With the pending sale of New Belgium Brewery, we turn to our archives to highlight another great employee-owned company and Independent Craft Brewer, Mass Bay Brewing Company, known for Harpoon Brewery, UFO Beer, and Clown Shoes Beer. Aaron Moberger, an amazing employee-owner and dedicated EO advocate is our guest.
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You can hear the original October 30th, 2018 release of this podcast in Episode 49 of our archives.
Episode 94 Transcript
Bitsy McCann: 00:03 Welcome to The EO Podcast, where we amplify and celebrate all forms of employee ownership.
Bret Keisling: 00:12 Hello my friends. My name is Bret Keisling and as it says on my business cards, I'm a passionate advocate for employee ownership. In November, 2019 New Belgium Brewery made big news in the employee ownership and ESOP communities when it announced that it was being sold to an international conglomerate. There's been a lot of talk since then about the sustainability of ESOPs generally, as well as specifically in the craft brewery field, so I thought it'd be a good time for us to go to our archives and bring back the interview we had done in 2018 with Aaron Moberger of Harpoon Brewery. Harpoon Brewery is a great example of an employee owned company. It's a great beer maker and Aaron is going to share some of the processes that go into making beer, how they choose products and flavors, and also how being an employee owned company adds to the magic that is Harpoon Brewery. Now, as you'll hear in the background, this was recorded at one of the ESOP organization conferences and although we strive to bring better audio quality, I do think the background noise has the ability to show you the excitement that goes on at these conferences and therefore you won't find it too distracting is my hope. Without further ado, here's my conversation with Aaron Moberger.
Bret Keisling: 01:35 We appreciate you're sitting down with us Aaron and it's an ESOP podcast but also a business podcast. Everybody knows you as Harpoon Brewery but just to set the record straight, that's actually not the name of the company, correct?
Aaron Moberger: 01:48 Yup, yup. We started as Mass Bay Brewing Company in 1986. And the first brand was Harpoon. And UFO kind of came from that as another flavor option developed into its own brand. We acquired Clown Shoes last fall, so Clown Shoes is another of our brands, and we do a cider too. So Mass Bay Brewing Company is the parent company and Harpoon Brewery or UFO or those other two brands are...
Bret Keisling: 02:12 ... Are the brands within. But if folks are walking around referring to the company as Harpoon Brewery, as long as they're drinking your beer, you're good with that.
Aaron Moberger: 02:20 A hundred percent!
Bret Keisling: 02:21 Excellent. So Aaron, what we're going to do is talk a little bit about you and a little bit about Harpoon Brewery and then your work in the employee ownership field, which you do as a volunteer and why you think that's important. So tell us a little bit about your story, about how you got to Harpoon Brewery and how you ended up being here today.
Aaron Moberger: 02:41 As far as how I get to Harpoon, and even in the business, just very lucky, you know. I had a friend of mine from high school worked at a brewery up in Ipswich in 2010 and I was hanging out with him one day and he was going to play a baseball game on their team. And so I wound up going to that game, played in that, and I'm not a baseball player. I'm a pretty lousy baseball player, but when you need a ninth person and that, anybody will do!
Bret Keisling: 03:09 But you knew beer. So even though it wasn't baseball and you fit in with the beer team.
Aaron Moberger: 03:12 I knew I liked it! I didn't know much else at the time from it, you know, it was it was very, it was interesting. So great people, had a lot of fun, played in a couple more games and then they said, you seem to get along with everybody. We have a person putting in their two weeks, do you want to maybe apply for a job? So I did. Again, not knowing much about it and just stayed late washing kegs for a couple of weeks and got a job there and got into some other parts of the operations and then saw about a year later, a job opening up on the Harpoon bottling line and applied for that and got it. And it was in the city, so it was close to my girlfriend at the time who I became, you know, yeah, we got married and had our first son six months ago. So....
Bret Keisling: 03:54 Congratulations! That's great.
Aaron Moberger: 03:56 Thank you very much.
Bret Keisling: 03:57 There's... when somebody says, you know, my girlfriend at the time there's always that moment of, oh, is this going to be a sad story?
Aaron Moberger: 04:02 What happened? Yeah. [Laughter.]
Bret Keisling: 04:02 But no, it's marriage and baby! Congratulations. [Laughter.] Absolutely. Great. so this was in terms of getting there and we'll pick up where you moved on from being on the line. But this was just a classic serendipity. You were in the right place at the right time.
Aaron Moberger: 04:17 Big time.
Bret Keisling: 04:17 Excellent.
Aaron Moberger: 04:19 And I met her at one of those baseball games, too.
Bret Keisling: 04:20 Dude!
