ESOPs and Hops: Craft Breweries Turn to Employee Ownership

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By Kristen Ricaurte Knebel

July 20 — At a time when small craft breweries are being purchased by big names like Anheuser-Busch Cos., some breweries are looking to sell to a different buyer—their employees.

The beer giant Anheuser-Busch has added Devil's Backbone Brewing Co., Four Peaks Brewing Co. and Breckenridge Brewery to its stable of craft breweries in just the last year. At the same time, smaller beer makers New Belgium Co., Left Hand Brewing Co. and Deschutes Brewery have started offering employee stock ownership plans to their employees.

For some companies, offering an ESOP is a way to recruit and retain employees. For others, it's a cultural move that promotes employee engagement in the business and signals to the community that the brewery intends to stay local. An ESOP is a special form of qualified defined contribution retirement plan that spreads ownership of an employer's stock throughout the company's workforce.

“The reason that we’re seeing the craft brewers go to the ESOP has a lot to do with their culture. They really want to share what they’re building with their employees, both emotionally, as well as financially,” Sandy Shoemaker, audit partner with EKS&H in San Francisco, told Bloomberg BNA July 15.

For New Belgium, based in Fort Collins, Colo., it was important to share in the rights and responsibilities of employee ownership “right from the beginning,” Bryan Simpson, PR Director at the brewery, told Bloomberg BNA July 15. New Belgium became 100 percent employee owned on Dec. 29, 2012.

Simpson says the response to employee ownership has been “overwhelmingly positive” because it “creates a culture of ownership.”

Tapping Into Interest

A lot of breweries decide to offer ESOPs to “maintain independence,” Rocky Fiore, managing director at Prairie Capital Advisors Inc. in Oakbrook Terrace, Ill., told Bloomberg BNA July 18.

An air of independence is important for the craft beer industry and has driven a lot of the growth that “higher quality beers” have enjoyed in the past decade, Kyle Leingang, associate with Dorsey & Whitney LLP in Costa Mesa, Calif., told Bloomberg BNA July 18.

“ESOPs have become very popular in the beer industry because of the message that it both sends to consumers and to other people within the industry, like employers, or within other craft breweries,” said Leingang, who has represented breweries and distributors in his practice.

Being an employee-owned company has a lot of advertising value in the craft beer industry, because consumers respond positively to a company with an element of employee ownership, Leingang said. It also helps the companies recruit talent because there's an interest in having a stake in the company, he said.

“There’s an intangible attraction in having an ownership stake in what you’re building,” he said.

Time to Tap Out?

Some think of an ESOP transition as the end of the road, Leingang said, but it doesn't mean there won't be another transaction later on.

The Hood River, Ore.-based Full Sail Brewing Co. was one of the craft breweries offering an ESOP until it was sold to a private equity firm last year. To date, it appears to be the only craft brewery that has been sold that offered an ESOP.

While some companies might set up an ESOP with the idea that they might sell the business to another party later, more often than not, breweries are setting up ESOPs “with the idea to maintain independence,” Shoemaker said.

Left Hand Brewing Co. in Longmont, Colo., just wrapped up its first year of employee ownership and have had a positive response from employees, Eric Wallace, chief executive officer and co-founder, told Bloomberg BNA July 18.

“In general, there’s a higher level of engagement. People tend to take more responsibly for the decisions they are making and hold each other more accountable,” he said.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

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