Summarize case study 8 in 5-6 paragraphs. Go through the case in its entirety before summarizing and responding. ? Do all three questions: What environmental issues do

460 Case 8 A Brew above the Rest: New Belgium Brewing

This case was prepared by Jennifer Sawayda for and under the direction of O.C. Ferrell and Linda Ferrell, © 2019. We appreciate the input and assistance of Greg Owsley, New Belgium Brewing, in developing this case. It was prepared for classroom discussion rather than to illustrate either effective or ineffective handling of an administrative, ethical, or legal decision by management. All sources used for this case were obtained through publicly available material and the New Belgium Brewing website.

Introduction Although large companies are frequently cited as examples of ethical and socially responsible firms, it is often businesses that start small that stand to have the greatest impact. Craft beer pioneer New Belgium Brewing Company began as a microbrewery in Fort Collins, Colorado. They have created jobs and contributed money, resources, and volunteer time to local causes for 30 years, serving as community leaders. Though New Belgium Brewing Company is no longer considered a craft brewery after its acquisition by Lion Little World Beverages in 2019, the company continues to be a role model in both the world of brewing and the local communities in which they operate.

History of New Belgium Brewing Company The idea for the New Belgium Brewing Company began with a bicycling trip through Belgium. Belgium is argu- ably the home of some of the world’s finest ales, some of which have been brewed for centuries in monasteries. As Jeff Lebesch, an American electrical engineer, cruised around Belgium on his mountain bike, he wondered whether he could produce such high-quality beers back home in Colorado. After acquiring a special strain of yeast used to brew Belgian-style ales, Lebesch returned home and began to experiment in his Colorado base- ment. When his beers earned thumbs-up from friends, Lebesch decided to market them.

The New Belgium Brewing Company (NBB) opened for business in 1991 as a tiny basement opera- tion in Lebesch’s home in Fort Collins. Lebesch’s wife at the time, Kim Jordan, became the firm’s marketing director. They named their first brew Fat Tire Amber Ale in honor of Lebesch’s bike ride through Belgium. Initially, getting New Belgium beer onto store shelves was not easy. Jordan often delivered the beer to stores in the back of her Toyota station wagon. However, New Belgium beers quickly developed a small but devoted customer base, first in Fort Collins and then throughout Colorado. The brewery soon outgrew the couple’s basement and moved into an old railroad

depot before settling into their present custom-built facility in 1995. The brewery includes two brew houses, four quality assurance labs, a wastewater treatment facility, a canning and bottling line, and numerous technological innovations for which New Belgium has become nationally recognized as a “paradigm of environmental efficiencies.”

NBB currently offers a variety of permanent and seasonal ales and pilsners. The company has their Year Round series, including Citradelic, Dayblazer, and Pilsener; their Voodoo Ranger series of IPAs; their Vintage Sour series La Folie, Transatlantique Kriek, and Le Terroir; their Belgian Collection of Abbey, Trippel, and 1554 ales; and their Fat Tire Collection, still the firm’s bestseller. Some customers even refer to the com- pany as the Fat Tire Brewery. The firm also has a line of “Glütiny,” or reduced gluten, beers. In 2018, the brewery introduced its Up Next series, unique beer flavors that rotate quarterly throughout the year.

Additionally, New Belgium works in collaboration with other companies to come up with new products. Through this, they hope to create improved efficiency and experimentation as they take collaborative strides toward the future of American craft beer making. One such collaboration resulted in the Grilled Pineapple Golden Ale, brewed in partnership with Red Robin to complement the restaurant’s Banzai Burger. The new ale was unveiled at the Great American Beer Festival. NBB also partnered with Ben & Jerry’s to develop new flavors of beer such as Chocolate Chip Cookie Dough Ale. Fifty thousand dollars of the proceeds from the beer were used to raise awareness about climate change.

