Over the years, plenty of craft founders have discussed the idea — Dogfish Head’s Sam Calagione and Sierra Nevada’s Ken Grossman come to mind — but it’s not something that grabs headlines. As the craft brewing industry continues to evolve, (publisher) Brewbound recognizes that some brewery owners might be considering a generational transfer as their primary succession plan. So, to discuss the ins and outs of generational transfers they tapped Deborah Steinthal, the founder and managing director of Scion Advisors, a boutique strategy consulting firm serving private business owners in the food and alcoholic beverage industries.
Steinthal, offering advice on the topic at a recent Brewbound Session, has worked alongside more than 150 CEOs to generate close to $1 billion of incremental, profitable revenues for their companies. She’s an expert in the area of generational transfers and regularly pens articles on how family-owned breweries can beat the odds, improve the sustainability and value of their businesses, and decrease risk during transition.
The health of the family-controlled craft brewing business is a fairly new area of study with much uncharted territory. Not unlike the U.S. wine industry a decade ago, the craft brewing sector is in the early stages of unprecedented change in management and ownership within family-owned breweries.
While beer distributors are more familiar with generational changes in ownership, craft producers have been slower in starting the process; among several dynamics, founders’ passion for their craft makes it hard to let go and the audience is a bit younger (many owners are still in their mid-40s).
Brewery owners who are nearing retirement and wanting to pull out of their day-to-day schedules might be asking themselves — “is my family business ready for a transition? If so, when and how do I start?”
In reality, when the time comes for founders to pass their baby onto the next generation, with dreams of keeping it in the family and maintaining their vision and hard-earned enterprise, they flounder for a variety of reasons: They lack a plan and can’t get out of the way. They find that either the next generation doesn’t want to take over or that all the siblings want it. Or, that they want to change it or sell it.
This complex picture is what causes many peaceful, family-run operations to crumble, and legacies fade into failed endeavors. The American economy depends heavily on the continuity and success of family businesses.
It is alarming that such a vital force has such a poor survival rate. Statistically speaking, the odds of successful family business continuity are low — less than 75 percent do not transition to the 2nd generation. Less than one percent survive past the 3rd generation.
But it’s not all doom and gloom. There are a good number of family businesses that are thriving and growing, and resources abound for aiding those families through the process of transitioning to the next generation. With the proper tools, the keys to the kingdom can successfully be passed down to family members for years to come and generations to follow.
Research indicates that family business successes can essentially be traced to one factor: ‘preparedness is at the core of those that are beating the odds.’
Most generational transitions take up to a decade to successfully put in place, so if you think this is only a 2 – 5 year process, guess again. Four dynamics need to come together before a founding generation should actually let go and pass the keys to the kingdom to the kids:
- They need qualified kids to run the business
- The business needs to be financially viable
- The parents need financial stability
- Their identity, very tied to the business, needs to shift to a new life phase
When these dynamics align, three additional fundamentals should be observed.
READ MORE: Link to Brewbound Voices Article
ABOUT THE AUTHOR. Deborah Steinthal is Founder and Managing Director of Scion Advisors, a leading boutique, strategy consulting firm serving the U.S. wine industry. With a proven approach enabling business owners to position for profitable growth or for exit, she has worked alongside over 150 winery owners and CEOs; and has moderated over 80 Winery CEO Roundtables involving more than 50 top wine industry CEOs for over a decade. Deborah’s expertise is in the area of business growth strategy, family business transformation, and board and leadership development.
Based out of McMinnville, Oregon; born in Lima, Peru; raised in Belgium and Germany; Deborah has lived, worked and travelled globally. She is broadly published in the national business press, an invited speaker, panelist and widely quoted for research on key practices, such as such as How to Build a Pull Brand, Digital Commerce and Family Business Transition.
For more information call Deborah Steinthal at 707.246.6830.
Among her clients: Cristom Vineyards, Adelsheim Vineyard, Wine by Joe, DeLille Cellars, Woodward Canyon Winery, OVS, Willakenzie, Elizabeth Chambers Cellar, Patz & Hall Winery, Benziger Family Vineyards, Calera Wine Company, Delicato Family VIneyards, Cakebread, Spottswoode, Gundlach Bundschu, Luna Vineyards, Clos Du Val, Quail’s Gate Winery, Wente, J. Lohr, Choice Lunch, Cowgirl Creamery, Easton Malloy (producers of Peppermint Bark for Williams-Sonoma) , and McEvoy Ranch.