In an effort to preserve its independence and help combat what Beau’s All Natural Brewing Company co-founder Steve Beauchesne believes will be the inevitable consolidation of small Canadian craft breweries, the Ontario-based beer company today announced plans to establish an employee stock ownership plan.
Under the terms of the agreement, Beau’s, the largest producer of organic beer in Canada, said it plans to sell approximately 4 percent of the company’s class B common shares to its 150 employees for purchase at fair market value.
The decision to establish an ESOP was also driven, in part, by a desire from some existing shareholders to exit the business, Beauchesne told Brewbound.
“Because we have grown so fast – our revenue growth rate has been 525 percent over the last five years — our initial investors have not been receiving any dividends; every penny has gone back into the brewery,” he said. “They have been patient but a number of them wanted to start thinking about getting their shares out of the brewery and it’s not like we have big piles of cash reserves to just pay investors out.”
Beauchesne, who together with his father, Tim, owns 59 percent of the company, said there are a total of about 20 additional investors. Eight of those investors, he said, are already employees of the brewery and the largest non-active stakeholder currently owns 10 percent of the business.
Unlike other ESOP transactions made by U.S. craft brewery owners in recent months — where their companies borrowed money from a lender, purchase shares from selling stakeholders and to then issues shares to an ESOP — Beau’s will actually give employees who have been with the company for at least 12 months, as of July 1, a chance to directly purchase a value of shares of at least 2 percent of their pay from the previous year.
Each year, Beauchesne said, the company will go back to initial investors with an offer to sell all or some of their shares. The move, Beauchesne said, also gives him a long-term succession plan.
“If I get to a point where I want to look at taking a step down or getting some of the value of my shares out of the company, I don’t have to sell to a giant company,” he said. “I will literally be able to sell those shares to this program.
Beau’s, which launched in 2006, has grown rapidly over the last decade, producing 45,000 barrels last year. The company – which is capable of expanding its brewing capacity to 140,000 barrels — currently sells product in Ontario, Quebec and New York, but it plans to expand into four additional Canadian provinces this year and is also eying additional U.S distribution opportunities.
The company’s impressive growth, coupled with its expansion opportunities, had attracted other buyers as well, Beauchesne told Brewbound.
“We have had a number of investment firms approach us, looking to purchase and we have had feelers from one international brewery,” he said.
But those options were not appealing to Beauchesne, whose primary concern was remaining independent.
“We are doing our best to protect not just ourselves, but trying to make sure there remains a strong, independent brewery scene in this country,” he said.
“Our biggest challenge has always been on the financing side,” he added. “That is the real challenge to staying independent — when you see the growth potential and you literally have to put the brakes on because you don’t have the financing in place. For me it has always been more important to maintain independence, rather than selling more beer.”
A press release announcing the establishment of the ESOP is included below.
Yesterday morning, Steve Beauchesne, CEO of Beau’s All Natural Brewing Company, Canada’s largest craft producer of organic beer, took centre stage in Ottawa’s ByTowne Cinema amidst the brewery’s employees to announce the news of its imminent sale under an Employee Share Ownership Plan (ESOP).
Since its inception in 2006, Beau’s has experienced rapid growth at a compounded rate of 45 per cent year-over-year, and now employs approximately 150 full time staff. The offering of the ESOP is in keeping with Beau’s legacy as a fiercely independent, Canadian owned and family-run operation. The employees will become co-owners and an even greater part of the Beau’s family, with shared responsibility for the brewery’s future and continued growth as it sets to expand across the country by the end of the year.
“My Dad and I started Beau’s ten years ago with the promise of making excellent, flavourful beer, and using our brewery as a force for good,” says Steve Beauchesne, CEO of Beau’s All Natural Brewing Company. “Our success during this time is strongly rooted in the support of our employees and fans, who have always believed in our promise.”
On July 1, 2016, Beau’s tenth anniversary, the company will start the process of selling the brewery to its employees.
ESOP offerings are particularly rare in the craft beer category, with only a select handful across North America, signaling Beau’s fearlessness to go against the grain in order to maintain the integrity and independence of their company.
“By handing the reins over to our employees we are saying this changes everything, because this change is everything,” adds Beauchesne. “We look forward to our expansion and success across Canada, with the help of our new company stewards.”
2016 marks an exciting year for Beau’s. This announcement comes as Beau’s reaches the milestone of ten years, and will be followed by a series of commemorative initiatives – from now through June 2017 – including philanthropic projects, community recognition, merchant appreciation, limited-edition brews, and a fresh new brand look and feel.
About Beau’s All Natural Brewing Company
Founded on July 1, 2006, Beau’s All Natural Brewing Company (Beau’s) is an independent, Canadian craft brewery run by a close-knit family and friends. Beau’s is Canada’s largest craft producer of organic beer. The Certified Benefit Corporation (B-Corp) produces certified organic beer including its flagship Lug-Tread, Kissmeyer Nordic Pale Ale, and The Tom Green Beer. The company supports hundreds of independent arts and community-building charitable organizations every year. Founded by father and son, Tim and Steve Beauchesne, the independent brewery will be rolling out its portfolio of craft beers across the country, expanding into major markets from the west to the east coast. Beau’s is currently available in Ontario, Québec and New York.