These are competitive times for breweries, but even in a year of acquisitions and mergers, New Belgium’s announcement yesterday that it plans to sell to Tokyo-based Kirin Holdings was huge news. New Belgium—brewer of Fat Tire, the Voodoo series of IPAs, and award-winning Belgian-style beers—is the fourth-largest craft brewery in America, and has been a pioneer in the industry since its founding in 1991. It’s also employee-owned—offering an Employee Stock Ownership Plan, or ESOP—which makes it an interesting anomaly in terms of acquired breweries. (Other ESOP breweries include Odell, Modern Times, Harpoon, and soon, Rhinegeist.)
New Belgium announced the news yesterday in a letter from cofounder and former CEO Kim Jordan. She addresses several important questions the public raised: Yes, because New Belgium is employee-owned, the ESOP must still vote whether to approve the proposed transaction. They’re likely to do so, as Jordan subsequently notes that “we will no longer be employee owned and it would be easy to see that as a drawback. But here’s another way to look at it. More than 300 employees are receiving over $100,000 of retirement money with some receiving significantly greater amounts.” (New Belgium’s ESOP bought 100% of the company in 2012, after it bought Jordan out of the 59% she owned.) Jordan goes on to say that Kirin, through its subsidiary Lion Little World Beverages, wants the company to retain its B-corporation status, which commits the brewery to environmental and social responsibility.
The letter admits New Belgium had sought to bring in a partner to help the brewery sustain and grow its business. With beer competition at an all time high—thanks to a record number of American breweries, as well as non-beer forces like hard seltzer, liquor, etc.—Jordan says the company explored avenues to bring in additional cash. “Options to raise capital while being an independent brewer weren’t realistic for us. Some of the most widely used options by craft brewers were going to compromise a lot about what makes New Belgium great; environmental sustainability, and a rich internal culture,” she writes. “Some of these were going to lead to cost-cutting or a lack of focus on sustainability. Having the support and resources of Lion Little World Beverages, allows us to attend to those competing priorities and utilize our brewery capacity to its fullest.”
Kirin already owns a minority stake in Brooklyn Brewery, and will receive California-based Magnolia Brewing—owned by New Belgium—should this deal be approved. The New Belgium deal likely marks an early phase of a larger Kirin plan to become more financially involved with American breweries; Jordan’s letter says New Belgium will “anchor a U.S. craft beer platform” for Kirin.
Some consumers will no doubt decry this as a “sellout,” as they invariably do following any independent brewery’s sale to a larger company. But at least in this case, it’s the employees who helped build the brewery making the final decision, and reaping the attendant financial rewards.