Employee Ownership and Craft Beer: Drinking the Company Kool-Aid?

In the United States, the fragmentation of the beer industry began in the 1980s with early craft beer start-ups operating as microbusiness consisting mainly of an owner or two and a few employees. Employee ownership using the legislation on Employee Stock Ownership Plans (ESOPs) appeared initially in craft beer with the first such plan instituted in 1999 at New Belgium Brewing Company, Inc. in Fort Collins, Colorado. Adoption of such plans started in earnest in the craft beer industry in 2012; the subsequent period witnessed many start-ups of microbrasseries in Quebec, Canada that have similar characteristics to the original U.S. craft beer microbusinesses. This paper begins by considering a few salient contributions to the economic literature on employee ownership that focus on workers’ agency and voice. Institutional information about ESOP legislation in the U.S. and relevant aspects of Employee Ownership Trusts (EOTs), which have a long history in the U.K., are compared according to these criteria. The recent flexible Canadian legislation on EOTs is outlined; the possibilities it allows are compared to ESOPs with respect to workers’ agency and voice. In the second section, the evolution of the craft beer industry in the U.S. following the enactment of two important legislative changes at the end of the 1970s is summarized. The third section discusses the role played by ESOPs in craft beer by first considering New Belgium Brewing; its ESOPs was dissolved upon a merger with a foreign-owned beer company. Detailed information on ESOPs in ten companies in the U.S. craft beer industry follows; two breweries of different size and ownership, namely Harpoon Brewery (minority employee-owned) and Switchback Brewing Company (fully employee-owned), are treated as mini case studies. In the fourth section, the craft beer industry in Quebec consisting of over 250 microbrasseries that accounted for 12% of total beer sales in 2020 is characterized. New federal legislation in Canada introduces flexible designs for EOTs that may be adopted to support employee ownership in these microbrasseries in the future. The conclusion opines about the necessary components for meaningful employee agency and voice in U.S. craft beer ESOPs and conjectures about the future potential for such worker engagement in Quebec’s craft beer industry based on the new Canadian EOT legislation.