Highwood Microbrewery Owners Buy San Diego-Based Ballast Point

HIGHWOOD, IL — The owners of Highwood-based Kings & Convicts Brewing Company have signed an agreement to buy Ballast Point Brewing Company from the giant alcohol producer Constellation Brands.

Once the deal closes, Kings & Convicts will acquire production facilities and brewpubs in California and Illinois, although Constellation will keep a Virginia production brewery.

The smaller brewery, headquartered at 523 Bank Lane in Highwood, was founded in 2017 by Brendan Watters, its Australian chief executive officer, and Chris Bradley, its English chief operating officer and head brewer. The privately held company offers its beer at its taproom and across Chicagoland and southern Wisconsin.

Watters said they were excited to welcome Ballast Point staff into the company. In a statement, Kings & Convicts said it would keep all 500 Ballast Point employees, use its existing distribution network and hire a marketing and sales team to support nationwide growth.

"As craft brewers, we have long admired the quality and spirit of the Ballast Point brand and team. Their best-in-class brewing standards will remain unchanged, delivering the same high-quality, award-winning beer the company has become known for over the years," Watters said. "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."

The financial terms of the sale were not disclosed, but Constellation purchased San Diego-based Ballast Point for $1 billion in November 2015. In the years since, Constellation has written down the estimated value of the trademark down to $17 million, closed locations and laid off employees. It was reportedly being offered for sale for as little as $100 million.

Ballast Point was founded in 1996 by a group of homebrewers in southern California and now distributes to every state and 17 countries. It is expected to sell more than 200,000 barrels this year, according to a release. In comparison, the Highwood-based craft brewery that purchased it produced just 600 barrels last year and employs just nine people.

"Trends in the U.S. craft beer segment have shifted dramatically since our acquisition of Ballast Point," Constellation Brands Chief Executive Officer Bill Newlands said, announcing the sale. "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."

Newlands said the publicly traded, New York-based company — which last year invested $4 billion in a Canadian cannabis company that it has already written down by $160 million and continues to lose more than $50 million a quarter — was looking forward to introducing new products, like the planned spring 2020 launch of an alcoholic seltzer by one of its Mexican beer brands.

Earlier this year, Kings & Convicts announced plans to open a 48,000-square-foot "destination brewery" in Pleasant Prairie, Wisconsin, as its second location. It is expected to open in fall 2020 with a taproom, restaurant, event space and large production brew house.

The newest Ballast Point brewpub opened in May at 212 N. Green St. in Chicago's Fulton Market District. King & Convicts' co-founder Bradley said the company was looking forward to "engaging the community and getting a connection back to the local markets" through distributors, retailers and marketers.

"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," Bradley, the head brewer, said in a release.

The companies announced the deal is expected to close by the end of April 2020, pending all licenses and permits. The Chicago Tribune reported the acquisition was made possible by an investment from The Wine Group Chairman Richard Mahoney, who joins Watters and Bradley with a similar ownership share of the company.