Aaron Moberger: 04:20 So if I didn't go to that first game. I don't know, probably wouldn't be talking with you guys today.
Bret Keisling: 04:25 That is... life is funny that way. That is very cool. So you're working on the line, that's not where you are now. So, so you continued to progress.
Aaron Moberger: 04:34 Yeah. Worked on the bottling line for about a year and stuff has been changing rapidly just in the seven, a little bit over seven years, I've been with Harpoon. So we were going from doing single and double bottling runs to doing triples and that eventually quads. Keg production was increasing. So after a year on bottles, I did about six months on kegs. And then a spot opened up in the cellar. So I got into cellaring. So the fermentation and conditioning adding hops at that stage...
Bret Keisling: 05:01 How to make the beer.
Aaron Moberger: 05:02 Yeah, yeah, well...
Bret Keisling: 05:04 Well... actually making the beer, or not really?
Aaron Moberger: 05:06 We kind of say the brewers make the wort and yeast makes the beer. So we try to keep it happy and make sure that we're checking it regularly. That in the rare, thankfully we do enough stuff right, that in the rare case we have to intervene we get to it early enough that we make the right decisions and make sure that we can produce that batch.
Bret Keisling: 05:27 And, Aaron although again, primarily we're going to be talking ESOPs and business, I just can't help myself because it's fascinating. Can you explain to some of our listeners who may not be aware, when you said the wort versus the yeast? Just tell us a little bit about that.
Aaron Moberger: 05:41 Yeah, absolutely. So the brewing process takes, you know, making beer which is by and large, it's fermentation basically. And then whatever you do around that...
Bret Keisling: 05:52 You mix the ingredients and then you wait.
Aaron Moberger: 05:54 Yeah, for us takes two weeks. But the brewing process is just making the wart. That's the bitter sugar water, essentially, that the yeast is going to ferment. So that only, that takes several hours. So that happens in the brew house. First thing you do is combine water and grain that you meld. So at a certain temperature you activate, it's called diastatic enzymes that break the starches into fermentable sugars. You know, it's an important step. A bunch of other stuff happens, but that's kind of the main thing we're concerned about. Or the thing that we're most concerned about at that stage. You put it into a lauter tun and run it off. So basically that porridge that you made, you separate at point the sweet wort, cause you basically, you had the two ingredients at that point. You boil it. Although New England style hazy IPA have funny implications with the less or no boiling and that understand people are experimenting with.
Bret Keisling: 06:46 So the boil versus no boil will...
Aaron Moberger: 06:48 I don't know anybody that's doing a production no boil batch.
Bret Keisling: 06:53 Okay.
Aaron Moberger: 06:53 But yeah, we can, yeah, that's an interesting, getting a stable haze in those styles of beers turns out to be a challenge. So how you do that and because when you're boiling, you cause what's called hot break at that stage and then precurses to cold break when you cool it back down? That causes a lot of those haze-forming compounds to drop out. Because it used to be you'd filter and stabilize beer to where it's perfectly bright. Because people thought in decrement in the clarity not only was a flaw, but that maybe even it would hurt you, you know, which we know is not the case.
Bret Keisling: 07:23 It's poisoned if there's a little cloud issue as opposed to that's the natural science physics of how...
Aaron Moberger: 07:28 Big time. Yeah. Yeah. And that's related to what we do in the cellar, you know, at the later stages. Although we're finding out that we can do it earlier and be effective and actually get some beer back tooo, which are employee led initiatives.
Bret Keisling: 07:39 And I'm glad that you pointed that out. So you have the dual role of experimenting, so to speak. And I mean the company as a whole, we're not saying that it's just you, but experimenting with flavors, lines, that kind of thing. While in full production of the schedule of everything that you have to put together.
Aaron Moberger: 07:57 Yeah. Yes sir. Yeah, it's really, it's a pretty, we've got a good thing going. Because we have, it's a 120 barrel system in Boston. We have a 50 barrel system in Windsor, so that's our main production. But we also have a 10 barrel pilot plant in Boston and every so often at the innovation brewer is actually based out of Windsor. And he'll do like, you know, one or two barrel batches or something like that. But 10 barrel batches will go into tanks in Boston and then typically we'll run them right through out to visitor's center. So it's a great R&D tool.
Bret Keisling: 08:25 So you get to have the beer when people are coming in for the visiting and that's just an offering.
Aaron Moberger: 08:30 That's it.
Bret Keisling: 08:30 And it let's you kind of market research it a little bit and see if people like it while they're there.
Aaron Moberger: 08:35 Big time. Very effective tool. Yeah, it's, it's a very virtuous kind of construction.
Bret Keisling: 08:39 Let's go back for just a moment because in terms of your position with the company, we kind of left you in the conversation where you're working on the line and you've evolved from then.
