Ballast Point follows a flurry of craft M&A activity over the last month, including Anheuser-Busch InBev agreeing to purchase the remaining stake in Craft Brew Alliance. While Kirin-owned Lion Little World Beverages reached a deal for New Belgium, and Artisanal Brewing Ventures acquiring the No. 2 hard cider brand, Bold Rock.