Tiny Illinois brewery buys Ballast Point. But how?

Kings and Convicts Brewing in Highwood, Illinois, just bought out
Ballast Point Brewing from San Diego. Yes. THAT Ballast Point!! Last
we heard in November 2015, Ballast Point had been sold to Constellation
Brands, who owns Corona among others, for $1 billion!! Let's assume
then that Kings and Convicts got one helluva bargain basement price.

Well, if Ballast Point Brewing, a former independent brewing giant out of San Diego, wasn't already a very curious business case study four years ago, they certainly are now.

You see, it was back in November 2015 that Ballast Point, by all accounts a great American success story at that point, was bought out by mega-conglomerate Constellations Brands.

Constellation, which started as a small wine producer in upstate New York in 1945, has since become an industry giant, gaining control of a number of brands of liquor, wine and beer, including huge-selling Corona, Modelo... and yes, Ballast Point.

Not to put too fine a point on it but look at Ballast Point
here. Now look up at Kings and Convicts. Now look back
here. Now look back up there. So up there will soon own
down here. Turns out this is just the property at Disney!!

Now here's the kicker. When Constellation bought Ballast Point in November 2015, the price was... not even joking... $1 billion!

You see, usually when a well-respected independent craft brewery sells out to a multi-national, craft drinkers are furious.

This time, it was more like, "Those bastards! I can't believe that they'd sell out their loyal clientele like... wait... how much?"

I mean, a billion dollars. That's a thousand million. So like, a thousand more than the Barenaked Ladies even thought of having in a catchy little ditty. It all seemed somewhat outlandish.

So I pulled up the 2015 Ballast Point numbers on NASDAQ to see if that was the case. Back in 2015, Ballast Point had gross revenues of $89.5 million. Okay, starting to make some sense as a long-term investment as you could recoup your purchase price in 11 years.

EXCEPT (rule of thumb with financial transactions, there's always an 'except'...)

Is it just me or does Kings and Convicts Brewing look about the same
size as Grain & Grit Small Batch Beer in Hamilton? So you may well ask
yourself, how does an Illinois brewery, roughly the size of Grain & Grit
end up buying Ballast Point? Believe me, we're all a little curious there.

There are other numbers involved here. The assets, which included four San Diego properties, as well as any material, beer, etc on their properties in 2015, were worth $64.7 million. Not too shabby.

However, their liabilities (so, debt) that year were $40.6 million. And then there were their shareholders who, in total, pocketed a nifty $24.6 million.

Anyway, in the end, as far as the numbers came up on NASDAQ (as they were submitted, I'm sure) their net profits for 2015 were just $15.4 million. It would then take Constellation 65 years to recoup their $1 billion. Let's face it. The deal was a stanky dog for Constellation from Day One.

Everyone in this and any other universe trying to do the
Math on the Kings and Convicts buying Ballast Point deal.
If you're thinking it makes no sense at all, you're right...

So when Kings and Convicts Brewing, a tiny operation out of Highwood, Illinois announced today that they were buying Ballast Point, all of us kinda went, "Who the hell are Kings and Convicts?"

None of us had ever heard of them. But even more telling was the nearby residents who do know them.

Greg Trotter, a former Chicago Tribune reporter, was stunned. "Insane! Kings and Convicts is the wee brewery right down the street from me in Highwood. Truly shocking!" When I told him that size-wise, it looks like Grain & Grit in Hamilton, sending a picture, he replied with the picture at the top.

The full glass is what Constellation Brands
paid for Ballast Point in 2015. That little bit of
beer on the bottom is likely what Kings and
Convicts is going to pay for them. Or less.

"Yes, very small. Closed today but the lights were on! I was hoping to have a pint at Kings and Convicts and toast this utterly insane turn of events."

Well, of course, I first read about it on well-known Canadian beer author Stephen Beaumont's Twitter a few hours back when I got home so I clicked on Kings and Convicts Twitter link. They had 249 followers. I was 250. That's small. A couple hours later, they're now well over 500.

Like everyone, I want details, especially financial ones, meaning how much did they shell out for the "billion dollar brewery"? But their website - surprise, surprise - had crashed. That'll happen when half the craft beer drinkers in North American are trying to log on just to find out who the hell you are?? (It just came back up but with no mention of the big purchase.)

Some small details. They're a half hour (30 miles, 50 km) north of Chicago. Founded in 2017 by a Brit, Chris Bradley, and an Australian, Brendan Watters. The name is a play off the fact that back in the 1700s and 1800s, Britain exiled convicts to Australia.

Like I said, small details. Show us the money (details)! But sure as hell, I'm pretty certain none of us has heard of a deal like this. One final question. Does this mean Ballast Point is craft again? Or is it like a virginity thing, once gone, never to return? We'll find out soon.