NBB’s most effective form of advertising has always been their customers’ word of mouth, especially in the early days. Indeed, before New Belgium beers were widely distributed throughout Colorado, one liquor- store owner in Telluride is purported to have offered people gas money if they would stop by and pick up New Belgium beer on their way through Fort Collins. Today, New Belgium is sold in all 50 states, the District of Columbia, Brazil, Finland, Canada, South Korea, Norway, Japan, Australia, and Sweden.

NBB experienced strong growth, which led the firm to build a 76,000 square foot addition to their 100,000 square foot plant in 2005, as well as a second brewery

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in Asheville, North Carolina, in 2016. The organization sold more than 844,000 barrels of beer in 2018. In April 2019, NBB opened a 125-seat restaurant at Denver International Airport (DIA), a strategic move that stands to increase brand awareness as DIA is the fifth busiest airport in the United States. Although NBB is still a small brewery when compared to many beer companies like fellow Coloradan Coors, NBB’s place in U.S. brewing history was recognized by the Smithsonian’s National Museum of American History in its “FOOD: Transforming the American Table” exhibition in 2019. The travel notebook Lebesch kept that helped inspire the brewery was included in a showcase about the craft brewing revolution.

Beer connoisseurs who appreciate the high quality of NBB’s products, as well as the company’s environmental and ethical business practices, have driven growth. For example, when the company began distribution in Minnesota, the beers were so popular that a liquor store had to open early and make other accommodations for the large number of customers. The store sold 400 cases of Fat Tire in the first hour it was open. With expanding distribution, however, the brewery recognized a need to increase opportunities for reaching their far-flung customers. They consulted with Dr. Douglas Holt, an Oxford professor and cultural branding expert. After studying the company, Holt, together with former Marketing Director Greg Owsley, drafted a 70-page “manifesto” describing the brand’s attributes, character, cultural relevancy, and promise. In particular, Holt identified in New Belgium an ethos of pursuing creative activities simply for the joy of doing them well and harmony with the natural environment.

With the brand thus defined, NBB worked with New York advertising agency Amalgamated to create a $10 million advertising campaign. The campaign would tar- get high-end beer drinkers, men aged from 25 to 44, and highlight the brewery’s down-to-earth image. The grainy ads focused on a man, Charles the Tinkerer, rebuilding a cruiser bike out of used parts and then riding it along pastoral country roads. The product appeared in just five seconds of each ad between the tag line, “Follow Your Folly … Ours Is Beer.” With nostalgic music playing in the background, the ads helped position the growing brand as whimsical, thoughtful, and reflective. NBB later re-released their Tinkerer commercial during the U.S. Pro Challenge. The re-released commercial featured on NBC had an additional scene with the Tinkerer riding part way next to a professional cyclist contestant, with music from songwriter Sean Hayes.

It would be eight more years before NBB would develop their next television advertising campaign. In 2013, NBB developed a campaign called “Pairs Well with People” that included a 30-second television advertisement. The television ad described the unique qualities of NBB as an organization, including their

environmental consciousness and 100 percent employee ownership (see more on this below). The advertisement was launched on four major networks in large cities across the United States. Because the primary purpose of the campaign was to create awareness in areas not as familiar with the brand (such as Raleigh-Durham and Minneapolis), NBB did not air the commercial in Colorado and states where the brand was already well-known. The campaign also featured four 15-second online videos of how the company’s beer “pairs well with people.” Bar patrons featured in the 15-second digital ads were NBB employees.

In addition to the ad campaign, the company maintains their strategy of promotion through event sponsorships and digital media. To launch their Ranger IPA beer, New Belgium created a microsite and an online video of their NBB sales force dressed as rangers performing a hip-hop dance number to promote the beer. The only difference was that instead of horses, the NBB rangers rode bicycles. The purpose of the video was to create a hip, fun brand image for their new beer, with the campaign theme “To Protect. To Pour. To Partake.” The company’s Beer Mode mobile app gives users who download it access to exclusive content, preselects messages to post on the users’ social media sites when they are spending time enjoying their beers, and provides users with the locations of retailers that sell NBB products. NBB started a free digital loyalty program called Grand Cru that rewards members with exclusive experiences and merchandise for engaging with the company and offering insights for new products. In so doing, NBB not only increases customer loyalty but is able to obtain valuable customer feedback on the firm and their products. NBB is highly active on Facebook, seeing it as an effective way for reaching their customers. After conducting one study, NBB found that their Facebook fans contribute $50.7 million in sales annually.

