New Glarus Brewery shareholders sue CEO over withheld profits
USA | The popular Wisconsin craft brewer New Glarus, famous for its Spotted Cow beers, is being sued by three of its original investors over withheld profits. The lawsuit was filed on 19 August 2021.
New Glarus was founded 28 years ago by Deborah Carey, CEO, and her brewmaster husband Dan. In 2020, it brewed 200 000 barrels beer, a decline of 12 percent over 2019, media say. The firm does not report financials. In 2018, on its 25th anniversary, Ms Carey told media that the brewery’s turnover was nearly USD 70 million. Whether this included revenue from its 250 000 annual brewery visitors, she did not say.
Despite the drop in sales, the business must have been very healthy in 2020, as New Glarus only sells its beers in Wisconsin and has obstinately refused to expand its distribution.
A long list of allegations
Among the list of claims, the three shareholders allege that Ms Carey used brewery money and resources to make a distillery meant to be owned by the brewery, but was instead transferred to Ms Carey and her husband personally.
Moreover, the lawsuit contends that New Glarus has built up USD 100 million in retained earnings, and USD 40 million in cash, on annual profits of USD 15 million to USD 20 million and has no debt. Allegedly, Ms Carey stated she would not distribute these profits with the minority shareholders.
Confronted with these accusations, Ms Carey told media that she was “totally gobsmacked” by the allegations. She was quoted as saying: “I saw these people in June or July. Everything was amiable. I had no idea they’re unhappy. These accusations are malicious and I mean they’re just lies.”
What’s behind the lawsuit?
Ms Carey suspects that the lawsuit is an attempt to force her into expanding her Wisconsin brewery and its beers outside the state to bring in more cash for shareholders.
“I have been very open about only selling in Wisconsin. I’ve built a very profitable business on this business model, and I am sorry they feel they should have more money in their lives. But I’m not a slave to our investors. My commitment is to make world class beer and to take care of the people at the brewery, and that’s where this has brought us today, and their bully behaviour won’t change that,” Ms Carey was quoted as saying.
