A New Ownership Model for Organic Businesses

By Sarah Chisholm Ryder, COG & and Laura Northey, OCO

Employee ownership has long been an important business model in the organic and natural food sector. Cooperatively-owned and managed businesses can help ensure that environmental and social good, employee needs, and business interests are served equally. Today, a new model for shared business ownership is building in popularity.

In Eastern Ontario, Beau’s All-Natural Brewing Company, a nationally-loved, certified organic craft brewery in Vankleek Hill, Ontario, began the process of implementing an Employee Shared Ownership Plan (ESOP) in 2016 to celebrate their 10th year in business. The plan, which was announced as a surprise to Beau’s employees in an Ottawa theatre, will allow about 200 employees the option to buy shares in the brewery over the next 25-30 years.

The benefit to the company is that employees are more dedicated to ensuring that it does well. Employees may perform better and stay with the business longer, knowing that their actions will have a direct effect on their investment. The ESOP is also a fair method of sharing the value appreciation of the business in future years.

“We’ve always told our employees that we want them to treat themselves like they’re part of the family and part of the brewery. It’s one thing to say that and it’s a very different thing to put our money where our mouth is.”

CEO Steve Beauchesne says that Beau’s has been approached by various investment funds or other groups over the years and, while the offers were tempting, he and his father (co-founders of Beau’s) have always chosen to turn them down. “When we were a lot younger and someone would come and say hey, I’d like to purchase a part of your company… it’d sound really exciting. Then they’d tell us what it would entail and it’d suddenly sound really terrible, like it would suck all the life and fun out of the brewery. So we very quickly decided that that wasn’t going to work for us,” says Steve.

The move to an ESOP has solidified what Steve and his dad have always wanted for the brewery: “We’ve always told our employees that we want them to treat themselves like they’re part of the family and part of the brewery. It’s one thing to say that and it’s a very different thing to put our money where our mouth is.”

The response from Beau’s employees has been overwhelming. Steve thinks it will only continue to evolve as employees start to see positive results for the company translate into benefits for themselves. “Right now, everyone’s got this sense of pride because they purchased shares. But next year, when the valuation comes out and they see that the shares are now worth more than they paid, I think they’re really going to start seeing things click…and it will continue to evolve beyond just ownership…it’s very much going to become a part of their future.”

“I really appreciate investing in organic production. Instead of investing in ‘x’ program from the bank, I can invest in something I believe in: organic food production, and my company.”

Organic feed, seed, and supply company Homestead Organics has also launched an Employee Shared Ownership Program recently. Homestead’s president, Tom Manley, feels the benefit of ESOPs to employees is clear. “Homestead Organics was already a close partnership between ownership and staff,” says Tom. “The ESOP takes that partnership to the next level, with formal shared ownership, shared engagement, and an equitable sharing of long-term benefits.”

Employee and now part-owner of Homestead, Valerie Yoder, says, “I really appreciate investing in organic production. Instead of investing in ‘x’ program from the bank, I can invest in something I believe in: organic food production, and my company.”   

Jennifer Williams of ESOP Builders, a Canadian consulting company that helps businesses adopt the ESOP model, explains the link between organic companies and employee ownership. “These are companies that are committed to building a new way of working in the world,” says Williams. “Organic companies are re-thinking business practices holistically and this includes the employee ownership piece of business.”

The difference between a worker-owned co-operative and an ESOP company is that the majority of shares are still owned by individual investors. However, unlike in a typical board-owned organization, employees at a company with an ESOP have a stronger voice in the way the business is run. In contrast to a worker-owned co-operative, ESOP participation is also voluntary and requires the employee to provide some capital to the business.

ESOPs are an excellent model for organic businesses, where employees likely have a strong ethical motivation for supporting the business financially. They are an important option consider for growing organic businesses that are looking for a way to build employee engagement and source capital at the same time.