New Belgium’s Ethical Culture According to New Belgium, the company places great importance on the ethical culture of the brand and their branding strategy is rooted in the core values of the company. They are aware that if NBB embraces citizenship in the communities they serve, they can forge enduring bonds with customers. More than ever before, what a brand says and what a company does must be synchronized. NBB believes that as the mandate for corporate social responsibility gains momentum, business managers must realize that business ethics is not so much about the installation of compliance codes and standards as it is about the spirit in which such codes and standards are integrated. The modern-day brand steward—usually the most externally focused of

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462 Case 8 A Brew above the Rest: New Belgium Brewing

the business management team—must prepare to be the internal champion of the bottom-line necessity for ethical, values-driven company behavior.

At New Belgium, a synergy of brand and values occurred naturally because the firm’s ethical culture (in the form of core values and beliefs) was in place long before NBB had a marketing department. Back in early 1991, when New Belgium was just a fledgling home-brewed business, Jeff Lebesch and Kim Jordan took a hike into Rocky Mountain National Park armed with a pen and a notebook. There they took the first stab at what the company’s core purpose would be. If they were going forward with this venture, what were their aspirations beyond profitability? What was at the heart of their dream? What they wrote down that spring day, give or take a little editing, are the core values and beliefs you can read on the NBB website today.

Since their inception, NBB adopted a triple bottom line (TBL) approach to business. Whereas the traditional bottom line approach for measuring business success is economic, TBL incorporates economic, social, and environmental factors. In other words, rather than just looking at financial data to evaluate company success, NBB looks at their impact upon profits, people, and the planet. One way that the company is advancing the TBL approach is through the creation of a high-involvement corporate culture. All employees at NBB are expected to contribute to the company vision, and accountability is spread throughout the organization. Just about any New Belgium worker can list many, if not all, of these shared values.

New Belgium’s Purpose and Core Beliefs New Belgium’s dedication to quality, the environment, their employees, and their customers is expressed in its mission statement: “To operate a profitable brewery which makes our love and talent manifest.” The com- pany’s stated core values and beliefs about their role as an environmentally concerned and socially responsible brewer include the following:

1. Remembering that we are incredibly lucky to create something fine that enhances people’s lives while surpassing our consumers’ expectations

2. Producing world-class beers 3. Promoting beer culture and the responsible enjoyment

of beer 4. Kindling social, environmental, and cultural change

as a business role model 5. Environmental stewardship: minimizing resource

consumption, maximizing energy efficiency, and recycling

6. Cultivating potential through learning, participative management, and the pursuit of opportunities

7. Balancing the myriad needs of the company, staff, and their families

8. Trusting each other and committing ourselves to authentic relationships, communications, and promises

9. Continuous, innovative quality and efficiency improvements

10. Having fun

Employees believe that these statements help com- municate to customers and other stakeholders what New Belgium, as a company, is about. These simple values—developed roughly 30 years ago—are just as meaningful to the company and their customers today, even though there has been much growth.

Employees Recognizing employees’ role in the company’s success, New Belgium provides many generous benefits for their employees. In addition to the usual paid health and dental insurance and retirement plans, employees who stay with the company for five years earn an all- expenses paid trip to Belgium to “study beer culture.” Employees are also reimbursed for one hour of paid time off for every two hours of volunteer work that they perform. Open book management allows employees to see the financial costs and performance of the company. Employees are provided with financial training so they can understand the books and ask questions about the numbers.

