New Belgium Brewing, Colorado's largest and most storied craft beer maker, said today that it plans to sell 100 percent of the company to a subsidiary of the Kirin beer conglomerate. The move would mean an end to New Belgium's employee ownership and its proud legacy of independent ownership.
As the fourth-largest craft brewery in the nation, it will also force the Boulder-based Brewers Association to consider how it defines craft breweries, as the sale would eliminate New Belgium from its definition.
"As we surveyed the landscape over the last several years, we found that options to raise capital while being an independent brewer weren’t realistic for us," co-founder and longtime CEO Kim Jordan wrote in a message to customers. "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. 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."
Lion Little is Kirin's U.S. division and was created earlier this year for just this kind of purchase. New Belgium joins Breckenridge Brewery and Avery Brewing among the state's biggest breweries to sell out.
Founded in 1991 in Fort Collins by Jordan and then-husband Jeff Lebesch, New Belgium began in a basement before growing over the years to become one of the largest independent breweries in the country, based in large part on its flagship beer, Fat Tire Amber Ale, a trendsetter beer for many years. The company now operates two huge production facilities — the original in Fort Collins and a newer facility in North Carolina — and a pilot brewery in Denver.
New Belgium didn't release the terms of the sale except to say that an all-cash transaction is expected to close by the end of the year, pending approval by regulators and the company's employee-owners.
For more on the sale and the reasoning behind it, read Jordan's letter below:
You’ve probably read the big news that New Belgium Brewing is set to join Lion Little World Beverages– the global craft beer division of Australasian brewer, Lion, which is part of Kirin. I’m assuming you’re here to learn more. If there are three things we’re known for at New Belgium, it’s our dedication to innovation and excellence in beer, our commitment to the culture and well-being of our coworkers and our crazy enthusiasm for being a business role model. We were thinking about these three things as we began to explore being a part of the Little World family. Lion, Kirin, and the Little World team liked that about us, and that paved the way for this decision.*
We are a Certified B Corp. Which means that we’re dedicated to being a force for good as a business. Right away, the folks at Little World told us that they were captivated by this model, and they are asking us to retain our B Corp status. In addition, Lion announced last week that they’ve made a pledge to be carbon neutral in their Australian and New Zealand breweries starting in 2020. That’s exciting! And now we will be accelerating our own journey toward Carbon Neutrality. Imagine a world where publicly traded companies are dedicated to business as a force for good, taking into account an array of stakeholders- their workers, their shareholders, and the environment. This is a model for a big, compelling future and is in line with the needs of our rapidly changing world.
We’ve been brewing eclectic Belgian style beers, aging beer on wood, and generally pushing at the boundaries of beer innovation as pioneers for almost three decades. Little World are brewers’ brewers. They loved the sour beers from our renowned wood beer cellar! When we noticed that they were really interested in the breadth of our beer portfolio, and they began to share stories about their own innovation, we felt their commitment to this ancient craft. They are as devoted as we are, and their resources in R&D and innovation can only help to grow our own capabilities.
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. Over the life of our ESOP, including this transaction, the total amount paid to current and former employees will be nearly $190 million. We will have helped a significant number of people realize the upside of having equity in something, being a part of the American Dream! Little World is committed to strategies to broadly share the wealth going forward, like profit sharing, best-in-class healthcare and a generous family leave policy. Our on-site wellness clinic will carry on. Continuing to practice the rest of what makes New Belgium so cherished by its coworkers: a playful, loving vibe, a culture that encourages learning and experimentation, and an entrepreneurial spirit, will be up to all of us. We are more than up for that challenge and Little World will support us all the way.
We all know the world of craft brewing is dynamic. In the US, the number of breweries has nearly doubled in the last four years to 7,500. At New Belgium, we’ve needed to balance the cash demands of our ESOP and selling shareholders, with the operational need for more capacity (hence the brewery in Asheville) and the need to grow our brand by reaching more beer drinkers with our brand message. These are a lot of competing priorities and it has been difficult to do all of them as well as we’d like. As we surveyed the landscape over the last several years, we found that 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. 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.
Joining Little World Beverages to anchor a US Craft Beer platform is so congruent with all the things we’ve committed ourselves to at New Belgium that we jumped at the opportunity to offer this to our shareholders. We’re thankful for Lion and Kirin’s support of our values and I’m excited to help to build a collective of breweries along with the management of New Belgium, who share the same commitment to delighting beer drinkers: with great beer, great businesses and great collaboration amongst us.
Of course, there are always people to thank: boundless thanks to all our passionate customers: you smuggled beer across state borders a la Smokey and The Bandit, you got tattoos, you make our hearts swell with pride with your care. To our retailers and distributors: nothing we’ve done could have been done without you, huge props! To all of our friends inside the craft brewing industry and in so many other places, thank you thank you — we treasure your friendship now and in the future. And last, but certainly not least to our amazing New Belgium Family, what can I say, but we have created the most loving, curious, warm, interesting fun thing together and I burst with pride every day. This is not the last chapter, there’s more fun to be had.
We can’t wait to see what happens next. We are as committed to being a vibrant, values-driven enterprise as we’ve ever been, and we look forward to having a beer with all of you along the journey!
Here we go.
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