Buoyed by growing consumer demand for premium beers and the popularity of the local food movement, Ontario’s craft breweries are enjoying a surge of commercial success.
Their year-over-year sales at the LCBO were up almost 55 per cent between April and November, according to the provincial liquor retailer, and that doesn’t include pints poured at restaurants and bars across the province.
“The multinational (brewers play it) very safe, very mainstream,” says Paige Cutland, co-owner of Hogsback Brewing Co., which first brought its beer to market in April.
“I think there is a backlash – or at least I hope there is – to this type of brewing.”
On the advice of former Sleeman Brewery and Brick Brewing Co. president Doug Berchtold, Mr. Cutland and his business partners scrapped plans to immediately build their own brewery, which was estimated to cost roughly $1 million.
Instead, they contracted their brewing to Toronto-based Cool Beer, allowing them to conserve capital and learn the sales and marketing side of the business.
It’s the same strategy used by Kichesippi Beer Co., which also sold its first keg in April. The company currently contracts its production to Ottawa’s Heritage Brewing, but Kichesippi co-owner Paul Meek says his firm will have its own brewing facility in roughly six months.
Heritage Brewing went the bricks-and-mortar route when it launched in 2000.
After finally clearing zoning hurdles, the company spent months applying for regulatory licences, manufacturing permits and LCBO approvals, recalls Heritage president and managing director Ron Moir.
“We were burning through money for 16 months,” he says, estimating the startup costs to be around $600,000.
“It’s why you see Kichesippi, Hogsback and others going the beer-contractor route.”
Since 2002, more than a half-dozen breweries have either been constructed or expanded across the province, including well-known eastern Ontario pint producer Beau’s All Natural Brewing Co., based in Vankleek Hill.
Mr. Moir says Heritage was “adventuresome” in the bitterness and malt content of its beer and was “ahead of the curve” in Ottawa’s acceptance of non-mainstream beers.
As a result, the company sustained losses for a “significant” period before things turned around.
“We’re enjoying commercial success now in part because (consumers’) tastes have changed, not because the beer we’re producing is any different from 10 years ago,” says Mr. Moir.
“There is more acceptance of beer with flavour, and there are more people looking for what’s local.”
Nevertheless, microbreweries still face challenges building brand awareness with a limited marketing budget.
After securing an account with a restaurant, Kichesippi’s Mr. Meek says he spends time educating the secondary sales force, helping chefs and servers pair his pale ale with certain dishes.
In an attempt to move beyond kegs and into bottles, both Kichesippi and Hogsback say they hope to soon secure product approval from the LCBO’s head office, which will allow them to start selling their product to individual stores, where they’ll be aided by special in-store displays and marketing promoting Ontario craft beers.
They say they’ll later go after a listing in The Beer Store, which is owned by three multinational brewers and predictably doesn’t have the same interest in promoting new products.
Mr. Meek says he wants to reestablish the concept of a truly regional brewery and that Kichesippi will only ever be available in the National Capital Region.
Hogsback will focus its growth in the Ottawa area in the foreseeable future, focusing on hundreds of untapped local establishments, says Mr. Cutland.
Heritage has been sold outside Ottawa in the past, but is launching a four-month program with the LCBO to sell its bottles in 30 stores in and around the GTA, with the intent of assessing the market and deciding on further expansion.
“With the growth of craft beers, it makes sense to invest in taking the beer to Toronto,” says Mr. Moir.
“People will come and buy things that are a little different.”