Aaron Moberger: 08:47 Yeah. Oh, I jumped all around.
Bret Keisling: 08:49 So just to bring us up to speed about the other jobs you've had and then I actually want to talk about how you market and plan the other flavors with the holiday seasons and you know, that sort of thing. There's probably a lot to keep track of. So just take us through your the rest of your job curriculum.
Aaron Moberger: 09:06 Yeah, so after getting into the cellar, that's where you learn to mostly monitor fermentations talking about watching the gravity change. So as the sugars are fermented they'll decrease and then you see the alcohol increase. CO2 obviously, you know, gets carbonated. So that's generally about five days. You'd have to figure out when to crash cool the tanks and go from your fermentation temperature, which generally is 70 for our stuff down to 30. And start the conditioning process.
Bret Keisling: 09:34 And the crash part, I imagine, is very quickly. How quickly does it go from 70, 30 or is that not what that means?
Aaron Moberger: 09:39 A lot quicker since our glycol upgrade. Yeah. It used to be kind of a struggle, especially in the summer months. You know engineering a refrigeration system in Boston is a challenge because you've got a hundred degrees swing. So if you just kind of pick 70 degrees, which it almost never... [laughter] how happy would we be if it was 70 degrees all the time? Then a lot of the year probably it's going to be a little bit oversized but you get into the summertime every degree you go up is that many more times a load on the system. So those a hundred degree days you really load down your glycol in a different way.
Bret Keisling: 10:14 And it's fascinating because obviously that then goes into equipment aspect of making beer as opposed to the flavors, and so that's a lot to...
Aaron Moberger: 10:24 Yeah, because temperature, you know, a lower temperature and how long we keep there is really a good predictor of stability, and a critical point that we're concerned with. So even on like a hazy beer, we want to crash it down to 30 because what you'll -- that promotes yeast flocculation. So forming groups of yeast cells, which drop out much quicker. So we're able to drop those out in the tank and then spin them out in the centrifuge. Same idea, you know, settling just happens much quicker on the centrifuge. And if we did a beer, let's say we conditioned an unfiltered beer at 38, you might have more of those yeast cells suspended. If you put that into a package and they decide they're going to flock, once they get there, then you have an unstable product. So, and then sort of on the other side, what we're stripping all the yeast out, polish filtering it, you actually, there are types of compounds that form. It spawns between proteins and tannins. They're thought to be sort of weaker hydrogen bonds, so the lower temperatures, stuff's moving slower, allows them to happen. And that makes your -- the colder you can filter, the more effective your filtration is going to be because you form more of those groups that you're going to filter out. So if we filter it at a higher temperature, we wouldn't have those protein and polyphenol or tanin combinations and they'd get through the filter separately and then possibly combine once they're in a package and you have an unstable beer, something that develops a haze weeks or months down the line.
Bret Keisling: 11:39 And obviously that would lead to unhappy customers and some concern perhaps or that sort of thing.
Aaron Moberger: 11:44 Yeah, for us that's almost like, I don't think moving target exactly the right kind of words for it, but it seems like people are pretty tolerant of haze nowadays. So we have to really pick. It's not like with an IPA, we're going to say if we all of a sudden develop a little bit of a haze at the end of four months, you know, at the end of its planned shelf life. I don't think anybody's going to send it back.
Bret Keisling: 12:09 Right. That's an excellent point. Okay.
Aaron Moberger: 12:11 Yeah. So we have to be, I mean, duty number one obviously is to be faithful to consumers. If we thought that they would, we'd have to...
Bret Keisling: 12:18 And obviously if you thought there was a problem with the product, you wouldn't release that at all.
Aaron Moberger: 12:23 Absolutely.
Bret Keisling: 12:23 So we're not talking about that. We're talking about the aesthetics.
Aaron Moberger: 12:25 Yes.
Bret Keisling: 12:25 It's almost if you're buying a piece furniture and there's, you know, a knot of the wood showing through. Some people say that's beautiful. That's the haze effect. It doesn't affect the quality of a beer.
Aaron Moberger: 12:35 Yeah. 100%. And it's even sort of funny when folks started to make these really hazy styles that you're adding, you know, two, or a lot of times three, four more pounds per barrel of hops. So, you know, many, many times more hops. And it was thought that you couldn't filter them in and get those types of powerful, you know, really pungent kind of fruity and citrusy and tropical aromatics and that sort of thing. Now it's swung all the way the other way. You can do that, you don't need that much haze, but it's thought that a characteristic of that style is to be basically opaque. So it goes all the other way. You can make something that smells and tastes exactly right and people still want more haze in it.
