As breweries hit a certain age there are founders that are looking for the business to continue without them. While sales and mergers are one options, another has emerged in the last few years as an alternative to an outright purchase: the Employee Stock Ownership Program (ESOP).
There have been several breweries that went this route, if only for a short time. New Belgium Brewing Company and Full Sail Brewing Co. are two examples of breweries that went the ESOP route and later sold to other breweries or private equity firms.
Still, it is a concept that resonates with consumers, gives new life to breweries, and allows employees to make decisions and take additional pride in where they work.
This week on the Drink Beer, Think Beer podcast John Holl has a conversation with Gretchen Langfeldt of Switchback Brewing. Langfelt is the engineer and brand marketing leader for the brewery and one of its earliest employees.
John Holl: When you look around and you see fellow owners and you see folks who have skin in this game, there’s got to be a well, I imagine there’s a larger push to say, “Okay, well, how do we keep the lights on? How do we keep them shining bright and new beers? ”
Gretchen Langfelt: I think it was 2017 when Bill Cherry, and Jeff Neiblum, our co-founders, made the transaction for us to be 100%, employee owned. We are I believe one of only a couple breweries that are fully 100 percent. As of now, I know, there’s some others that are trying to get to that point.
But they went all in and said, No, this is this is the direction we’re going. This is we want this to be, all of ours moving forward. And I really think it happened more or less overnight. The crew that was here, it’s was like, “oh, wait, there is going to be a future someday without Bill at the helm.”
And that’s both frightening and exciting. We’ve got careers ahead of us. Bill has always done a very good job of taking all of our input and, running ideas by all of us. Before we did the bottling line, he literally said, you know, where do we want to go with this?
it’s always been very inclusive, but when when it’s actually down to ownership, I think it really came like “oh, no, we are all officially owners now.” So bring the new ideas to the table, let’s run with some things. And it certainly has seen the whole cat [double IPA] series came out of that.
John Holl: What have you learned in the last five years since since this change?
Gretchen Langfelt: ESOPs are very convoluted financial agreements. That’s, that’s the biggest takeaway for me.
I mean, honestly, I think we still don’t even understand exactly how it how it works day in and day out sometimes.
And I’ll say that I’m not on the financial side of it for the most part. So there are people who do get it.
It’s a privately owned company.
Only we can make our own decisions based on what we think is appropriate.
From a from the positive side of things I think it gave us it’s all a new sense of respect for how daunting some of these decisions can be.
This conversation has been condensed and edited for clarity.