In their decision to open a second brewery, NBB demonstrated how seriously they take their employees’ contributions. NBB had chosen 13 possible locations on the East Coast for their new brewery. The company wanted to select an area that met 33 criteria NBB developed as to what they were looking for in a town. NBB owners visited all 13 locations. They returned on a second visit accompanied by employees and other stakeholders. Employees were an integral part of the decision-making process. Although this process took longer because it involved more stakeholders, NBB’s actions assured employees that the firm values their feed- back and views them more like family than employees.

New Belgium also wishes to get their employees involved not only in the company but in their sustain- ability efforts as well. To help their own sustainability efforts, employees are given a fat-tired cruiser bike after one year’s employment so they can ride to work instead of drive. An on-site recycling center is also provided for employees. In addition, each summer, New Belgium hosts the Tour de Fat, where employees dress in costumes and lead locals on a bike tour. Other company perks include inexpensive yoga classes, free beer at quitting time, and a Prius to run company errands. To ensure that workers’ voices are heard, NBB has a democratically elected group of coworkers called POSSE. POSSE acts as a liaison between the board, managers, and employees.

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Sustainability New Belgium’s marketing strategy involves linking the quality of their products, as well as their brand, with the company’s philosophy of environmental friendliness. As co-chair of the sustainability subcommittee for their trade group the Brewers Association, NBB is at the forefront in advancing eco-friendly business processes among companies in their industry. Co-workers and managers from all areas of the organization meet monthly to discuss sustainability ideas as part of NBB’s natural resource management team. From leading-edge environmental gadgets and high-tech industry advance- ments to a strong belief in giving back to the community, New Belgium demonstrates their desire to create a living, learning community.

NBB strives for cost-efficient energy-saving alterna- tives for conducting their business and reducing their impact on the environment. In staying true to the company’s core values and beliefs, the brewery invested in a wind turbine, making New Belgium the first fully wind-powered brewery in the United States. NBB also charges itself a per-kilowatt-hour internal tax on their purchased energy consumption that they use for energy efficiency projects. NBB has also invested in the follow- ing energy-saving technologies:

• A smart grid installation that allows NBB to com- municate with their electricity provider to conserve energy. For example, the smart grid will alert NBB to non-essential operational functions, allowing the company to turn them off and save power.

• The installation of 1,235 solar photovoltaics panels on top of the packaging hall. The array produces 4.5 percent of the company’s electricity.

• A brew kettle, the second of its kind installed in the nation, which heats wort sheets instead of the whole kettle at once. This kettle heating method conserves energy more than standard kettles do.

• Sun tubes, which provide natural daytime lighting throughout the brew house all year long.

• A system to capture its wastewater and extract methane from it. This can contribute up to 15 percent of the brewery’s power needs while reducing the strain on the local municipal water treatment facility.

• A steam condenser that captures and reuses the hot water that boils the barley and hops in the production process to start the next brew. The steam is redirected to heat the floor tiles and de-ice the loading docks in cold weather.

In April 2014, New Belgium was featured in a half- page advertisement supporting the EPA clean water rule that was introduced March 26, 2014. Andrew Lemley, New Belgium’s Government Relations Director, was quoted in an EPA news release championing continued support for the Clean Water Act while also associating quality water with quality beer.

In addition to voicing political support for environmental protections, New Belgium also takes pride in reducing waste through recycling and creative reuse strategies. The company strives to recycle as many supplies as possible, including cardboard boxes, keg caps, office materials, and the amber glass used in bottling. For example, NBB partnered with Original Grain in 2019, a sustainable wood and steel watch company, supplying wood foeder barrels for the creation of a collection of limited edition watches. Foeder barrels are used for many decades before they are retired. The brewery also stores spent barley and hop grains in an on-premise silo and invites local farmers to pick up the grains, free of charge, to feed their pigs. Beyond the normal products that are recycled back into the food chain, NBB has also worked with partners to take the same bacteria that creates methane from NBB wastewater and convert it into a harvestable, high-protein fish food. NBB also buys recycled products when they can, and even encourages their employees to reduce air pollution by using alternative transportation. Reduce, Reuse, Recycle—the three Rs of environmental stewardship— are taken seriously at NBB. The company has been a proud member of the environmental group Business for Innovative Climate & Energy Policy (BICEP), and they signed BICEP’s Climate Declaration in 2013 which calls for American businesses, stakeholders, and regulators to address climate change.

