The Schlafly Beer Employee Blog

September 5, 2012

Minding Our Brewery

tomdanSchlafly Beer Co-Founders: Dan Kopman and Tom Schlafly

Our Succession Planning Process Moves Forward with Local and Employee Ownership

Independent Brewers, often described today as Craft Brewers, are all thinking about brewing new beers, brewing more beer, selling more beer and how to market their beers.  The how to make more beer or building “brewing capacity” and the how to develop the “selling and marketing capacity” have and continue to be two critical issues facing Craft Brewers.  Craft Brewers are facing big decisions at a time when there is plenty of uncertainty.

In the past 20 years, my conversations with other Craft Brewers follow a similar pattern.  “How much beer are you making this year” we would ask each other.  “Are you adding more fermenters, buying more kegs; should I buy neons or coasters”?  We often speak about raw material challenges with poor hop and barley harvests.  We talk about beer styles, traditional and innovative.  This has been the routine.

A few years ago at an industry event I found myself speaking to other owners of Independent Brewers.  Once we got past the usual set of questions we started to talk about “life after”.  Life after what?  We all realized that we had started our breweries 20 to 25 years ago.  We might have considered the “life after the brewery” as a passing thought but the question never really came up in conversations.  Today, it has become apparent that there is another big issue facing many of America’s Independent Brewers, “succession planning”.  Who will own and lead America’s Craft Brewers in the future.

Tom Schlafly and I have been partners for over 20 years.  It has been a wonderful 20 years.  We built the Schlafly Tap Room in 1991; a great team of employees worked with us to build Schlafly Bottleworks, from the purchase of the property in St. Louis County in 2001 to the opening of the restaurant at Schlafly Bottleworks in early 2004.  The Brewery has continued to grow; our committed and caring team works every day to brew great beer, prepare some great food and deliver great memories for our customers.  It is clear that we truly enjoy our part in supporting and re-building the brewing community in St. Louis and beyond.

In early 2010 we began to realize that Schlafly Bottleworks might not have enough capacity to meet future demand; we also realized that Tom did not have younger family to come into the business and I did not want to purchase his majority stake in the business.  By June 2010 we decided that we had to begin work on a formal succession plan.  We decided to start by meeting with many of the key employees who had helped to ensure the Brewery’s success to date.  In these early meetings we established three goals.

  1. Keep it local.  Find a local investor group to purchase the majority stake in the Brewery.  A sale to a strategic buyer, a large international brewer, just did not seem to be the right path. We searched for a group that shared our commitments to independent local ownership, brewing great beer and continued operation of our two Brewery-Restaurants, The Schlafly Tap Room and Schlafly Bottleworks. In doing so, we hoped to provide for continued ownership by myself and Tom Schlafly.
  2. Create a significant employee stock purchase plan to allow employees to purchase a significant stake in the Brewery over time.
  3. Do not add any significant new debt to the Brewery so that the Company can continue to re-invest in the Brewery.  The idea is that by adding local and employee owners, we strengthen the financial position of the Brewery to ensure that the capital is available to fund future growth.

I am pleased to announce that as of last Friday, the 31st of August 2012, the process is complete; the three goals have been achieved.  Many of you followed the announcement of the purchase of a 60% stake in the Brewery by a local group of families led by John Lemkemeier, Wes Jones and Spencer Finney and including Tom’s cousin David Schlafly.  The work on this “closed” on May 31st of this year.  We completed the work on this purchase last week.  A local investor group, committed to building on our local success now owns a 60% stake and Tom and I both retain significant ownership stakes in the Brewery.

During the entire 2+ year process we have been developing the employee stock purchase plan.  In July we finalized the details and provided information to eligible employees.  Last week, we realized our goal when 28 employees, who met the eligibility requirement of 5 years of completed employment, purchased shares just in excess of a 5% stake in the Brewery.  For Tom and me, this was one of the most powerful moments we have experienced in the last 20 years.  I now feel a great sense of commitment to work to ensure the future success.  My memory may be incomplete, but I feel an excitement similar to 1991.  It is a wonderful beginning to a new chapter and increasing the amount of stock owned by employees remains a key goal.  We plan to provide more opportunities for these individuals and many other employees to purchase shares in the future.

I want to thank all of our employees, our distributor partners, the bars, restaurants, grocery, beer stores (why do we call them liquor stores?) and convenience stores and most of all our customers for your support for nearly 21 years.  On December 26th we will turn 21.  I will admit that there are some days when I feel “a little old”.  But on this occasion I intend to forget my age and look forward to the next 20 years as if we were just starting out.  Our 21st birthday party will start on December 26th with the annual celebration at The Schlafly Tap Room and will be followed by some great events through into the New Year.  Once again, thanks.

Dan