Bret Keisling: 13:20 [Laughter.] Which is the a.) you got to bring people what they want, and b.), there's almost a, I'm going to say never win. No, that's actually not right.
Aaron Moberger: 13:27 It's definitely moving targets. Yeah, definitely moving targets.
Bret Keisling: 13:30 So you need to manage the taste of the consumers, but actually be ahead of the curve because you can't wait to find out what everybody's buying and then start the process. You guys need to create what everybody's buying.
Aaron Moberger: 13:45 Yeah.
Bret Keisling: 13:45 So let me ask, Aaron, and people who listen to the podcast may know, certainly the people know me in real life know that I happen to have quit drinking in 1991. I do a lot of work in the addictions recovery movement and that sort of thing. And very much to be clear, I am in recovery, so I'm talking to one of the most renowned beer companies in the ESOP world without knowledge base. And two questions come to mind and we're joined, as you know, Aaron, but so our listeners know, as usual, Brian Keisling, our producer is sitting with us and he may come [on]. The first question that I've got is probably timed with the advent of craft beers generally because when I quit in '91, it's an exaggeration, but in my mind there were like seven beers you could buy. Six domestic and like Molson or Heineken if you want it to be fancy. And now there's just hundreds and hundreds and hundreds. So can you tell us a little bit about how the craft breweries have come and changed the world in the last 20, 30 years?
Aaron Moberger: 14:47 Yeah. Well, we, so we started in '86. That was brewing license number one in Massachusetts. So we hadn't had a brewery operating in Massachusetts since Prohibition.
Bret Keisling: 14:56 I would have thought maybe it's just because of marketing budgets or that kind of thing, that Sam Adams would have been the first, because you know, they're very, very famous, but you guys actually beat them into production and that sort of thing.
Aaron Moberger: 15:07 They were producing, they're producing beer before we were. I was in, it wasn't actually for an ESOP conference. It was before I'd gotten into this stuff. But years ago I was at a different conference in Las Vegas for the job that I was in. And the cab driver that was taking me downtown from the airport said they used to run a liquor store and he -- in the '80s -- and he distributed Sam Adams out there. So in the '80s, they already had a wide reach. Their two production facilities are in Pennsylvania and Ohio. So there's a plant in Jamaica Plain that they do all their test batching and tours and you know, everything like that. But I guess most of the beer must've been coming out of those plants before we started operating?
Aaron Moberger: 15:45 Well, and obviously we're not here to talk about them. And it shows the fallacy. I don't know if it's popular fallacy or just my lack of knowledge, but I didn't realize their plants were in Pennsylvania, so but you guys had the first brewery license in Massachusetts. And so the effect of the craft beers...
Aaron Moberger: 16:04 Totally. Yeah. So that, you know, so that was number one. Now, now there are 200, I think, just in Massachusetts and 7,000 in the country. So that's up. I want to say the last brewery I worked at started in '91. You know, so there are some of those, you know, that was sort of a scrap room. It's picking up. By around 2000, it was starting to drop off and that's when we actually bought the plant up in Windsor [VT] that was the Catamount Brewery.
Bret Keisling: 16:30 Oh, okay.
Aaron Moberger: 16:30 Yeah, because they had a loan out to the bank that, you know, I think people were doing then what they're doing now, which is projecting out these, you know, we grew 30% last year, so let's be conservative and call it 10. Maybe you're flat.
Bret Keisling: 16:46 Right.
Aaron Moberger: 16:46 So that already happened around 2000. So the number of breweries kind of stagnated. I don't even think, I think it might've dropped off a little bit. And then it really started climbing again, and recently it's accelerated.
Bret Keisling: 16:59 So let me ask this. When I mentioned there were only six or seven options, which again was an exaggeration, but that's what it seems.
Aaron Moberger: 17:07 I'm thinking it's probably very close to that.
Bret Keisling: 17:10 You have in there, there used to be eight. My father back in the day and drank Piel's Real Draft, but once they went out of business in the 70s, you know, we were down. But with all of the choices. I don't want to be rude to your customers and beer drinkers everywhere. Who started putting pumpkin in beer. Aaron? Is there any justification for why people would take two food groups and mix them like that? Because it just seems unnatural to me. I'm not a fan of-- and I don't drink -- but the idea of it is like, what are you people thinking?
Aaron Moberger: 17:39 Yeah, I don't really know. I think I think fall kind of brings out certain ingredients, like anything with spice, it cranberry, you know, a couple other kinds of things like stuff that's a little, a little bit more hardy, you know, maybe? And so pumpkin is a great combination with that. The pumpkin itself doesn't add a huge amount of flavor. Some people, not ours, some people don't even put pumpkin in their pumpkin beers. They just spice it.
