New Belgium Brewing Case Study

This popular craft brewery in the US has an internal energy tax, which pays for energy improvements annually.

This mid-sized popular craft brewery in the US has implemented an internal energy tax, which goes to pay for energy improvements annually.

New Belgium Brewing (NBB) is a first rate employer. Yet it isn’t the free beer that makes America’s 4th largest craft brewery1 a top pick for its 780 employees.2 Rather, in 2013 the company embraced a 100% employee-ownership structure that incentivises long term, values-driven strategic planning over short term profit seeking.3 Company books are open to all employees, who hold senior management accountable to the core values on which the company was built.4 The result is a 97% employee retention rate5 within the modestly-sized, yet fiercely competitive brewery operating as the eighth-largest brewery in the United States.6

The ability to take a longer view towards ROI than a shareholder-accountable public company would, led NBB to create its own internal energy tax. The journey started in 1998 when NBB conducted an internal environmental impact audit which revealed that the energy they used supplied by coal-burning power plants was the largest contributor of CO2 emissions in their brewing process.7 In response, the NBB employees voted to use money from their bonus fund to subscribe to the local Fort Collins wind program.8 This decision was taken unanimously, despite costing a 57% premium above their current prices.9 The city added an additional turbine to meet the brewery’s demand and NBB’s participation in the program allowed Fort Collins Utilities to become Colorado’s first electric utility to offer wind power.10 In 1999, this made NBB the United States’ first brewery to purchase 100% of its electricity from wind power.11

In 2013, NBB again took stock of their footprint with an eye towards optimizing their environmental footprint. Based on this analysis, NBB decided to move away from purchasing Renewable Energy Credits and instead invest in future renewable energy and energy efficiency projects within their own facilities.12 Currently, on-site energy generation comes from a clean biogas treatment plant which produces by-products that fuel 15% of energy needs, and solar panels that fuel an additional 4.5%.13

This evolving self-improvement project is financed by NBB’s Internal Electricity Tax. Under this scheme, they charge themselves 2.4 cents for every kilowatt-hour of energy they consume.14 This tax is a conscious accounting for the externalities not reflected on the electricity bills.15 The tax helps NBB get closer to the true environmental cost of the electricity and provides a fund to invest in further renewable and energy saving projects for the future of the company.16 One such project was an investment of US$250 thousand in 2015 to add an additional 96.525kW of photovoltaic solar panelling to the Fort Collins facility.17

Jenn Vervier, former COO and currently the Director of Strategy and Sustainability at New Belgium Brewing is adamant that the cultural and sustainability pieces are wedded. As she explains, becoming a B-Corp, planning for longer term strategic sustainability, attracting and retaining the best and brightest talent are part of New Belgium Brewing’s succession planning.18 While their efforts appear to delay ROI in the short term, their products’ reputation as the “Colorado lifestyle beer” helps it fly off the shelves in 45 states, the District of Columbia and British Columbia19 to the tune of US$225 million (est.) revenue annually.20 The outsized success of the business compared to their company size allows NBB to, in Ms. Vervier’s words, “punch above their weight class,” and be a leader in its advocacy and sustainable business practices for companies both in the beer industry and beyond.21

References

1 Brewers Association. (2016) “Brewers Association lists top 50 breweries of 2015”. Press Release, 5 April. https://www.brewersassociation.org/press-releases/brewers-association-lists-top-50-breweries-2015/.

2 From private company interview.

3 Rhodes, K. (2015) “New Belgium Brewing: Employee and community fueled growth”. Harvard Business School, 9 December 9. https://rctom.hbs.org/submission/new-belgium-brewing-employee-and-community-fueled-growth/.

4 Ibid.

5 From private company interview.

6 See http://www.newbelgium.com/Brewery/company/craft-beer-rankings-and-financials

7 New Belgium Brewery. “Goal: Reduce energy intensity 10% from 2008 to 2018”. Energy Environmental Metrics. http://www.newbelgium.com/Sustainability/Environmental-Metrics/Energy.

8 Ibid.

9 Ibid.

10 Ibid.

11 Ibid.

12 Ibid.

13 Rhodes, K. (2015) “New Belgium Brewing: Employee and community fueled growth”. Harvard Business School, 9 December 9. https://rctom.hbs.org/submission/new-belgium-brewing-employee-and-community-fueled-growth/.; New Belgium Brewery. “Goal: Reduce energy intensity 10% from 2008 to 2018”. Energy Environmental Metrics. http://www.newbelgium.com/Sustainability/Environmental-Metrics/Energy.

14 Interview with Katie Wallace. “Efficiency at New Belgium”. Conscious Company Magazine Issue 1, Winter 2015. http://www.consciouscompanymagazine.com/blogs/press/16059729-efficiency-at-new-belgium

15 Ibid.

16 Ibid.

17 Brew Bound. (2014) “New Belgium Adds 50 Percent More Onsite Solar Capacity”. Press Release, 17 December. http://www.brewbound.com/news/new-belgium-adds-50-percent-more-onsite-solar-capacity.

18 From private interview conversation.

19 From private company interview.

20 Dahl, D. (2016) “How New Belgium Brewing Has Found Sustainable Success”. Forbes, 27 January. http://www.forbes.com/sites/darrendahl/2016/01/27/how-new-belgium-brewing-has-found-sustainable-success/#268ece63a12a.

21 From private interview conversation.