Insurance for the craft

This month, the California Craft Brewers Association became the first craft-beer trade association in the country to establish a benefits trust intended to help small brewing companies reduce the cost of providing benefits packages to their employees.

With more than 700 craft breweries now active within the state, CCBA managing director Leia Ostermann explains, "The trust groups all participating breweries into one, large, group plan so that they can access the power of a large company while still maintaining a small business."

The CCBA Employee Benefits Trust is being offered through HUB International Insurance Services, a Chicago-based brokerage with hundreds of offices throughout North America. HUB vice president Bo Lebherz points out, "At 50 employees or more, it is required that a brewery provides affordable and adequate coverage." However, when it comes to advantageous large group pricing, Lebherz estimates "that threshold is usually a hundred employees or more."

Plans available include medical, dental, vision, life, and disability insurance. With group buying power established through the CCBA, Lebherz indicates the realistic savings for businesses under that 100-employee threshold could amount to 10 to 15 percent over the small group market cost, and in a few cases a little higher. "The more breweries join," he adds, "the more affordable it becomes for everybody."

While a few industries utilize group buying power in this fashion — including agricultural and life-science fields — Lebherz says one reason it works well for breweries is that the bulk of their workers fall within the insurance industry's favored demographic: young single males.

Breweries must have 10 or more employees to qualify, while those with over 100 — like Green Flash — already have access to large group rates, meaning most breweries to benefit from the trust will fall between that range. Thus far, Lebhertz and the CCBA have fielded interest from several dozen breweries in California. One local beer company that requested an estimate is Mike Hess Brewing, which counts 23 full-time employees.

Mike Hess says that since he and his wife Lynda cofounded the brewery six years ago, offering benefits to employees has been an important goal. However, he points out it's a pricey one, especially since most startup breweries struggle to keep up with operating costs and debt financing.

"What I don't think most people realize," Hess says, "is there's not money at the end of each month to pay for benefits." As San Diego's 11th largest brewery, he says, "We're just now getting to the point where we can consider it…if we can do it and not have to worry month after month."

Hess estimates that once profitable, a business has to sell an extra million dollars' worth of beer annually to afford offering benefits. "We have been soliciting quotes for the last year and a half, hoping that soon we would get to the point," he adds, noting that the rates now being offered through the CCBA have been the best he's gotten. "It's going to help some breweries that have some scale, but it's not going to help out the smaller breweries yet," he figures. "They're still trying to get out of the red."