Addressing 760 fellow co-owners during a company-wide retreat held in Fort Collins, Colo. this week, New Belgium co-founder and executive chair of the board Kim Jordan quashed persistent rumors of a brewery sale and reassured employees that the country’s 4th largest craft brewery would continue to remain 100 percent employee owned for the foreseeable future.
“While the Board of Directors and ESOP trustee have a fiscal responsibility to keep an eye on capital markets, we have found that our current capital structure serves our purpose and vision best,” Jordan said on Monday.
A declaration that New Belgium would continue to remain independent comes at a time when the beer company investment market is very active: in the past three years, dozens of craft breweries have been sold, all or in part, to larger beer conglomerates and private equity firms alike.
It also comes less than one year after Reuters reported that New Belgium was looking for a buyer.
But according to company spokesman Bryan Simpson, the rumors of a sale “have been greatly exaggerated,” he told Brewbound, quoting Mark Twain.
“As we said in December, the board has a fiscal responsibility to research the landscape so that we can understand what these other models look and feel like,” he said, adding that New Belgium had engaged financial advisory firm Lazard as a consultant.
Nearly 25 different craft brewery transactions occurred last year, including Constellation Brands’ $1 billion acquisition of Ballast Point Brewing last November and Heineken International’s $500 million investment for 50 percent of Lagunitas Brewing Company last September.
That trend that has continued in 2016; popular brands like Cigar City, Devils Backbone, Terrapin Brewing and Hop Valley have already sold to companies like Fireman Capital, A-B InBev and MillerCoors.
But despite the continued M&A activity within craft, Simpson maintains that there has “never been a moment” where New Belgium has felt the need to sell. Instead, he characterized the company’s dealings with Lazard as more of a fact-finding mission to “learn more about our capital structure and the best model to stay competitive.”
Lazard is said to have shopped a New Belgium deal to prospective foreign investors interested in purchasing a U.S. craft brewery, and names such as S.A. Damm and Asahi Breweries Ltd. have been floated as potential buyers by numerous industry sources.
So does this mean New Belgium is no longer on the block, as so many have speculated?
“I will never say never about anything in this industry,” Simpson told Brewbound. “It is just too dynamic. But I do think that for all of the speculation that has been out there, that we are super happy with our model and that is our plan going forward. There are no active discussions at this time, but we will always be watching the capital markets.”
Founded in 1991, New Belgium is currently ranked as the country’s 4th largest craft brewery, according to the Brewers Association. Production declined three percent, to 914,000 barrels, in 2015 but a flurry of new market entries and the opening of the company’s Asheville, N.C. brewery location could push sales past 1 million barrels in 2016.
The company is currently 100 percent owned by an employee stock ownership program (ESOP), shares for which are allocated annually based on salary. Employee ownership first began in 2000 when 41 percent of the company was purchased by the ESOP and longer-tenured as well as higher-paid employees often hold more shares, Simpson said. An appointed ESOP trustee valuates those shares and, should New Belgium ever choose to fully sell, all current and past employees that hold ESOP shares would participate in the buyout, Simpson said.
New Belgium CEO Christine Perich and members of the senior leadership team also addressed brewery employees during the retreat, according to Simpson.
The company’s Citradelic IPA, which launched in January, is currently ranked at the no. 1 craft beer launch year-to-date, according to the company, which cited data from market research firm IRI.