BY LINCOLN ANDERSON | Oenophiles and labor supporters were shocked and dismayed when the Trader Joe’s Wine Shop suddenly was shuttered a month ago — allegedly in a union-busting move.
Trader Joe’s, for its part, claimed it closed the Union Square outlet because it was searching for a better location to “optimize the potential” of its sole liquor license in New York State. But the stated reason rang hollow — given that employees were poised to file paperwork to organize the shop.
Meanwhile, one of Downtown’s oldest and largest alcohol outlets is taking a very different approach. The owners of Astor Wines & Spirits are selling their store — to their employees.
The Fisher family, which has owned and operated the store for more than 50 years, completed the sale on Aug. 16. The sale price is not being made public.
The place currently has 75 employees.
The sale was made to what’s known as an Employee Stock Ownership Plan a.k.a. ESOP. In an ESOP transaction, the current stockholders sell their shares to the ESOP, and the purchase price is then paid off over time from the company’s ongoing earnings. Employees in the newly formed ESOP are allocated shares in the company, and then cash in on them upon their retirement, just like in a 401-K plan. In some cases, employees in the ESOP can also receive payouts before retirement age, such as if they become disabled or are fired or leave the company.
At retirement, the payout of the employees’ shares is based on the success of the business. The payments are usually made over a period of several years.
ESOPs reportedly generally have higher sales and job growth than non-ESOP companies. Examples of other ESOPS include Publix Super Markets, WL Gore (the makers of Gore-Tex) and Bi-Mart
Andy Fisher, the president of Astor Wines & Spirits, explained the thinking behind the unusual move.
“My brother Rob, Astor’s chief operating officer, and I believe the best succession plan is to entrust Astor to the people who have been so instrumental in building our enterprise,” he said. “By becoming an employee-owned business, we ensure that Astor Wines & Spirits will maintain our qualitative standards in selection and service while providing the additional benefit of rewarding our outstanding team.”
Astor Wines & Spirits has been a Downtown fixture since 1946. The late Edwin Fisher purchased the shop in 1968, when it was at its original location on Astor Place. His son Andy has served as the company president since 1971. Andy’s brother, Rob Fisher, a former senior executive in weekly business newspapers, joined the company in 2014 as chief operating officer.
In 2006 Astor moved to the stately De Vinne Press Building — one of New York City’s first individually landmarked buildings — at 399 Lafayette St., at the corner of E. Fourth Street.
Today the nationally recognized store carries more than 5,000 wines, spirits and sakes. In 2008, the Fishers added the Astor Center in the same location, an educational space that offers classes in wine, spirits and cocktails. While the wine store did not close during the pandemic, the Astor Center has been shut down since the start of COVID.
“People didn’t want to be sitting beside each other in a classroom,” Fisher explained.
“This is a succession plan,” he told The Village Sun, regarding the sale. “I’m 73. Rob’s 68. We thought it was irresponsible not to have a plan in place.”
The brothers’ children have taken their own paths in life. Andy’s son, Daniel Fisher, is a whiskey distiller in Scotland. Rob’s son, Max Fisher, a New York Times reporter, just published a new book, “The Chaos Machine,” that’s being hailed as an “authoritative and devastating account of the impacts of social media.”
“They’re respectful of the business — but it’s not what they want to do,” Fisher said of the family’s younger generation.
Fisher said that, as opposed to selling to an outside buyer, the ESOP would insure that employees are not fired by a new owner. He noted that, no matter how much one investigates a potential buyer, once the company is sold, it’s completely in the new owner’s hands and employees could be axed.
“We think that what we’ve built is worth preserving,” he said. “Rather than the buyer get the benefit of a successful business, we’d like to see our employees get the benefit.”
Because the ESOP is a retirement plan, it is monitored by the U.S. Department of Labor. A trustee is appointed to protect the employees and insure that shares are distributed to them on an ongoing, annual basis.
The longer one works for the company, the more shares he or she accrues. As a result, Fisher said, the ESOP plan will benefit younger employees the most, as opposed to those who are currently nearing retirement age.
“How long you stay will determine how many shares you get,” he said.
Andy and Rob Fisher will be staying around to “partner in the transition” to make sure the plan goes smoothly. Moving forward over time, the brothers will be paid the sale price from a percentage of the store’s profits.
“It’s like a no-money-down sale of a house,” Fisher explained.
Blue Hippo ESOP Advisors, Inc. and Royer Cooper Cohen Braunfeld LLC served as advisers on the sale.
Meanwhile, Fisher said, there has been no noticeable impact on the Lafayette St. store’s business from the demise of the Trader Joe’s Wine Shop.
“Astor was a big enough and strong enough store that we didn’t need to see a competitor go out of business,” he said.