Cloudy
44°
Cloudy
Hi 54° | Lo 45°

Employee Owned

Harpoon Brewery Forms an ESOP to Start Aug. 1

  • Paul Malnati, bottling line manager, right, and Kevin Pellerin, left, bottle a run of Imperial Pumpkin beer at Harpoon Brewery in Windsor, Vt. Friday, July 18, 2014. The owners of the brewery are selling their stock to employees on August 1, through an Employee Stock Ownership Plan.<br/><br/>Valley News - James M. Patterson

    Paul Malnati, bottling line manager, right, and Kevin Pellerin, left, bottle a run of Imperial Pumpkin beer at Harpoon Brewery in Windsor, Vt. Friday, July 18, 2014. The owners of the brewery are selling their stock to employees on August 1, through an Employee Stock Ownership Plan.

    Valley News - James M. Patterson Purchase photo reprints »

  • Harpoon Brewery lab tech Katie Lloyd prepares to test the clarity and color of beer samples in Windsor, Vt. Friday, July 18, 2014. "It's definitely changed the atmosphere around here for the positive," said Lloyd of the announcement of the Employee Stock Option Plan. "We've always had the Harpoon attitude of pitching in and helping out, and now it's really our own." <br/><br/>Valley News - James M. Patterson

    Harpoon Brewery lab tech Katie Lloyd prepares to test the clarity and color of beer samples in Windsor, Vt. Friday, July 18, 2014. "It's definitely changed the atmosphere around here for the positive," said Lloyd of the announcement of the Employee Stock Option Plan. "We've always had the Harpoon attitude of pitching in and helping out, and now it's really our own."

    Valley News - James M. Patterson Purchase photo reprints »

  • Paul Malnati, bottling line manager, right, and Kevin Pellerin, left, bottle a run of Imperial Pumpkin beer at Harpoon Brewery in Windsor, Vt. Friday, July 18, 2014. The owners of the brewery are selling their stock to employees on August 1, through an Employee Stock Ownership Plan.<br/><br/>Valley News - James M. Patterson
  • Harpoon Brewery lab tech Katie Lloyd prepares to test the clarity and color of beer samples in Windsor, Vt. Friday, July 18, 2014. "It's definitely changed the atmosphere around here for the positive," said Lloyd of the announcement of the Employee Stock Option Plan. "We've always had the Harpoon attitude of pitching in and helping out, and now it's really our own." <br/><br/>Valley News - James M. Patterson

Windsor — After 28 years of being a closely-held corporation, on Aug. 1, Harpoon Brewery will have new owners.

Founding partner Rich Doyle is stepping down as CEO, and he and some other shareholders are selling their stock to the employees through an Employee Stock Ownership Plan (ESOP).

Dan Kernary, who will remain with the company as CEO and a major stockholder for the next five to 10 years, made the announcement last week.

In 2000, Boston-based Harpoon purchased the recently constructed brewery in Windsor after Catamount Brewery went out of business. Last year, the company had sales of 205,000 barrels and is ranked the 12th largest craft brewery and the 19th largest brewery in the country.

Harpoon, which was started in 1986 by Doyle and Kernary, has seen sales more than double over the last decade with an average annual growth of 9.7 percent. The company employs 187 people, including 26 in Vermont, a spokesman said.

Craft breweries have a significant economic impact in Vermont. The companies contribute about $196.3 million a year or about $419 per person to the state’s economy, a recent study by the National Brewers Association found.

Vermont is ranked third in the U.S. in per capita economic impact behind Oregon and Colorado and 16th in craft beer production with 229,062 barrels a year. There are 29 breweries in the state, including Harpoon and Long Trail, or 6.2 breweries per 100,000 residents over 21 years old. That makes the state second in the country.

New Hampshire lags behind — ranked 10th per capita — with only 22 craft breweries, or 2.2 per 100,000 adult residents.

The state produced only 69,164 barrels or 2.2 gallons per adult versus 15.1 gallons per adult in Vermont, a figure that makes the Green Mountain state No. 1 in the country.

“A couple of years ago, Rich (Doyle) and I started thinking about what we wanted to do with the business. We had some options. It’s a hot time for craft breweries, and we definitely had some interests from other companies and investors in buying us, and we considered an ESOP,” Kenary said.

After consulting with other employee-owned companies, such as King Arthur Flour and Hypertherm, and considering the other sales options, the Harpoon shareholders decided to establish the ESOP.

ESOPs are highly regulated, and to establish one is complicated. Doing the research to make the decision took about two years, and the actual process of setting it up took four months. A number of appraisals were required, and the company had to hire an independent adviser, counsel and ESOP trustee, Kenary said.

Doyle might have done better off financially if the company had been sold to another brewery, but the ESOP buyout was enough. It also was the right decision, one that will guarantee that Harpoon will stay independent and continue to be able to brew quality beer, Kenary said.

Employees now own 48 percent of the company, but the eventual plan is for the ESOP to own 100 percent after Kenary, who is 53, retires.

Rumors about a sale of the company had been going around the last few months. Employees were noticing a lot of visitors wearing suits and ties visiting the Windsor and Boston breweries.

“They were sort of wondering what was going on. They know that we’ve been running the business for 28 years, and some changes might be made.”

Harpoon holds its annual company-wide meetings later in the year, but on July 2, a special semi-annual meeting was called, and employees from Windsor were bused to Boston and gathered with the rest of the company in Harpoons new beer hall “for a major announcement.

“It was a little mean, but I asked the lawyers and accountants to join us and stand around sort of as props. I announced that I wanted everyone to meet and congratulate the new owners, and then I told them to shake the hand of the person (fellow worker) standing next to them,” Kenary said, noting that there were cheers and people were crying.

Then, they poured the beer to celebrate.