Jake Voelker and the ownership team at Voodoo Brewery is excited about the future of its brewery.
Calling it a “competitive advantage,” a Principal of the company in western Pennsylvania said one of the happiest days of his life as a small business owner was announcing to the 17 employees of Voodoo that it would be a Employee Stock Ownership Plan company.
“They are practically family and this is a way to help provide for them and show that this is something that we want around for a long time, and have them be a part of it,” he said, noting that Voodoo is most likely the smallest ESOP business in the U.S., especially in the craft brewing world. “A bar back, a brewer, a principal, you get the same opportunity as everyone else. It’s just about us giving back to the people that got us to this point already.”
Voelker and his team took nearly all of 2015 to formulate the idea of letting employees own the brewery and help contribute to the day-to-day operations.
“Some of our employees that have kicked around the service industry for a while, when we told them they aren’t just going to be a guy we put on the schedule, they are going to be my business partner, the creative ideas started to float to the top,” Voelker said. “You start to see the commitment, it’s been a blast.
“Little things, like leaving the lights on, can be an important thing. But also how we serve our product and how we represent ourselves publicly become more important to someone that works only 20 hours a week because they want to see what their stock prices are doing.”
An ESOP is, according to the National Center for Employee Ownership, an employee benefit plan, similar in some ways to a profit-sharing.
In an ESOP, a company sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares. Alternatively, the ESOP can borrow money to buy new or existing shares, with the company making cash contributions to the plan to enable it to repay the loan. Regardless of how the plan acquires stock, company contributions to the trust are tax-deductible, within certain limits.
“It’s an employment perk and is based on how long you have been with the company and your salary,” Voelker explained. “Are they going to own 10 percent of the company in one year? No. That’s not how it happens, but if you work with us and have a commitment in us, you can grow over time.”
A business needs at least 15 employees to qualify for the federally-regulated program. Voodoo, which has been open for nine years and increased capacity from 1,100 barrels in 2014 to 1,660 last year over its two locations in Meadville, Pennsylvania and near Pittsburgh in Homestead, will bring in a team of experts to manage the ESOP mandates for financial, legal and accounting paperwork.
“I am by no means an expert at federal legislation and taxation law, but there are SEC filings that need to happen,” explained Voelker on the help that the brewery has hired. “That initial transition is important.”
Asked if it’s a viable option for a brewery his size after mentioning much larger breweries such as New Belgium, which is also an ESOP company, he said “yeah, it is.”
“Is it right for everybody? No, I don’t think so,” Voelker added. “What I see for us is this is a competitive advantage of having an incredibly dedicated group of people who care about the company, because it affects them, [and] it affects their share price.”
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