New Belgium Brewing helped build the burgeoning craft beer market by shaping best practices in it: a quality product, consistent innovation, ethics and sustainability at the fore — and employee ownership at the core.
Employee-owned companies have had an outsized role in building the market for craft beers, the same hot market that eventually gobbled up New Belgium. Oregon’s Full Sail Brewing had an Employee Stock Ownership Plan (ESOP) until it sold to a private equity firm in 2015; Boston’s Harpoon Brewery still has an ESOP, and throughout the country you’ll find small brewpubs—the frontlines of marketing the craft beer renaissance—owned by their employees, from Boston’s Democracy Brewing to Austin’s Black Star Cooperative.
In fact, employee-owned and cooperatively owned companies have historically helped build new markets by filling gaps when there was initially little incentive to open a business. They’ve identified emerging needs, doing business with integrity. In recent times, consumer-owned (and sometimes worker-owned) food cooperatives brought natural foods into the mainstream well before Amazon bought Whole Foods. Companies like Burley Bicycles and Good Vibrations actually shifted culture, helping transform once-niche markets into multi-billion dollar global industries.
And yet these companies have struggled to sustain their shared ownership model once the market they built began to heat up. The reasons are varied, from the need for growth capital to ESOP repurchase obligations to being outgunned by major competitors to the simple (or not so simple) desire of the employee-owners to cash out. Many stories of demutualization actually contain all sorts of “wins” from an employee ownership perspective: they influenced practices in their industries, they made the world a better place by building the market for better products, and—uniquely—a broad swath of people benefited from the sale of the company. But the major, structural, lasting “win” — an employee-owned company — was not one of them.
As we conduct the inevitable post-mortem on New Belgium, employee ownership advocates should be asking: What other markets are employee-owned businesses building, right now? How can we plan strategically for the long-term success of shared ownership enterprises in those markets? Can lessons from New Belgium help us think differently about employee ownership in high-growth sectors?
Can lessons from New Belgium help us think differently about employee ownership in high-growth sectors?
Increasingly, growth industries using shared-ownership forms are concentrated not in everyday consumer luxuries like craft beer, but in necessities like child and elder care, garbage collection/recycling, and custom local manufacturing. These are businesses that meet basic needs, in industries perhaps uniquely suited to shared ownership and values-driven forms. They are also mostly low-margin businesses, not attractive to investors. What are we doing to plan for growth in these fields, to ensure the longevity and scalability of the cooperative and employee-owned firms that are building these markets?
Anticipating, planning for, and even driving growth by using secondary structures (like Amicus Solar, which brings together 50 independently owned, values-driven solar energy companies into a national member-owned purchasing cooperative) may be one key to helping sustain employee-owned businesses. Other keys are policy supports, ecosystem organizing and, of course, safeguards in employee-owned forms themselves.
Yes, business is dynamic; companies open, close and change form all the time. But if employee-owners are taking the risks and investing their time and passion to build markets from the ground up, they should be able to reap the rewards as those markets mature, and not simply at the single point of sale of their business asset. The New Belgium sale calls those of us in the field to apply our creativity to the question of ensuring long-term employee benefit even — especially — when employee-owned enterprises succeed beyond their wildest dreams.
Melissa Hoover is the founding Executive Director of the Democracy at Work Institute, the think-and-do-tank that expands worker cooperatives as a strategy to address economic and racial inequality. A leader in the worker ownership movement for over fifteen years, Melissa helped start and grow the United States Federation of Worker Cooperatives, the national grassroots membership organization for worker-owned businesses.