New Belgium Brewing Company is the eighth largest beer manufacturer in the United States. Over the last five years, volume has grown at a 10% CAGR, reaching over 945,000 barrels in 2014, which represents 4% share of the U.S. craft beer market (1, 2). After 25 years in Fort Collins, Colorado, the company is building its second brewery in Asheville, North Carolina, to continue to meet growing market demand.
New Belgium’s purpose statement is “To manifest our love and talent by crafting our customers’ favorite brands and proving business can be a force for good.” (3) In addition to developing products that appeal to both craft beer connoisseurs and the average drinking public, the company has created brand identification through non-traditional approaches to ownership, transparency, and marketing.
Like many craft brewers, New Belgium produces a mix of year-round, seasonal, and limited release beer. Fat Tire, the company’s flagship beer, ensures consistent distribution and national recognition. Fat Tire and the rest of the company’s year-round beers are likely higher-margin, with dedicated brewing tanks and long-term supplier relationships. Seasonal and limited-release products provide opportunities for brewers to experiment with new styles, providing innovative new products that appeal to the most passionate beer drinkers. Stores and bars are encouraged to stock and promote year-round beers in order to gain access to limited-release products, and having limited-release products demonstrates knowledge and credibility to high-value beer-drinking customers. Having a diverse product suite is also important because craft beer consumers are always hunting for new products, and are rarely as loyal to one product as beer drinkers of prior generations.
In order to ensure consistent product and profitable growth, the company has significantly grown its supply chain function over the last decade, from three people to over 200. The company has professionalized its manufacturing function with lean techniques and software implementations, while increasing productivity and lowering per-unit manufacturing cost. Given the limited shelf life of beer, forecasting is a required skill for success in the industry. After entering the California market and over-producing, the company introduced new software meant to better combine historical data, distributor orders, and information from the sales team into one forecast, reducing potential spoilage and the need for discounting. (4)
Employee ownership has been a hallmark of New Belgium since inception, with stock granted to its first outside employee and an Employee Stock Ownership Plan (ESOP) in place since 2000. In late 2012, co-founder and then-CEO Kim Jordan sold her shares back to the ESOP, allowing the company to go from 41% employee-ownership to 100% employee ownership. Through this model, employees are more invested in company success because their retirement plans directly benefit. One of the historical criticisms of ESOPs is that workers who are owners may favor short-term wage increases, not investments in long-term growth. (5) However, New Belgium has successfully navigated this concern, pursuing the $175 million Asheville expansion project while transitioning to full employee ownership.
In addition to encouraging employees to become owners, they are also taught to think like owners. All new hires are taught basic financial concepts, and are given access to company financial data and KPIs. Senior leaders regularly convene all-company meetings to discuss how the business is performing and field questions. In addition to creating a culture of employee engagement, New Belgium ensures cross-functional collaboration, sourcing process improvement ideas from throughout the company, such as the elimination of dividers in its 12-packs, which reduced downtime and saved nearly $300,000 per year. (6, 7)
Employee retention has improved from an already-strong 92% to 97% since 2009, even as the company has continued to grow, a testament to the value of employee ownership (8, 9). Low turnover reduces the company’s recruiting and HR costs, and ensures a well-trained workforce who understands the brewing process and the New Belgium customer.
New Belgium’s commitment to openness also extends to its environmental and social practices. As a certified B-Corp, New Belgium is focused on stakeholders beyond its ownership base. It publishes environmental metrics on its web site, donates 1% of its sales to environmental causes and $1 for every barrel sold to philanthropic endeavors. Through its role as one of the largest ESOPs and B-Corps, New Belgium ensures a steady stream of positive media stories, serving as highly effective earned media.
New Belgium also connects with its customers through special events. The company’s Tour de Fat is a traveling festival celebrating bicycles and irreverence. By attaching the New Belgium brand to outdoor events, the company creates non-obtrusive advertising in line with its values and its customers.
Craft beer is an incredibly trendy market, with the number of breweries in the US doubling from 1,653 in 2009 to 3,464 in 2014. (10) Having a diverse product set and operational skills to operate at a low-cost helps New Belgium remain highly competitive. As Millennials have become a core customer of craft beer, brand authenticity and focus on the greater good have become key success factors in appealing to customers. (11) Purpose-driven companies can effectively organize around a shared vision, differentiating their products and attracting customers and employees. Through its commitment to openness, preserving the environment, and fun, New Belgium has transcended beer and become a lifestyle brand, with values that directly align with its target customers.