Additionally, New Belgium has been a long-time participant in green building techniques. With each expansion of their facility, the company has incorporated new technologies and learned a few lessons along the way. In 2002, NBB agreed to participate in the United States Green Building Council’s Leadership in Energy and Environment Design for Existing Buildings (LEED-EB) pilot program. From sun tubes and daylighting throughout the facility to reusing heat in the brew house, NBB continues to search for new ways to close loops and conserve resources.

New Belgium has made significant achievements in sustainability, particularly compared to other companies in the industry. For instance, New Belgium uses only 4 gallons of water to make 1 gallon of beer, which is 20 percent less than most other companies. The company is attempting to create a closed-loop wastewater system with its own Process Water Treatment Plant, in which microbes are used to clean the wastewater. NBB keeps 99.9 percent of their waste out of landfills, and today 100 percent of their electricity comes from renewable energy sources. Despite these achievements, they have no intention of halting their sustainability efforts. The company hopes to reduce the amount of water used to make their beer through better production processes as well as decrease their carbon footprint per barrel. To encourage sustainability throughout the supply chain, NBB adopted Sustainable Purchasing Guidelines. The

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464 Case 8 A Brew above the Rest: New Belgium Brewing

Guidelines allow the company to pinpoint and work closely with eco-friendly suppliers to create sustain- ability throughout the entire value chain. For their part, NBB conducts life-cycle analysis on their packaging components while continually seeking more efficient refrigeration and transportation technology that can be incorporated into their supply chain.

In 2013, NBB achieved B corporation certification as a way to further solidify their belief that business can be a “force for good.” The B stands for benefit. B corporation certification, awarded by the nonprofit B Lab, is a type of certification for for-profit firms that certifies they meet stringent environmental and social performance goals, as well as practice transparency and accountability. Companies that have received B corporation certification are scored based upon their performance in ethical, social, and environmental areas, including governance, worker relations, community relations, and the environment. NBB scored 143 out of 200, whereas the median B corporation score is 80. NBB demonstrates through certification that they go above and beyond what is expected to try and make the world a better place.

Social Responsibility Beyond their use of environmentally friendly tech- nologies and innovations, New Belgium also strives to improve communities and enhance people’s lives through corporate giving, event sponsorship, and philanthropic involvement. NBB has donated more than $10.5 million through their grants program to philanthropic causes. For every barrel of beer sold the prior year, NBB donates $1 to philanthropic causes within their distribution territories. The donations are divided between states in proportion to their percentage of overall sales. This is the company’s way of staying local and giving back to the communities that support and purchase NBB products. NBB also participates in One Percent for the Planet, a philanthropic network to which the company donates one percent of Fat Tire sales.

Funding decisions are made by NBB’s Philanthropy Committee, which is composed of employees through- out the brewery, including owners, area leaders, and production workers. NBB looks for nonprofit organiza- tions that demonstrate creativity, diversity, and an innovative approach to their mission and objectives. The Philanthropy Committee also looks for groups that incorporate community involvement in their operations.

In addition, NBB maintains a community bulletin board in their facility and posts an array of community involvement activities and proposals. This community board allows tourists and employees to see the various opportunities to help out in the community, and it gives nonprofit organizations a chance to make their needs known. The NBB website also has a dedicated link where organizations can apply for grants. The company

donates to causes with a particular emphasis on water conservation, sensible transportation and bike advo- cacy, sustainable agriculture, and youth environmental education.

NBB also sponsors a number of events, with a special focus on those that involve “human-powered” sports that cause minimal damage to the natural environment. Through event sponsorships, such as the Tour de Fat, NBB supports various environmental, social, and cycling nonprofit organizations. In the course of one year, New Belgium can be found at anywhere from 150 to 200 festivals and events across the nation.

