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02/09/2017

VT’s Switchback Goes 100% ESOP Route; Expects 25% Growth Again This Yr

Co-founder and brewmaster of Vermont’s Switchback Brewing, Bill Cherry, and his partner Jeff Neiblum decided to sell 100% of the company to its 30 employees, co announced. It joins handful of other US brewers to go 100% ESOP (Employee Stock Ownership Plan) route. Bill “will remain as Brewmaster and President,” according to release.  And Jeff’s role “is actually going to increase.” He’ll become “more involved as the future goes” in “more traditional VP roles of strategy,” as well as bringing his “skill set on the electrical and IT side,” Bill told CBN separately.  But “I wanted Switchback to be Vermont-owned forever,” and “entrusting the brewery to the employees ensures the company will carry on with its mission to provide great beer and great jobs to the local community.”  The deal is structured so Bill and Jeff get paid out over next 15 yrs, so they’re “not going anywhere,” he assured.  After that, “then I think I’ll be ready to retire,” tho he could decide to “not actually leave,” but reduce “day-to-day” involvement.  It “feels great” to have succession plan “all decided.”  Now “I can go back to just focusing on building” the biz.

Switchback Up 25% to ~30K Bbls; Expects Another 25% Gain This Yr  Switchback quietly became a major player in VT and New England region over the years since opening in 2002.  Last yr it finished up “a little bit more than 25%” to about 30K bbls, with revs up “more than that,” Bill shared. That’s still “mostly” in VT and vast majority is from flagship unfiltered Switchback Ale – impressively “the number one selling draft beer in Vermont.”  Even after adding bottle sales within the last few yrs and 6pk sales more recently, draft is still about 2/3 of its biz and Switchback Ale is “pretty much all” of its draft sales.  The “uniqueness” of Switchback Ale’s flavor profile allows it to stand on its own, he thought, since it’s “not fighting with the IPAs.”  And “we know what that fight is, it’s brutal out there.”  So it’s admittedly tuff to get more of its portfolio in the mkt, particularly on draft.  “You try and get a second draft line out there these days,” he quips to customers seeking more Switchback beers on tap.  At lotsa accounts, “maybe if you’re brand new,” you can get “a few” handles.  But often times it’s “one brewery, one beer.”  Switchback Ale “is just so dominant” as many VT bars’ “best-selling beer,” he said. So they’re “not taking this off.”  Keep in mind, Switchback also happens to be one of the fastest growing breweries in natl scan data thru 2016, with $$ sales up 77% and volume up 120% in IRI multi-outlet + convenience data last yr (see last issue).   

Meanwhile, 2017 marks the first year it’ll brew a full-time 2nd year-round brand – Citra-Pils Keller-Bier, an unfiltered lager – along with its growing portfolio, including Connector IPA (brewed year-round in VT-only), and several “Rotating Specials.”  Bill and co have gotten “hugely positive feedback” about Citra-Pils and that’s “really generating our anticipation.”  Then too, this year “I think the expectation would be we’re ready to probably fill out Massachusetts.  We’re definitely thinking about it,” said Bill.  Perhaps Connecticut too.  Tho he’s admittedly “a little scared” of the idea of entering a city as large as Boston or NYC.  “I’ve always been tentative” and “very methodical about that stuff.”  Switchback also just recently opened RI and has distribution in NH, ME, Western MA and upstate NY.  So “between our underdeveloped territories” and “solid growth” in home-state VT, Switchback’s “likely” to grow “another 25%” this year.

Publishing Info

  • Year: 2017
  • Volume: 8
  • Issue #: 13
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