“Money is not the goal,” says Eric Wallace. “It's a means to an end.” And the end? To support his community, to provide a stable living for himself and his employees. Oh, and to “change the world” with craft beer.
On Thursday, Wallace, who co-founded Longmont's Left Hand Brewing in 1993, announced that the brewery has converted into a majority employee-owned company. Left Hand has been working on the change for years and accomplished the task by repurchasing shares from current stockholders. Left Hand, which is now 54 percent employee-owned, joins New Belgium Brewing in Fort Collins, which became 100 percent employee-owned in 2013, as one of just a few such breweries, known as ESOPs (for "employee stock ownership plan"). Others include Oregon's Deschutes and Massachusetts-based Harpoon.
“The idea is to have everyone have a stake in the game, to create long-term employees and have everyone doing our work on a mission from God,” Wallace says, quoting the Blues Brothers. “We have been working on ownership culture for a long time – half of our employees already own stock – so this is just another step. It's a big step, though.”
The move comes at a time when big business interests – like private-equity firms and multinational conglomerates – have begun to express an interest in buying or investing in craft breweries, which have been quickly growing and gaining market share in the competitive beer business nationwide.
Anheuser Busch-InBev, for instance, has purchased at least four craft breweries over the past five years, while private-equity firms have taken major financial stakes in several others, including Wasatch and Squatters breweries in Utah, New York's Southern Tier, Georgia-based Sweetwater Brewing, and Oskar Blues, which is Left Hand's Longmont neighbor.
But unlike many other industries, craft brewing developed, in part, as a reaction to the beer being made by large brewing companies – and it has always possessed and maintained a fiercely independent streak. Which is why many craft brewers, especially the older, larger and more successful ones, are looking for ways to continue to grow without selling out.
“I enjoy the collectiveness of the business, and we have collectively changed the world,” Wallace says. “I have no intention of letting someone else fuck up 22 years of effort.... Could we pull more zeros out of a private-equity group or from a strategic buyout? Yes, probably. But to what end? There are things that are way more important than a bunch of extra money.
“The whole business-school thing where you start a company, sell it for a lot of money and then start another one so that you can make more money – that is so 1980s. That is not who we are as an industry. The majority of our peers in craft brewing don't see the world like that,” he continues.
“Private-equity groups aren't changing the world or making great beer. They're not interested in investing in the community or growing people to the maximum of their potential. They are about making money. How banal. Our mission is bigger than making money.
“We are part of a worldwide revolutionary movement in beer. How much money could make up for not being part of that? For me — and I'm speaking for myself here — you couldn't give me enough money. You could give me a billion dollars and it wouldn't be enough.”
Wallace says that Left Hand receives a “constant barrage” from investor groups and strategic acquirers, and that he tells them straight up that he isn't interested. If one ever made a real offer, he would have to share it with the board, but he believes the offer would be turned down.
“We're not looking for a monster payout to go buy an island. Our entire board participated in this. No one is looking to sell stock,” he says. “Our outside shareholders have always been supportive as well. They get a solid return. We want to stay profitable and continue on with our mission.”
Wallace currently owns about a quarter of the company and is the largest shareholder, while co-founder Dick Doors is the third largest. Together, the nine members of the board of directors own 75 percent of the brewery. But that will change over the years as Left Hand contributes stock to the ESOP trust, with each eligible employee receiving an annual allocation.
Left Hand currently has more than one hundred employees and produces about 75,000 barrels of beer per year, but the brewery has been growing by double-digit numbers in recent years. Left Hand is currently the fourth largest craft brewery in Colorado and the fortieth largest nationwide.
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