Travel with me if you will back to the heady days of 2015. Game of Thrones and Modern Family ruled the airwaves. Ballast Point was at the height of its popularity. Their wildly popular Sculpin IPA was available almost everywhere. Caught in the twin mid-decade beer waves of explosive growth and selling out to Corporate Beer, Ballast Point was purchased by Crafty brand aggregator Constellation Brands for an unfuckingbelievable $1,000,000,000.00. That’s “billion” with a “b.”
Enter Kings & Convicts, an privately owned craft brewery in the North Shore of Chicago that last year brewed less than 2000 barrels of beer. They have purchased Ballast Point (minus their new production facility). Financial terms were not disclosed, but it’s a private sale, financed by friends, family, and bank loans, so it’s pretty clear that they paid a bit less than a billion dollars.
The deal seems like a major coup for Kings & Convicts. K&C co-founder Brendan Watters says, “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.” So good for them, and good for Ballast point, who regain their Craft status. Watters added, “we are taking this brand back, and bringing it back to independence.”
Maybe not so good Constellation Brands, though. They clearly took a bath on this deal. So what on earth happened? I have two thoughts on this. First, the recent trend in the craft beer world has been toward “juicy hazy” New England IPAs and away from bitter-first West Coast IPAs; Sculpin is a prime example of the latter. So Constellation went all-in on a popular example of a style right as the style’s popularity was waning. Constellation Brands president and CEO Bill Newlands confirmed this, saying “Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point.”
Additionally, Ballast Point is a small-to-medium-sized nationally distributed beer brand. It seems that very few breweries have been able to survive at that size for very long, carrying all of the distribution and marketing costs of the big Corporate brands but without being able to realize most of the benefits of scale. There’s a pretty solid list of breweries (Dogfish Head, Green Flash, Lagunitas…) that expanded to this point and then collapsed and / or sold out. K&C’s Brendan Watters acknowledged, “bigger players like Ballast Point have to work out what they want to do, and where they want to play.”
Indeed. In the short term, though, let’s all have a Sculpin and welcome Ballast Point back to the Craft fold. Cheers!
Sources include Washington Beer Blog and Forbes.