Bret Keisling: 18:10 And to be clear, yours...
Aaron Moberger: 18:11 We put pumpkin in. Yes.
Bret Keisling: 18:12 It has pumpkin.
Aaron Moberger: 18:13 Yeah. So it adds, it adds something. But typically what we're thinking of with that is really just the spiciness. You know cinnamon and nutmeg, and all spice, and other spices.
Bret Keisling: 18:24 And like everything, and Brian when we were getting ready to sit down, you had mentioned you and your brother have a disagreement on blueberry beer. I imagine juggling all of the different flavors for the consumers is challenging. But Brian is someone in the age demographic who drinks, any thoughts on the flavors or that sort of thing?
Brian Keisling: 18:46 Yeah, I mean it's definitely fun to be able to try new things. And I think, you know, when I was in college, beer was beer, but having matured a little bit and expanding my palate more, you do get an appreciation, the same way people do with wine or any other alcohol for the sort of the diversity of flavors and that sort of thing. And you know, having this weird ingredient that you wouldn't necessarily expect can bring a lot to a drink and make it a really nice experience. I'm not in love with pumpkin flavored things in general, but something about fall makes you just kind of enjoy that. It's warming, you know, it warms you up and it's a comfort thing.
Bret Keisling: 19:31 All right. I hate to take the crotchety old get off my lawn position, but I don't think there should be fruit flavors in beer. I don't think, and we've mentioned this on a podcast from about a month ago, everything bagels to me are a crime against nature. Leave some of the stuff out! And finally...
Brian Keisling: 19:50 It something we disagree on...
Bret Keisling: 19:52 We disagree on. Absolutely. And whoever started putting bacon and chocolate together for desserts, I think it's, it's just -- there's a natural order of things Aaron, and I'm not comfortable with it! [Laughter.]
Brian Keisling: 20:00 So, as the person at Capital Trustees who actually appreciates things that tastes good. [Laughter.] I think you're doing a great job.
Aaron Moberger: 20:08 Ha ha. Thank you.
Bret Keisling: 20:10 So, Aaron, talk about, what are some of the flavors from the consumer's perspective? Some of the favorite flavors and or a seasonal, you know, are there any big Christmas specials or that sort of thing?
Aaron Moberger: 20:22 Yeah. Winter Warmer was our first seasonal that we released in the early nineties... actually, you know what, it might've been '89, it was '89. I'll have to, maybe I'll come back and we can edit that. [Laughter.] Anyways, we've been at it for a long time, as far as we know, it's one of the first seasonals and so therefore it's been one of the most long lived. And that's a spiced winter beer. You know, it's an amber ale that we add cinnamon to. And it's like you said Brian, the kind of warming effect, comforting effect of those types of beers in the wintertime. I think, you know, you see them seasonally, you know, so we talked about the law of flavors a little bit. Spring's a little bit tough because it might be several months, it might be a day, you know. [Laughter.] It's tough to plan for that season, but there's kind of, it seems like there's kind of an implication. Summer you get a little bit kind of more brighter fruit flavors. So our Mango Pale Ale wound up being a good fit there. That replaced the Summer Beer, which was the seasonal and that slot for a long time. And that was three years ago and it's been all since.
Bret Keisling: 21:28 So with the flavored beers and again this is more than just kind of the marketing of it and the product placement, when they introduced it in the late eighties, et. cetera, there was no sense that 30 years later you'd still be selling that flavor or was the intent that it would always be permanent?
Aaron Moberger: 21:48 You know, I don't think maybe they thought much about, you know... That'd be a great question for Dan, our CEO. I think at that point they were just making beers that they wanted to drink, you know, and we had...
Bret Keisling: 22:04 That Dan himself wanted to drink. [Laughter.]
Aaron Moberger: 22:07 Yeah.
Bret Keisling: 22:07 Well that makes sense. What flavors, you know, are interesting.
Aaron Moberger: 22:09 Absolutely. And that's why they got into it, you know, to do that. They'd gone to Europe, experienced the beer culture there. Like you said, there were a handful of options at the time and they wanted to bring some more stuff to consumers that they themselves want to drink. Areas that people wanted to visit, stuff like that. So I think, I think the seasonal landscape has changed quite a bit because up until a few years ago we were running summer beer in the summertime, Octoberfest, Winter Warmer. And at that, at a certain point people started rotating their stuff out. After a couple of years, it was almost like you expected you'd get a season, maybe two out of something and then see you later. So we started to try to plan for that, rotated the mango in. Flannel Friday's a higher hopped amber ale for the fall. It's a really good fit. That replaced Fest, which we're still doing. Summer Beer turned into House Golden and moved into a year round spot. So we tried to find spots for those beers, but just kind of plan for the inevitability that the next new seasonal that somebody else was going come out with had a certain appeal just because it was new and you sort of plan for it. But now Flannel has really found a strong following where we've gone through our third season of Mango in the summertime. So I don't think we necessarily would have expected when we were making those changes for them to last as long. But because people like the stuff, we're able to keep them around and rely on them. So it's funny to have to change and react to these types of things, but, you know, lucky that we're able to find stuff that has some strength in those spots.
