The business of beer: craft brewers grow market share with 'huge heart and soul'

When Kim Jordan was exploring options for building an inclusive business, management consultants told her she didn’t need to acknowledge the people driving forklifts at New Belgium Brewery, where she’s the CEO.

“You can hire those kinds of skills any day,” she was told. “It’s top management that you need to incentivize.”

That advice contradicted the kind of community she and her management team wanted to build at New Belgium, one of a second wave of breweries driving the US craft beer revolution. The brewery went 100% employee-owned in January 2013.

Founded in 1991, New Belgium has flourished into a multimillion-dollar business. Its story is emblematic of the rise of craft brewing in the US, which is often told as a David and Goliath tale, with plucky artisanal brewers – focused on making beer with soul – taking on the bland global beer brands of yore.

Many of the breweries that characterize the movement didn’t set out to become national or even international brands in some cases. They started as outlets for home brewers passionate about innovation, flavor and giving the man the finger. As they’ve grown, this passion seems to have manifested into businesses with strong environmental and social values.

Boston-based Harpoon Brewery, for example, became employee-owned this month, making it one of a growing handful of US breweries that are controlled by employees. Whilst Ken Grossman, founder of Sierra Nevada, one of the pioneers of the US craft-brewing movement, says that taking a responsible approach to running his business is a part of “who we are and where we came from”.

These values are translating into strong financial performance: craft brewers have seized almost 8% of the US beer market, growing 17.2% in 2013 while overall beer sales dropped by 1.9%, according to the Brewer’s Association, a trade group.

Staying true to origins

Jordan started her working life as a social worker after growing up in a liberal family where no one was a business person. This didn’t hold her back; in fact, she says the lack of business context in her family was empowering. “I realized that we could make choices about how we wanted to use profit, and we could do interesting things that were consistent with our values,” she said. “We could invest money in things that might not have a fabulous ROI because they matter to us.”

Things like environmental consciousness and stewardship, for example, which were part of the original vision for the brewery that Jordan and her now-ex-husband Jeff Lebesch outlined whilst hiking in the Rocky mountains in the early 90s. In a spiral notebook, they wrote: “New Belgium … amazing efficiencies and ingenuity. MacGyvering things together with huge heart and soul.”

It seems that she’s sticking to that vision of doing things with heart and soul. Along with employee ownership, the company practices open-book management, giving all employees access to the company finances, and it’s a certified B Corp.

It also has invested $15m in its water treatment process, using dry lubricants in its packaging hall instead of the water often used to move bottles along conveyers, and generates 18% of its electricity on site with solar and bio-gas. “I like to make sure that what I say I’m going to do and what I do are pretty closely aligned,” Jordan said.

Arguably even more interesting: New Belgium is advocating for stronger water conservation policies. Spurred by an opinion piece that New Belgium wrote in the Washington Post, the Natural Resources Defense Council started the Brewers for Clean Water Campaign. Through the campaign, New Belgium and the 30 other member breweries seek to influence policy makers to create rational water conservation policies.

“It may be to our detriment in some ways, but we think if you take the long view, a higher level of conservation is absolutely necessary.” The highly stressed Colorado River basin, after all, is the lifeblood of the brewery.

Of course, more stringent water conservation policies are not to all brewers’ tastes. Jordan alludes to some friction: “We have had some conversations with larger brewers who were not so enthusiastic about our approach, but we felt like we touched base with enough experts to feel pretty good about the things that we were advocating for, so we said ‘thank you for your input’ and ‘we’re going to continue to work on this.’”

Something in the water

It’s Jordan’s view that craft brewers have a tendency towards iconoclasm, and so it fits that New Belgium is hardly the only brewer taking a path less trodden when it comes to sustainable business practices.

Grossman says that being conscious of limited resources has remained a key part of his business as it has grown from a kit cobbled together from cast-off food-processing equipment in 1980 to the seventh biggest brewery in the US. If you visit the Sierra Nevada website, you can view electricity being produced by its solar panels and fuel cells in real time. On a clear day, they generate more than 100% of the brewery’s needs.

He describes the approach as “a philosophical thing that goes to who we are as a company and who I am”. If that’s the case for the other 2,768 US craft brewers, you should expect more than just a revolution in how beer tastes but also in the whole business of making beer.

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