When workers own the place

On a recent Friday afternoon, the employees of Astor Wines & Spirits were working at full speed. Among the dizzying number of bottles piled up under the high red-brick ceiling of the historic De Vinne Press building on Lafayette Street, some filled shopping carts with liquor bottles to restock the shelves, while others checked inventories, called customers, packed deliveries, advised clients or updated staff picks.

Since Sept. 12, they've had an extra incentive in making sure that everything in the shop runs smoothly. They now own it.

When Andy and Rob Fisher started to contemplate selling Astor Wines & Spirits — which had been in their family for over 50 years — the brothers faced a dilemma. With Andy now 73 and Rob now 68, they would be retiring soon, and knew that their children would not take over the business. 

They had received offers and went so far as getting a letter of intent and doing due diligence on a prospective buyer in Jan. 2020. But even the most thorough investigation could not guarantee that the new owners would respect Astor’s identity and product selection — or reward the shop’s 75 employees properly.

“No matter how well you get to know the people that are going to buy, they eventually will do what they want with the business,” Andy Fisher said. “And you lose control over what happens to your associates.”

So, last month the Fisher brothers decided to sell Astor to the people already running it. In the short-term, it may have been a riskier, and less lucrative, option. “We sold the house, you’re living in the house, but no one paid for the house yet,” Fisher joked when he announced the sale to his employees. 

But Astor would stay, if not in the family, then in the hands of people who know what makes it a neighborhood staple, and who would benefit from its success.

‘Added really positive energy’

Employee-owned companies have been an option for owners looking to ensure their succession for over 50 years, but still seem to be the “best kept secret” of the U.S. corporate world, said James Bonham, president and chief executive of the ESOP Association, a trade group for employee-owned businesses. 

He said that 10.5 million U.S. employees now own stakes in the companies where they work, through approximately 6,700 employee stock ownership programs (ESOPs) like the one now in place at Astor Wines & Spirits.

The way ESOPs work is that essentially a loan is taken out to finance the purchase by the employees from the previous owners, with the transaction monitored by the Department of Labor. Profits and tax benefits in place for ESOPs help pay off the loan and accrue shares owned by the employees.

From product selection to company operations at Astor Wines & Spirits, “the new owners already understand what they need to do because they have been doing it,” Fisher said.

Ten years ago, when natural wines weren’t so well established, it was Lorena Ascencios, Astor’s wine buyer, who advised the Fishers to support small biodynamic producers. Now those wines are in every winery from Brooklyn to Soho. And Ascencios is leading Astor’s ESOP process, coordinating the sale with the trustee who represents the employees.

When she learned that they would be inheriting the company, Ascencios couldn’t believe it. “I was shocked. It’s kind of daunting but it added a really positive energy in the shop,” she said. “We’re all seeing ways to advance in the company.” She celebrated the sale with her two children, who have helped out at the shop during the holidays, and a Greek red wine.

Employee-owned companies could be an attractive option to many as 2.8 million baby boomers who currently own their business approach retirement age — the “silver tsunami,” as it’s known. Employees are also increasingly demanding fairer compensation for their work, which could include ownership shares. Around the same time Astor sold to its employees, Trader Joe’s Wine Shop was suddenly shuttered amid rumors that workers at the store had been unionizing. “Company shares are still overwhelmingly in the hands of a few, and businesses should look for ways to fix that ‘ownership gap,’” Bonham, from the ESOP association, said.

To Doug Yacka, the sales manager who has been working with Asencios on the takeover, Astor’s existing work culture made the transition easier.
‘Every single person counts now’

Although the Fishers will stay on as managers for the near future, Yacka said, “we need to get more involved with other departments to get a better idea of how the shop works as a whole.” But the tight-knit management style already fostered such interdependency.

Beyond the respect and sense of community that the ESOP might reinforce among employees, the operation also gives them a stake in seeing Astor Wines & Spirits succeed. 

A 2022 study by the National Center for Employee Ownership focused on ESOPs in food-related industries found that ESOP firms fared better during the pandemic in terms of workforce retention and benefits, but also showed higher performances and more profits. 

“Employees have an incentive to be more committed and think as owners, not simply people getting a paycheck,” Bonham noted. Indeed, the employees will receive payouts when they retire or leave the company based on the success of the business, which means they directly benefit from the company’s value.

“It was an act of faith, but I don’t see it as a risk, because I believe in these people and in the store,” Andy Fisher said. “If only for selfish reasons, they have an interest in not walking out the door and seeing the store do well.”  

At 30, Kayla Marcos has gone from an entry-level job to front-end manager in two years at the store, and already saw it as a place that encouraged employees to grow. She said the sale allowed her to envision a “long-term plan” at Astor, knowing that her fidelity and hard work will be rewarded. 

Marcos, who is also in charge of hiring, said she has gotten more selective and looks for people who will really have the company's interest at heart. “Every single person counts now,” she said.

After the ESOP deal was closed, a delivery truck arrived from Astor’s warehouse. As it lowered a pallet of wine cases containing over 200 bottles onto the pavement, it slipped and several bottles broke on the floor. Andy Fisher said three people came running out of the shop. “They cared just that little amount more,” he said, “because it was really their bottles, not ours.”