Organizational Success New Belgium Brewing’s efforts to embody a sustainability-oriented business has paid off with a very loyal following—in fact, the company expanded the number of tours they offer of their facilities due to high demand. The company has also been the recipient of numerous awards. Past awards for NBB include the Business Ethics Magazine’s Business Ethics Award for its “dedication to environmental excellence in every part of its innovative brewing process,” their inclusion in The Wall Street Journal’s 15 best small workplaces, and the award for “best mid-sized brewing company of the year” and “best mid-sized brewmaster” at the Great American Beer Festival. New Belgium has been awarded medals for three different brews: Abbey Belgian Style Ale, Blue Paddle Pilsner, and La Folie specialty ale.

Many applaud New Belgium Brewing Company’s sustainability and philanthropic initiatives. According to David Edgar, former director of the Institute for Brewing Studies at the Brewers Association in Boulder, Colorado, “They’ve created a very positive image for their company in the beer-consuming public with smart decision-making.” Although some members of society do not believe that a company whose major product is alco- hol can be socially responsible, NBB has set out to prove that for those who make a choice to drink responsibly, the company can do everything possible to contribute to society. NBB also promotes the responsible appreciation of beer through their participation in and support of the culinary arts. For instance, they frequently host New Belgium Beer Dinners, in which every course of the meal is served with a complementary culinary treat.

Although NBB has made great strides in creating a socially responsible brand image, their work is not done. They must continually reexamine their ethical, social, and environmental responsibilities. In 2004, they received the Environmental Protection Agency’s regional Environmental Achievement Award. It was both an honor and a motivator for the company to continue their socially responsible goals. After all, there are still many ways for NBB to improve as a corporate citizen. For example, although all electric power comes

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from renewable sources, the NBB plant is still heated in part by using natural gas. Furthermore, continued expansion requires longer travel distances to distribute their products, which increases the use of fossil fuels. In addition to addressing logistical challenges, NBB is part of an industry where there is always a need for more public dialogue on avoiding alcohol abuse. Practically speaking, the company has a never-ending to-do list.

NBB executives acknowledge that as their annual sales increase, the company will face increasing chal- lenges to remain committed on a human level while also being culturally authentic. Indeed, how to boldly grow the brand while maintaining their perception of a humble feel has always been a challenge. Additionally, reducing waste to an even greater extent will require more effort on behalf of managers and employees, creat- ing the need for a collaborative process that will require the dedication of both parties toward sustainability.

Perhaps as a way to deal with the long transportation distances necessary for national distribution as well as to expand production capacity, NBB opened their second brewery in Asheville, North Carolina in 2015. Its grand opening in 2016 was marked with a celebration that coincided with NBB’s 25th anniversary. Like Sierra Nevada, who already operates a brewery in Asheville, NBB is hoping to use its new $175 million facility as a hub for product distribution to eastern states—Asheville has legislation in place that makes regional distribution easier. However, opening their second brewery is more than just about increasing production capacity; NBB, along with hundreds of other craft brewers, are attracted to Asheville for their local culture that values sustainabil- ity and locally produced products. Asheville is surrounded by mountains, is near protected water sources, and is inhabited by many outdoor enthusiasts. Indeed, NBB is not the only craft brewery to recognize the potential of positive tourist exposure and local support by operating in the Asheville area. Sierra Nevada added tours of their brewery to emphasize their history and sustainable brewing practices. Additionally, other Asheville breweries have spent millions expanding their current operations in anticipation of NBB’s entrance to the area.

NBB also faces increased competition from larger craft breweries. They still remain behind D. G. Yuengling & Son Inc., Boston Beer Co. (maker of Samuel Adams beer), and Sierra Nevada in market share. Like NBB, Boston Beer Co. and Sierra Nevada have plans to expand. NBB must also compete against craft beer alterna

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