Bret Keisling: 23:49 Sure. How many flavors at any given time do you put into production or put at the market?
Aaron Moberger: 23:54 Oh, my goodness. It's grown so much. We did a couple dozen -- just looking at our records from last year, we did at least four, maybe five dozen different styles just in Boston. And we went past that number by June, I think this year.
Bret Keisling: 24:13 Wow.
Aaron Moberger: 24:13 Yeah. And I would say it's probably doubled since then. You know, it's just crazy.
Bret Keisling: 24:19 So, Aaron as we said at the top of the recording, we're recording this live during the New England conference. And so the folks in the background are just conference goers. So we're actually telling that for our listeners so that they understand. But we love recording at the live conferences where everybody's here. So with that, with a little bit of noise in the background, let's continue chatting. And, Aaron craft breweries seem to be a pretty good fit in some ways for employee ownerships. There are a number of breweries who have gone the ESOP route. And just talk a little bit about is there something about craft brewery as an industry that leads it to being ESOP friendly, that sort of thing? Is it just a fluke? What do you think?
Aaron Moberger: 25:06 Yeah, I think if the founders know and care about it, like Dan Kenary, our CEO does. It's, you know, they have to have that. It's sort of a natural fit because the craft beer industry attracts people who are passionate about what they do, you know. So in that sense it's a great fit. But they still need to have folks, you know, founders that would heard about and care enough about that strategy to go there. So as many craft brewers that have gone ESOP, which is awesome -- and I think the number of those has doubled or tripled since our transaction, which is fantastic. There are also other places that are our size and age roughly that when it's time for them to go to the next stage in their succession plan, they would sell to a private equity or strategic [inaudible] or something like that. So.
Bret Keisling: 25:54 So it's, it's much like any other industry and the founder of selling shareholder, et cetera, et cetera. Oftentimes will need an exit strategy, will need something as a way to pull liquidity out, they don't necessarily exit and that sort of thing. So when the decision is made, the ESOP just in traditional exit planning strategy, ESOP may be an option, but selling out to a large conglomerate can also be the case as well. InBev or one of those?
Aaron Moberger: 26:20 Yeah. And it seems like, you know why some of those deals have happened. You know, maybe if the founders had heard or knew about ESOPs or how to, you know, had advisors where they could execute them or something like that. And maybe they would've done that. But you know, of course ABI is not going to come to the table and say, well, you can sell to your employees too. You know, that side's not getting a shake as much. We're extremely, extremely fortunate in that respect, and also to have, you know, founder Dan who wants to stay and make this run the best that it possibly can. So was a succession strategy for his co founder Rich, that's where most of the 48% of the shares in the ESOP came from in 2014. And then we've got Dan who's here and cares that much about and committed to making it a majority ESOP in the best way possible.
Bret Keisling: 27:09 Is there a sense of timeframe for a majority ESOP? Or is it just one of the... we're on the path and get there when you get there.
Aaron Moberger: 27:16 Yeah. I think the market is such that it is right now that the strategists all have a bunch of things to balance, you know, so...
Bret Keisling: 27:24 And it's working now, so there's no need for a minute, changes that quickly.
Aaron Moberger: 27:29 Absolutely.
Bret Keisling: 27:30 So talk a little bit -- earlier in this recording, you had referenced the one or two things were employee initiatives, which I assume is tied to it being employee owned.
Aaron Moberger: 27:40 Yes.
Bret Keisling: 27:40 So talk a little bit about the effects of being an ESOP on Harpoon. How's it changed your company?
Aaron Moberger: 27:48 Yeah. We had a really good culture to begin with, so it's -- it wasn't like flicking a switch or something like that, where all of a sudden we're employee owned and we've got more of like an ownership spirit. It's an ownership spirit before that. But of course you need the, you need the ESOP component as well.
Bret Keisling: 28:06 Right.
Aaron Moberger: 28:06 So I would, I guess, it just sort of augmented a lot of the good things that were there already. People care more, people will figure out how to use our continuous improvement program. You know, or we've really, we had initiatives before that we formalized the program, track it. I think the results are very tangible with that, you know, just talking locally in our cellaring department in Boston we've increased our efficiency by 50%.
Bret Keisling: 28:38 50%?
Aaron Moberger: 28:38 50%.
