Ballast Point sold for the second time in four years

For the second time in four years, Ballast Point — a San Diego craft beer pioneer that became one of the areas’s largest breweries — has been sold.

Kings & Convicts Brewing Co., a tiny Illinois firm, on Tuesday announced an agreement to buy Ballast Point from New York-based Constellations Brands, Inc. Terms of the sale were not disclosed, but includes Ballast Point’s four California brewpubs — at the main brewery in Miramar; Little Italy; Anaheim’s Downtown Disney; and Long Beach — plus one in Chicago.

Also included is Home Brew Mart, Ballast Point’s birthplace in Linda Vista.

Constellation will retain a production brewery and brewpub built for Ballast Point in Daleville, Va.

“We are going to get back to being craft,” said Brendon Watters, Kings & Convicts’ CEO. “We are going to start innovating again.”

Kings & Convicts, a two-year-old microbrewery that employs nine people and annually produces about 600 barrels of beer, will move its headquarters from the Chicago suburbs to San Diego.

In recent years, large multinationals have gobbled up small independent breweries. This time, though, a tiny independent brewery is assuming ownership of a fading brewery that was once one of American craft beer’s rising stars.

“It’s going against the trends,” Watters acknowledged.

Ballast Point has shaken up the craft beer industry before. In 2015, Constellation Brands paid $1 billion for the Miramar company, still a record amount for a craft brewery. Coming just one month after MillerCoors’ purchase of another San Diego brewery, Saint Archer, this sale upset craft beer fans who saw Ballast Point as a locally owned bulwark against the multinational brewing concerns.

Constellation owns Modelo’s U.S. beer business, plus numerous wineries. Since buying Ballast Point, the corporation acquired Florida’s Funky Buddha Brewery and Dallas’ Four Corners Brewing.

Founded in 1996, Ballast Point began as a side venture at Home Brew Mart, a popular supply shop for homebrewers. While the brewery soon earned fans for its clean and creative beers, it scored a major breakthrough with the 2005 introduction of Sculpin.

While other breweries were vying to make the bitterest IPA, Sculpin’s notable hop bitterness was balanced by a fruity sweetness.

“When it rolled out into New York City,” Joshua Bernstein, a Brooklyn-based beer writer, told the Union-Tribune in 2016, “everyone went for it. That lush, tropical, stinging profile was unique — it increased the possibilities of what brewers could do with the IPA.”

In 2015, the brewery’s founders considered taking the company public, offering shares to investors. That plan was abandoned when Constellation agreed to buy Ballast Point. Although Constellation distributed Ballast Point’s beers across the country and bought TV ads featuring brewer Colby Chandler, this was not a successful marriage.

While sales initially rose, Ballast Point peaked in 2016 at almost 431,000 barrels (one barrel of beer equals 31 gallons). By 2018, production had dropped to 320,000 barrels. Kings & Convicts on Tuesday noted said 2019 sales should “surpass 200,000 barrels,” which would represent further decline.

Reached by phone in Illinois Tuesday, Watters said Ballast Point’s beer recipes will remain the same (“Sculpin is one of my favorites,” he said, “has been for years”). New management would continue to distribute the beer in 49 states, but focus on key markets such as San Diego County, California, the West Coast, Chicago, Pennsylvania and Texas.

Ballast Point’s 560 employees will all retain their jobs, while Watters said he plans to bulk up the company’s sales and distribution arms with 70 new hires.

“What Constellation wanted from Ballast Point is not what Kings & Convicts wants,” he said. “It’s more about focusing on the areas that make sense.”

Kings & Convicts was founded by Chris Bradley, a British expat known as the King, and Watters, a native of Australia dubbed the Convict.

This year, the tiny brewery planned an expansion, a new 48,000-square foot facility in Wisconsin. While working on this new place, Bradley and Watters met with Ballast Point employees.

“I just think the world of Ballast Point,” Watters said. “Love the employees, love the story, love the liquid.”

In July, while meeting with Constellation executives, he sang Ballast Point’s praises.

“Is it for sale?” he asked, half-joking.

The response: “Would you like to buy it?”