New Belgium Brewery Goes Flat

A couple of weeks ago, a tremor ran through the “employee ownership” establishment when New Belgium Brewing announced that it had sold itself to Kirin, a Japanese conglomerate with international holdings. New Belgium was a highly touted ESOP (Employee Stock Ownership Plan) that boasted 100% “employee ownership”. The workers will receive an average $100,000 payout. Kirin’s subsidiary, Little World Beverages, which is the official buyer says that everyone keeps their job and everything will remain the same.

I’ve been wondering when the craft beer market would begin consolidating. A few years ago, shockwaves went through the Cascadia craft beer community when 10 Barrels sold to Anheuser-Busch and worse, Full Sail sold to an investment company. New Belgium, around that time, also acknowledged that they would be open to a seller. There was another ESOP brewery in Oregon that sold as well, but I can’t remember the name. It was notable because, as with Full Sail, the trustees were the founders. At this brewery, the couple that were trustees also had a majority share. They said that they wanted the workers to vote on the sale so that they could “feel like owners.” ugh.

Fifty by Fifty created a great discussion about the sale and what it means to employee ownership. I mainly come down in the same commentary of Sonja Novkovic and Erbin Crowell (which shouldn’t surprise too many people). In addition, I would add that, as I mentioned in my previous post, the point of worker ownership goes deeper than creating decent paying jobs (just like the point of labor unions is more than wages and benefits). Ultimately, worker ownership must be about human development and human dignity not only in the workplace but in the community served by the workplace. If human dignity and development isn’t centered in the project, it only offers a few pennies in return for maintaining a larger system aimed at using up people and the planet.

What I found interesting in the commentary was the lack of information about the sale. I held off writing about this because I have more questions than anything. I wonder how the voting went. Was it a unanimous decision such as with Good Vibrations? What is a majority of shareholders? With Full Sail, it was “near unanimous” for the sale (the trustees held 42%). What constituted a majority of shareholders (a minority of actual workers for instance could hold a majority of shares). The reported payout of $100,000 per worker was not reported as either an average or a median number. I think that it would be useful to see a breakdown of how the sale price is distributed to the workers.

That said, $100,000 isn’t a lot of money today. By comparison, Burley Bikes, a co-op in economic crisis, sold in 2005 or so and the workers averaged $30,000 (about $40k in today’s dollars). It will certainly be life-changing for some but will the trade-off be worth it. How does it compare to the wages of these workers? I know that Kirin claims that no jobs will be lost, but there isn’t a guarantee (and if the workers haven’t unionized, it would be a good idea to do so in my opinion). Eventually, Kirin’s shareholders will expect a return on their investment and this will either come from wages, expanded growth in a market that is already saturated, or a sale to a larger company (Miller SAB, AB, etc).

The constant drumbeat of the established worker co-op movement has been how to “get to scale” for several years now. But when companies get to scale, the pressure to sell out becomes even greater. There are ways of “getting to scale” that can still center the individual human in the equation: Rainbow Grocery, Union Cab, Equal Exchange come to mind. Other larger co-ops,such as Cooperative Home Care NY, use labor unions to help keep the social purpose of worker ownership alive. The idea of using a retirement plan in lieu of true worker ownership or real social change has always seemed flawed to me.

I can see using ESOPs as an aspect of a worker co-op, but agree with others that we need to quit calling ESOPs worker owned. Perhaps we should just refer to ESOPS as Worker RVs (retirement vehicles). An ESOP paired with a worker co-op (though a Limited Co-op Association) would allow the best of both worlds, but I don’t know of an example. However, the workers need to democratically control of the business or it will always be investor focused which is inherently pro-capital and anti-labor.

If worker ownership centers only on maximizing wealth for the employees, it will ultimately do little more than create marketplaces for the real capitalists to exploit. Our movement needs to be about more than making the marketplace great for investors again. To paraphrase an old adage: we don’t need to sell ropes to the bosses to hang us with.

About John McNamara

John spent 26 years with Union Cab of Madison Cooperative and currently helps develop co-ops in the Pacific Northwest. He holds a Ph.D. in Business Administration and Masters in Management: Co-operatives and Credit Unions from Saint Mary's University.
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