Bret Keisling: 28:40 Wow. Very impressive.
Aaron Moberger: 28:40 Yeah. Honest to God. Yeah. Thank you. It's all people's ideas. That's the coolest thing! We were doing -- before we were an ESOP company -- we struggled to put six batches through our finishing system, so the centrifuge and a lot of times the filter in a day, and we do eight, nine or ten now. We did eight batches of beer through a filter head twice and it was a challenge, before that, and we just did 12, we did 11 a couple of times in our sleep really. It's, we could go probably the whole week on one filter head now.
Bret Keisling: 29:14 Wow.
Aaron Moberger: 29:14 And that wasn't for many new pieces of equipment. That was from a cellar operators figuring out better ways, grassroots better ways to do things.
Bret Keisling: 29:23 Which is what we like to see in employee owned companies -- we like to see it in any company -- but obviously our focus is on ESOPs, where the employees understand with some skin in the game they benefit from the results. So finding a way to bring down expenses or innovate your processes is very much a natural component of being an ESOP.
Aaron Moberger: 29:43 Yeah, it's a natural component. It's something that people, I would say people have a natural drive to do. I think the constructive part of it is having a system that helps to people to use that and the best way possible. You know, if people do have these ideas and certainly they know, you know, we can, we can make a very safe assumption that people who are doing those jobs every day know how to make them better. They don't have an outlet for that. It can be frustrating, you know? And it's, it's far, as far as I know, there's no perfect system. So, you know, we've had to work hard to get to the point where we see those types of results and it's still not perfect. We've come up over the past several years, just the ones that we've tracked, 200 ideas and 60 are completed. So we're at, we're at a 30% which I have no idea what world class is in terms of idea, systems, but 30% seems to leave an awful lot of room for improvement.
Bret Keisling: 30:36 Right, right.
Aaron Moberger: 30:38 But obviously there's still tangible results in people take a huge amount of pride, you know, our folks take a huge amount of pride in what they've done and it really helps me get... So, when the market's shifted and you have 7,000 breweries for the first time from six, five, you know, for a couple of years ago. And you have to continually innovate to keep people interested and get, you know, really good faith in consumers to stay relevant and all that kind of stuff. If we hadn't made a lot of those improvements, which we're doing for the sake of doing them and you know, making our jobs better. Adding shared value, now of course, as a result of those things, it would have been much more difficult to keep up with the adjustments that have had to make since then. You know? So if we, if we couldn't put eight batches through, you know, in a day and all of a sudden we had to make all these other changes, you know, maybe we would, at that point we would have been putting two quads of IPA through and it was sort of a standard thing and now we might be doing a quad of IPA and before other batches. So there's transition time between those things that we would have had to absorb it if we weren't out ahead of it, it would have caused problems.
Bret Keisling: 31:46 And ultimately, and it's just human nature. In traditional companies that aren't employee owned, the end of the work shift comes, you're not necessarily motivated to think about it, care. You know, you take your check, we assume, you know, put in honest service for the check. But there was that extra component of wanting to go further.
Aaron Moberger: 32:07 Yeah, absolutely. And that's, and that's a great point about continuous improvement, is that people need some time away from their normal work to be able to come up with and crawl through on these things. So whether that's after hours or whether you do enough of them, that people can find chunks of time during the day around their normal work to be able to do it. It's a necessity, you know?
Bret Keisling: 32:28 Sure. Aaron, let me ask a question and then we'll talk a little bit about your work in The ESOP Association. But as a way to segue that. You're a relatively young man. You mentioned recently married, relatively speaking, and a baby. What's the baby's name?
Bret Keisling: 32:42 Alex.
Bret Keisling: 32:42 We just wanted to be the first ones to be able to say, "Hi, Alex! Daddy's on the podcast, doing well!"
Aaron Moberger: 32:49 Oh, that's awesome. I'm going to show that to him.
Bret Keisling: 32:53 Well, play it, there's nothing much to see. [Laughter.]
Aaron Moberger: 32:55 Yeah, right.
Bret Keisling: 32:55 Absolutely. And your wife's name?
Aaron Moberger: 32:58 Mandy.
Bret Keisling: 32:59 Mandy. So you and Mandy have Alex. Can you talk, and sorry to a ask a personal question, but I think people will be curious. What does it mean to be an employee owner for you, as a young person with a child? A lot of people your age, when I was your age, don't think about retirement. And as our listeners know, ESOPs are a qualified retirement plan. That's really -- everything that springs, springs from the fact that it's a retirement plan. What does that mean to you personally that you're in with a company where that's a benefit for you?
