A funny thing happened to Stone Brewing Co. on its way to global expansion and hotel entrepreneurship: 5 percent of its work force got laid off Thursday.
ESCONDIDO, CA. — We don’t know how many employees were affected by this. Stone didn’t say. However, the company website said it employs 1,100 people, and industry websites put the number of jobs eliminated at 50 to 75.
Some of the layoffs were confirmed as made at the Escondido location although it’s impossible to know how many at this time.
Stone officials blamed an “unforeseen slowdown” in business growth for the surprising, and sudden cutbacks.
“Due to an unforeseen slowdown in our consistent growth and changes in the craft beer landscape, we have had to make the difficult decision to restructure our staff,” according to a statement the company emailed and attributed to its chief executive officer, Dominic Engels.
“Unfortunately, this comes despite a year that includes the incredible accomplishments of opening two new breweries (Richmond and Berlin), which are ultimately expanding the availability of Stone beers and boosting the reputation of American craft beer in Europe,” he said.
Overall beer sales in the U.S. were down slightly in 2015, but independent craft beer makers saw about 12.8 percent sales growth by grabbing market share, according to the Brewers Association, a trade group for craft beer producers.
The number of U.S. breweries exploded to nearly 4,300 in 2015, from about 1,800 in 2010.
In Engels’ statement, he said the independent craft segment “has developed tremendous pressures.”
The company cited pressure exerted by large brewing companies as a result of their “acquisition strategies,” and a proliferation of “hyper-local breweries.”
“With business and the market now less predictable, we must restructure to preserve a healthy future for our company,” Engels said in the statement. “Even given this unfortunate circumstance, we will continue to be fiercely independent and, importantly, Stone remains one of the largest — if not the largest — employers in the craft brewing segment.”
Engels started as Stone’s CEO in September, succeeding the company’s founding CEO, Greg Koch, who became executive chairman. Engels had previously served as president of juice company POM Wonderful.
Stone said the affected employees were given “a substantial notice period and career transition services.”
“The team members no longer with our company are talented, committed individuals who have held important roles in our organization, and we expect that their talents will be in high demand,” he said.
“No additional layoffs are expected within Stone’s foreseeable future,” he said.
The sudden layoffs took the craft beer industry by storm as much as surprise.
“We were befuddled,” Draft Magazine said. “Stone is currently the ninth-largest craft brewery in the U.S., having produced more than 325,000 barrels of beer last year, according to the Brewers Association, and it’s expanding at a rapid rate—the brewery opened production facilities in Berlin in mid-September and in Richmond, Virginia in March. Another location in Napa, California is slated to open next year.
Draft added: “The timing for a mass layoff seemed … off.”
Stone’s longtime receptionist Denise Ratfield in a Facebook post said: ““It’s a bellwether day, and one that I did not see coming. Today, along with dozens of others, I was laid off from Stone Brewing.
“Although it will be a challenging transition after 7 years with a legendary brewery, I know that new opportunities lay ahead. I’m excited to start a new chapter in my career and so very lucky that I am in the best beer community on planet earth. Thanks to all the friends and family I made along the way at Stone that I hold in high regard. You made it wonderful. Let the new adventure begin.”
Until recently, according to Peter Rowe of the UT, Stone’s business seemed to be booming. Founded in 1996 by Koch and Steve Wagner, it entered 2016 as the nation’s 10th largest craft brewery and California’s third largest, trailing Sierra Nevada (third in the nation) and Lagunitas (sixth). Last year, it produced about 326,000 barrels, or more than 10 million gallons of beer.
Stone celebrated its 20th anniversary in August with a festival on the Cal State San Marcos campus, Rowe said. Earlier in the year, it opened a new facility in Richmond, Va.; in September, it became the first U.S. brewery to own a European operation, launching Stone Berlin, he said.
An announcement — no, not that announcement — from one year ago...
The official Stone news release said:
More recently however, the larger independent craft segment has developed tremendous pressures. Specifically, the onset of greater pressures from Big Beer as a result of their acquisition strategies, and the further proliferation of small, hyper-local breweries has slowed growth. With business and the market now less predictable, we must restructure to preserve a healthy future for our company. Even given this unfortunate circumstance, we will continue to be fiercely independent and, importantly, Stone remains one of the largest – if not the largest – employers in the craft brewing segment.
It is crucial to recognize that this decision was made after much careful consideration. Approximately 5% of all team members were affected, and they were offered a substantial notice period and career transition services. The team members no longer with our company are talented, committed individuals who have held important roles in our organization, and we expect that their talents will be in high demand. This reduction was not a reflection of the work they did, but a careful decision made to ensure that our company will remain competitive and profitable. No additional layoffs are expected within Stone’s foreseeable future.
In summary, we want to emphasize the following points:
This year, we completed several significant investments that have been in the works for a number of years.
A recent decline in domestic growth for the category and for Stone has forced us to restructure in order to preserve our independence in an increasingly competitive category.
Stone remains one of the largest – if not the largest – employer in the craft beer segment and remains dedicated to providing our fans with fresh beer.