4 Years After $1 Billion Acquisition Constellation Brands Unloads Ballast Point to Much Smaller Kings & Convicts Brewing Co.
Constellation Brands continues its march toward the premium end of the adult beverage market as it has announced they are selling the 23 year old Ballast Point brand to two year old Kings & Convicts Brewing Co.
In October 2015 Ballast Point Brewing of San Diego, California filed the paperwork to start an IPO to take the company public. At that point according to their SEC filing the IPO was valued at $172.5 million. One month later Constellation Brands announced a $1 billion acquisition of Ballast Point brands.
Now four years later Constellation Brands has announced the sale of craft-beer maker Ballast Point to Kings & Convicts Brewing Co. of Chicago, Illinois. The signed agreement includes Ballast Point brand and a number of its associated production facilities and brewpubs, excluding Constellation’s Craft & Specialty operations in Daleville, Virginia.
The Craft Beer Market has Shifted
“Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point,” said Bill Newlands, Constellation Brands president and chief executive officer. “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.”
“We’re excited to welcome the team at Ballast Point into the Kings & Convicts family,” said Brendan Watters, Kings & Convicts’ chief executive officer. “We have long admired the quality and spirit of Ballast Point’s brands and team. Ballast Point’s best-in-class brewing standards will remain unchanged, delivering the same high-quality, award-winning products 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.”
Kings & Convicts Operates a 5,000 Square Foot Brewery
Kings & Convicts will retain all positions within Ballast Point’s existing workforce, which is comprised of approximately 560 employees and plans to hire additional resources to support the future growth of the business. The company will continue to utilize Ballast Point’s current U.S. distribution network and hire a sales and marketing workforce to support long-term growth in all 50 states.
Kings & Convicts is a privately-held company backed by a small group of investors. The company was co-founded in 2017 by Chief Operating Officer and Head Brewer Chris Bradley and Chief Executive Office Brendan Watters. Kings & Convicts brews ales and lagers out of its 5,000 sq. ft. Highwood brewery and taproom in the North Shore of Chicago, which are available on draft and in cans at the taproom and in bars and restaurants across Chicagoland and Wisconsin. The duo announced plans earlier this year to open a second location of Kings & Convicts in Pleasant Prairie, Wisconsin, approximately 30 miles from Milwaukee. The 48,000 sq. ft. destination brewery will house a large production brewhouse, taproom, restaurant and event space and is expected to open in Fall 2020.
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As part of the transaction, Kings & Convicts will acquire Ballast Point’s four brewpub locations in California, including Downtown Disney/Anaheim, 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.
“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.”
Current volume of Ballast Point is expected to surpass 200,000 barrels in 2019 and is available in all 50 states as well as internationally in 19 countries including South Korea, Sweden, Australia, and New Zealand.
What Did Ballast Point Sell For?
Constellation expects to realize slightly improved depletion and margin trends for the beer business upon close of this transaction. This transaction is expected to close by the end of Constellation’s fiscal 2020.
Terms of the transaction were not disclosed. According to a report in Beer Business Daily word on the street is it went cheap. The San Diego Union-Tribune said industry observers estimate the sales price between $75 million to $200 million. We’ll update the story if the numbers are released.
Constellation Brands is a leading international producer of and marketer of beer, wine and spirits with operations in the U.S., Mexico, New Zealand, Italy and Canada. The company’s Constellation Ventures include investments in Catoctin Creek Distilling, Bardstown Bourbon Company, Nelson’s Green Brier Distillery, Real McCoy Spirits Corp. and Copper & Kings American Brandy.