Labatt Brewing Company is cutting off its retirees. Beginning in January 2019, the company will no longer offer weekly allotments of free beer to pensioners, a popular perk that has been part of the company’s benefits package for more than 50 years.
“The reason for the change relates to the rising overall cost of maintaining a full benefits package, including health care coverage for retirees,” Labatt vice-president Lindsay King wrote in a letter to employees last month, according to CBC News. “A recent comprehensive review of all the cost management options has led us to conclude that discontinuing free beer is the best course.”
It’s unclear how much money will be saved as a result, but Molson, another Canadian beer heavyweight, eliminated a similar program in 2009, which it said saved the company more than $1 million.
WHY IT MATTERS
We can all sympathize with the retirees here, as they’re losing a pretty cool perk, one that’s uniquely enjoyed by very few in a singular industry. And assuming for just a moment that the Labatt executive raised the issue of health care coverage, not as mitigating spin, but as a genuine concern, we can all also hopefully acknowledge that if one of the two had to go, then it’s bye bye beer. Except this story really isn’t about free beer. It’s about company culture, and how that culture changes—or doesn’t—with a sale. (Anheuser-Busch InBev owns Labatt. It was first sold, though, in 1995 to the Belgian company Interbrew, which ultimately merged with InBev).
Consider the dichotomy on display in the two following bits of reporting from CBC News.
In the first:
“The ones who worked there for decades remember what it used to be like when these factory jobs were coveted and paid enough to raise a family… ‘We have a retiree that's been there since 1972. He's probably worked there longer than the majority of the members have been born,’ [Union President Jim] Stirr said…Back then, the business was owned by a Canadian family.”
In the second:
“Stirr said employees tell him the atmosphere started to change after Labatt first sold to a foreign company in the 1990s. And pulling retirees' free beer is not the first cut… Starting in 2010, new hires saw a $10 drop in wages. The new starting wage was $24/hour, compared to $34/hour for workers hired previously. New employees also have to pay into their own pension.”
Eventually the early protectionism of acquisitions wears off, like they do in any industry, and the people running those brands and businesses have little, if any, connection to the original intent. They become businesses that run on efficiency and profit-making, and are beholden to the larger operation. Time has a way of normalizing these brands in a large corporate portfolio, removing their jewel-like cultural status they have upon their entry.
As it relates to American craft, you’ve probably heard various brewers say, after shaking hands with Big Beer or some private equity firm, that, “nothing is going to change.” Or: “They respect our culture and that was so critically important to our decision making process here.” This has reached platitude status by now. But from the outside, it’s impossible to challenge—there really hasn’t been much evidence to suggest it’s a lie. The caveat here is that most of the American craft breweries that have sold have only done so in the last half decade or so. And if the above reporting is to be believed, it becomes clear that cultural change doesn’t take place overnight. It’s a gradual process, beginning there in the mid-‘90s and continuing to this day.
But craft isn't immune, either. As we saw when Stone Brewing laid off approximately 10% of its workforce amidst a huge international expansion, forecasting is tough. Much like the applaudable intent behind pensions, no one offering you one is guaranteeing anything. They're simply saying, “We hope things keep growing forever and ever and ever, amen."
Labatt employees mourn the end of beer-for-life era [CBC News]