THE GIST

Ballast Point Brewing Company has sold for the second time in four years, for a less princely sum than it commanded in 2015 when multinational alcohol company Constellation Brands Inc. paid a headline-making $1 billion for the San Diego craft brewery.

More interesting even than the quick resale—the financial terms of the deal have not been disclosed—is who was behind the purchase. The announcement named Kings & Convicts Brewing Company, a Highwood, Illinois-based brewery that last year produced 600 barrels of beer, as the new owner of Ballast Point, a brewery producing more than 200,000 BBLs of beer annually. Cofounded in 2017 by Brendan Watters and Chris Bradley (the latter of whom is now Kings & Convict’s head brewer), the privately held company is backed by a “small group of investors.” Watters declined to name those investors in a conversation with GBH, saying only that they are private citizens from outside the beer space. (Some are in the wine industry.) Watters is a former hotel executive; Bradley has a biochemistry and tech manufacturing background.

They now own a brewing company lost at sea. Ballast Point’s 200,000 BBLs of production is less than half what it brewed at its peak in 2016, when it produced a reported 431,000 barrels of beer. From 2016 to 2018, Ballast Point shed 110,000 barrels of production. Following the sale to Constellation, layoffs in Ballast Point’s Craft & Specialty Sales Division, Midwest and South sales teams, and among brewpub and brewery staff soured employee morale. Executives, co-founders, and brewers departed just eight months after the deal closed. Without a dedicated sales and marketing team for the Ballast Point brand, sales declined and consumer interest waned. Two brewpub locations closed this spring. Ballast Point appeared to be floundering, and there was talk that Constellation was shopping around for a buyer. According to people familiar with the matter, prices as low as $100 million for the brand and brewery were in discussion.

Enter Kings & Convicts, a company that currently operates an Illinois brewery and is in the process of constructing a 48,000-square-foot production brewery, hotel, and events space in Pleasant Prairie, Wisconsin. (To learn more about Kings & Convicts, you can visit its now-functional website that temporarily crashed after news of the deal broke yesterday.) Watters tells Good Beer Hunting he’s not at liberty to disclose the terms of the deal, but admits his company paid less than the former $1-billion valuation.

Watters tells GBH he and Bradley met with employees of Ballast Point a year and a half ago when Kings & Convicts “asked permission to come out and see them and ask them for some tips on the structure of our new brewhouse and packaging line.” It was late July of this year when Watters and a senior Constellation executive met over beers; The Chicago Tribune places these beers on a golf course, notable in that Kings & Convicts’ taproom also includes indoor golf simulators. It was then that Watters expressed his company’s interest in buying the brewery.

As for why Watters and Bradley bought Ballast Point with Kings & Convicts, rather than creating a new company, Watters cites both practicality and a loyalty to their first brand. (It’s not clear what stake the original investors in the 600-BBL brewery now have in the 200,600-BBL brewery conglomerate.)

“We already had the company there and had investors in it. The company just happens to be called Kings & Convicts,” Watters tells GBH. “This is one company with two brands. We’ve got one that does 600 barrels and then we’ve got a big boy. We raised some capital through our friends here and brought it into Kings & Convicts. I didn’t just want to go call the new company Ballast Point Brew Co.; I don’t want to lose the background of why we started Kings & Convicts.”

At the point the pair were in discussions with Constellation executives, Kings & Convicts was already at work on its massive production facility in Wisconsin, which is intended to produce Ballast Point beer for sale in the Midwest and East once the deal closes. That’s key geographically, as Ballast Point’s Virginia production brewery was not included in this sale. Was Kings & Convicts already planning to buy such a large brewery when it constructed the space?

“Possibly,” Watters tells GBH. “In our wildest dreams [we had BP in mind]; only in our wildest dreams.”