Aaron Moberger: 33:34 I mean, the fact that we can, you know, we have some idea hopefully of what the ESOP is going to do for us and we can plan around our retirement. I really couldn't imagine thinking about retiring without it. I don't think, I probably would think about it for a while without that. So that's a big component of it. And the other one, I think it's important that my son grows up to see his father enjoying what he does at work, you know? And so hopefully he can be, you know what I mean? My folks always liked what they did. You know, my father worked in the office of community development in the City of Lynn for decades, and he always seemed to like what he did and my mother was a lawyer and then went on to teach and she liked what she was doing. And so I think that's, I think that's an important thing for a kid to see growing up. You know, his parents care about what they do and they don't just go to work on cash a check.
Bret Keisling: 34:28 And I love that you said that. And just because I can, I'm going to turn to my son, Brian. Brian, do you have a sense that I enjoy what I'm doing?
Brian Keisling: 34:35 Yes. Yeah, I do. You, you clearly love ESOPs and that's what brought The ESOP Podcast about. Just, you know, sharing that with other people as well and then spreading that knowledge and joy for the community here. So.
Bret Keisling: 34:50 And what I like, Aaron, is you had mentioned there's a certain pride, if you're working for a craft brewer that a lot of people really --- passion, they have a passion for just the process and the flavors and all that. And then you have the passion that comes from employee ownership. So it seems like strength build upon strength.
Aaron Moberger: 35:10 Absolutely. And like I said, I think people have to have an outlet. You know what I mean? You have to figure out constructive ways to process people's ideas for all sorts of things, ecause with all that comes a whole bunch of ideas for all different parts of the business.
Bret Keisling: 35:26 Right.
Aaron Moberger: 35:26 We've been successful in the cellar because you know, we've been able to more or less focus in on our local work, but there are all types of other, you know, all other different suggestions and stuff that pop up. I feel for marketing in particular because a lot of people have ideas about marketing stuff. Nobody comes to me and tells me how to run the centrifuge, you know.
Bret Keisling: 35:45 [Laughter.] Hey, Aaron we were sitting in lunch talking about the centrifuge and we have this idea, a little twist to the torque. Whereas everybody, hey, we need billboards. We need et. cetera.
Aaron Moberger: 35:53 Absolutely.
Bret Keisling: 35:55 That's very funny.
Aaron Moberger: 35:55 Yeah, yeah. So there's a little, there's a little bit of a disproportion I think. And of course we got to deal with that too, because with that kind of passion, like people really care and get behind things. And I think we've gotten, we've been receptive to and agile enough to try to figure out the best ways to process, you know, kind of collect and process those things and stuff like that. But, you know, that can be a challenge at the same time. I think just facing up to it is the biggest thing and trying to figure out better ways to do things. It's kept us so we're able to improve on it.
Bret Keisling: 36:33 Excellent. And that's, you know, we see that with employee owned companies all the time. You happen to be in the adult beverage market. But the context that you're speaking about, employee ownership is a hallmark of what we think are successful employee owned companies and so that fits in.
Bret Keisling: 36:51 All right. With that, we're going to wrap up our episode with Aaron Moberger. Again, if you go to our archives at TheESOPpodcast.com, Episode 49 is the full original interview with Aaron and you'll find more about his personal journey and also what it means to be an officer at The ESOP Association. We go at length at that so you can find that in our archives. We are very proud of all of the employee ownership and ESOP topics that we have covered in the two plus years we've been doing this podcast. So I hope you'll check the archives out for any topic that you may be interested in. And if there's a topic you're interested in that we haven't covered yet, please drop us a message or a line and we'll look to cover it on a future episode. With that, I'll turn it over to Bitsy McCann, who will tell you how to contact us and also give closing credits. Hope you'll stick around for that. With that, everybody, thank you so much for tuning in. This is Bret Keisling. Have a great day.
Bitsy McCann: 37:47 We'd love to hear from you! To contact us, find us on Facebook at KEISOP, LLC and on Twitter @ESOPPodcast. To reach Bret, with one "T", email Bret@KEISOP.com, on LinkedIn at Bret Keisling, and most actively on Twitter at @EO_Bret. Again, that's one "T". This podcast has been produced by The KEISOP Group, technical assistance provided by Third Circle, Inc. and BitsyPlus Design. Original music composed by Max Keisling, archival podcast material edited and produced by Brian Keisling, and I'm Bitsy McCann.
Standard Disclaimer: The views expressed herein are my own and don't represent those of my own firms or the organizations to which I belong. Nothing in the podcast should be construed as guidance or advice of any kind in any field. And the fact that I mentioned an organizational website or an advocate or a company on a podcast does not reflect an endorsement. But if you've heard your name or your group's name mentioned on this podcast, I'd love to have you come on and talk about it yourself.