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

In the United States, the craft beer industry began in the 1980s with the early companies 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 the industry 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 2014 when Massachusetts Bay Brewing Company a.k.a. Harpoon Brewery located in Boston, Massachusetts adopted an ESOP. This time period also witnessed start-ups of microbrasseries in Quebec, Canada that have similar characteristics to the original U.S. craft beer microbusinesses. The paper begins by reviewing a few salient contributions to the economic literature on employee ownership. Institutional information about the ESOP legislation in the U.S. and relevant aspects of Employee Ownership Trusts (EOTs), which have a long history in the U.K., follows. We compare ESOPs in ten companies in the U.S. craft beer industry and discuss the experiences of two companies, namely New Belgium Brewing and Modern Times Beer (San Diego, California), that adopted ESOPs but had them dissolved when they merged with large beer companies. Of the ten with current ESOPs, we choose two with different characteristics, namely Harpoon Brewery (134 active employee participants) and Switchback Brewing Company in Burlington Vermont (30 active employee participants) to present as mini case studies. Following this, we discuss the craft beer industry in Quebec consisting of over 250 microbrasseries that accounted for 12% of total beer sales in the province in 2020. New federal legislation in Canada introduces very flexible designs for EOTs that may potentially support employee ownership in Quebec microbrasseries. The conclusion discusses what is needed for meaningful employee agency and voice in U.S. craft beer ESOPs and, using this analysis, conjectures about the potential for such worker engagement in Quebec’s craft beer industry based on the new Canadian EOT legislation.