{"id":355,"date":"2015-11-29T13:33:52","date_gmt":"2015-11-29T18:33:52","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/new-belgium-brewing-success\/"},"modified":"2015-12-03T17:32:59","modified_gmt":"2015-12-03T22:32:59","slug":"new-belgium-brewing-success","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/new-belgium-brewing-success\/","title":{"rendered":"New Belgium: Brewing Success"},"content":{"rendered":"

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<\/a>, 2<\/a>).\u00a0After 25 years in Fort Collins, Colorado, the company is building its second brewery in Asheville, North Carolina, to continue to meet growing market demand.<\/p>\n

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New Belgium\u2019s purpose statement is \u201cTo manifest our love and talent by crafting our customers’ favorite brands and proving business can be a force for good.\u201d (3<\/a>) \u00a0In 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.<\/p>\n

Like many craft brewers, New Belgium produces\u00a0a mix of year-round, seasonal, and limited release beer. Fat Tire, the company\u2019s flagship beer, ensures consistent distribution and national recognition. Fat Tire and the rest of the company\u2019s 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\u00a0to stock and promote year-round beers in order to gain access to limited-release products, and having limited-release products\u00a0demonstrates knowledge and credibility to high-value beer-drinking customers. Having a diverse product suite is also important because craft beer consumers\u00a0are always hunting for new products, and are rarely as loyal to one product as\u00a0beer drinkers of prior generations.<\/p>\n

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A limited release collaboration with Ben & Jerry’s generated significant excitement and press, with a portion of the proceeds benefiting Protect our Winters, a non-profit\u00a0rallying snow sports enthusiasts against climate change.<\/figcaption><\/figure>\n

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<\/a>)<\/p>\n

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.\u00a0One 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<\/a>) However, New Belgium has successfully navigated this concern, pursuing the $175 million Asheville expansion project while transitioning to full employee ownership.<\/p>\n

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<\/a>, 7<\/a>)<\/p>\n