Yet another U.S. beer company is making cuts to its workforce due to slowing sales of craft beer.
New Belgium Brewing Company, an employee-owned business with production facilities in Fort Collins, Colorado, and Asheville, North Carolina, today laid off 28 employees across the production, administration, finance, human resources and IT departments.
Today’s cuts — which come just three months after the company consolidated its sales territories, resulting in the termination of six salespeople — represent about 4 percent of the company’s total workforce. They will not impact sales employees or its marketing spend, the company said.
“We took a very clinical look at our business functions across all departments,” New Belgium spokesman Bryan Simpson told Brewbound. “As an employee-owned business, it is the executive team’s responsibility to look out and make sure that their (employees) share value is being protected.”
The 28 employees who were let go will receive severance packages that could include up to 20 weeks of salary, in some cases, Simpson said. New Belgium will also repurchase outgoing employees’ shares of the company, which will be “recycled” back into its employee stock ownership program (ESOP).
“We are looking at some correction within the market,” Simpson said of the decision to restructure. “We fully anticipate getting back to growth someday, but at the moment we had to right-size the business.”
The layoffs come just one month after San Diego’s Green Flash Brewing, which is in the process of identifying new investors, eliminated 15 percent of its workforce. It also follows layoffs at Anheuser-Busch InBev, Craft Brew Alliance, Pabst Brewing Company, Stone Brewing Company, Summit Brewing and The Gambrinus Company.
In a press release, New Belgium, citing positive depletions trends, said the reductions weren’t due to declining sales of its own brands but rather “changing dynamics in craft brewing.”
“Beginning in 2013, we expanded our staff to support a brewery about 40 percent larger than New Belgium is today, and we haven’t yet achieved our goals in the face of changing dynamics in craft brewing,” the release stated.
The decision to staff up for expanded production came at a time when craft beer sales were growing 18 percent annually (in 2013 and 2014). Between those two years, New Belgium’s production grew from 792,000 barrels to more than 945,000 barrels.
But it’s been slow going ever since. Over the last two years, the growth of craft beer has slowed to single digits while, simultaneously, more than 1,500 new craft breweries have entered the space.
“Everyone in craft right now has to take a good hard look at where they want to be a few years from now,” Simpson said. “In doing so, you have to look at the market conditions as they are, and the market conditions that you aim to achieve.”
New Belgium produced about 955,000 barrels in 2017, down from the 958,000 it produced the prior year. Nevertheless, the company had anticipated that expanded distribution into all 50 states and additional capacity at its new Asheville brewery would lead to an increase in sales — to the tune of about 1.3 million total barrels, Brewbound estimates.
New Belgium’s Asheville facility, which began brewing beer in early 2016, is capable of producing 500,000 barrels annually. Between its two plants, the company can produce upwards of 1.5 million barrels.
Most of the cuts being made will impact personnel at New Belgium’s headquarters in Fort Collins, Simpson added.
New Belgium has grabbed numerous headlines in recent months for hiring a new vice president of marketing, tapping Backbone Media as its new agency of record, introducing a nationally distributed New England-style hazy IPA and purchasing San Francisco’s Magnolia Brewing out of a bankruptcy proceeding.
A press release with additional information about the restructuring is included below.
New Belgium Realigns Fort Collins and Asheville Workforces to Match Growth Expectations
FORT COLLINS, Colo. — New Belgium made the difficult decision to let go 28 employees between our Fort Collins, CO, and Asheville, NC operations which represents less than 4% of our workforce. These changes were not driven by a decline in our business; in fact, our depletions grew in 2017 vs. 2016 which is admirable given industry headwinds. However, beginning in 2013, we expanded our staff to support a brewery about 40% larger than New Belgium is today, and we haven’t yet achieved our goals in the face of changing dynamics in craft brewing.
Despite these employee reductions, we will grow our business to create value for our employee-owners. New Belgium remains firmly committed to being a national brewery and will continue full operations at our two breweries and distribution to all 50 states and many international markets. It should also be noted that today’s actions have not reduced our sales force nor our marketing spend. We will continue to invest in building our business – a 100% employee-owned B-Corp focused on making world-class beers – as we believe this is highly relevant to today’s beer consumers. If we want to further our vision of what craft brewing can be, and still remain an innovative brewer, we have to ensure we have the right cost structure in place.
“Today has been a tough day at New Belgium,” said CEO Steve Fechheimer. “We feel deeply for the employees impacted and wish them nothing but the best in the future. Going forward, we will have more resolve than ever to grow our business and create value for this 100%-employee-owned company.”
Co-founder Kim Jordan added, “As leaders, we balance the needs of the organization with our care and respect for all of the people within. Always a difficult task. Steve, the Board, our management team and I have crafted what we believe to be the best outcome for New Belgium and its employee-owner coworkers. We have great leadership in place, iconic brands, powerful innovation hitting the market, and strong sales, marketing, and brewing teams. All of this makes me more confident than ever in the future of New Belgium.”