LET’S DRINK TO THAT
Small producers eye growth
Saskatchewan has a thirst.
And increasingly residents reach for something local to quench it, but that demand for homegrown booze hasn’t always existed. Neither have the producers that supply it.
Back in 2001, the province had only one dedicated brewery, one cottage winery, and handful of taverns brewing their own beer.
Now, some 17 years on, the province is home to 58 businesses licensed to produce alcohol, including 13 microbreweries, 13 small distilleries and nine cottage wineries. One larger brewery and small brew pubs account for the rest.
As Saskatchewan’s craft market continues to grow, producers are busy strategizing. Contemplating packaging, distribution, a target market or a whole new concept, each business takes its own approach to carving out a market share.
Glen Valgardson sees canning his beer going a long way to solving a number of issues his brewing company faces. However, after investing in canning equipment, he experienced a minor hiccup.
“We were going to run our first batch off (last) week, but our air compressor actually exploded,” he said with a slight chuckle during an interview.
Whether or not his beer hits parched gullets is largely up to bar owners. They decide if a keg of Pile O’ Bones ends up beneath a tap. Valgardson believes canned beer will give his products more exposure.
“I can just unload a pallet at a time, and they’re happy to sell it,” he said of liquor stores with whom he plans to do business.
There’s also another upside to putting beer in retail outlets.
“How do I get it at home?” customers ask him, because they’re “terrified of drinking and driving.”
Thus, the canned beer is somewhat of a reactionary measure to the tightening of Saskatchewan’s impaired driving laws, he said.
Once his air compressor is chugging away and cans rolling off the line, they’ll be sold and delivered independently, and only to private stores.
This is an option given to small craft alcohol distributors by the Saskatchewan Liquor and Gaming Authority (SLGA), which operates a wholesale warehouse and its own retail stores.
“You can quote me on this,” he said, before raising his tone. “I will never sell to SLGA, as long as they refuse to refrigerate product,” he continued, noting that his beer, which he and his partners have been producing commercially for just over a year, is unpasteurized.
“Would you keep milk warm?” he asked, adding that many private stores are willing to refrigerate products.
While Valgardson takes an admittedly “hard stance,” not all Saskatchewan brewers feel the sameway.
In Swift Current, Black Bridge Brewery has canned its beer since operations began in 2014. While it self-distributes some of its beer, it also goes through SLGA. Co-owner Kari Stenson says the Crown corporation’s unrefrigerated storage isn’t ideal, but it’s not the end of the world.
“It’s getting a lot better with movement of product,” she said, meaning as demand grows for craft beer, some product isn’t sitting as long in the warehouse.
“We actually can keep our prices lower if we’re not self-distributing because of the delivery costs.”
All Black Bridge must do to stay available to stores across the province is make continued bulk deliveries to the SLGA warehouse, and the cost of doing business with the Crown is only “pennies” per can for breweries, Stenson said.
“We’re able to get our products to a lot more people’s hands that way.”
The SLGA markup for beer made by small brewers (less than 200,000 hectolitres annually) ranges from roughly 43 cents to 80 cents per litre, depending on the quantity produced.
Its cost of service depends on how many units are packaged in a case. On a four-pack of Black Bridge cans, for instance, the Crown would levy a 57-cent charge. However, Stenson says Black Bridge is priced the same to retailers whether it comes through SLGA or directly from the brewery.
Black Bridge also sells into Alberta and Manitoba, and Stenson says growth is on target.
“We don’t want to grow too fast,” she added, noting her business doesn’t have plans to expand beyond the production threshold that allows them the freedom of a small brewer.
Of course, beer isn’t the only local drink wetting Saskatchewan whistles.
Last Mountain Distillery has produced hard liquors since 2010, including vodka rum and whisky, some of which are offered through SLGA. Production manager Braeden Raiwet says while the Crown helps with distribution, when it comes to spirits, it doesn’t help profit margins.
SLGA’s markup on spirits is substantial, he said, so Last Mountain has to consider how to price products so they’re still affordable for customers. That cuts into the company’s profits.
“You’ve got to really take into account, are we still making enough to make it worthwhile?”
While domestic wine, spirits and coolers are exempt from a service charge, markup rates on spirits for small producers (less than 200,000 litres annually) ranges from 73 per cent to 119 per cent per bottle, depending on quantity produced.
The company hopes by using the Crown’s distribution to get its name out there, people will begin to purchase from private stores or their Lumsden storefront, where margins are better.
While craft beer producers create some unique products, Raiwet says small Saskatchewan distillers must work harder to set themselves apart by having exclusive products.
Last Mountain’s Dill Pickle vodka (listed by SLGA) is the company’s original workhorse product, ingredients for which come from farms around Lumsden. However, lately they ’ve focused attention on developing whiskies, which Raiwet hopes will continue to set them apart as they come of age.
“We do have regulations where whisky has to be aged for three years, in a barrel, versus say something like a vodka — you can distil it and you’re good to go.”
While whisky might be a bit of a waiting game, winemaking can test patience even further, according to Susan Echlin, part owner of Living Sky Winery. Especially when you see the process through from the ground up.
“We planted our orchard in 2005, specifically for the winery, and then we released our first bottle in 2010,” she said. “It takes that long to get any fruit in this province.”
Growing conditions for wine inputs have been getting even worse lately, she said, pointing at volatile fluctuations in the weather.
Still, she refers to Saskatchewan as “one of the best provinces to make craft alcohol in,” in terms of taxes and regulations, which she said have changed drastically for the better since Living Sky got started.
“It’s more common sense and more supportive of industry.”
While SLGA regulations offer incentives to all small craft alcohol producers, Saskatchewan people definitely have their favourites, Echlin noted.
“We drink less wine here, period, than any other province. We’re very much a beer and rye culture,” she said.
Further, she said Saskatchewan wine hasn’t always had the best reputation.
“You know what I mean? Those stories that everyone has.
“Oh, grandpa made rhubarb wine in his bathtub and I drank it when I was 14,” she joked.
Perhaps, because of preconceptions and in spite of tough growing conditions, Living Sky sells out of province in both Manitoba and Alberta.
And the company, literally rooted in Saskatchewan, is looking at markets event further afield.
“Especially in China, there’s pretty much a huge demand for anything Canadian,” she said. Comparing the size of the potential Chinese drinking population to that of Saskatchewan, she couldn’t help but laugh.
So the province’s craft alcohol cup, once empty, now runneth over. And what Saskatchewan residents don’t put down the hatch may soon be making its way well beyond provincial borders.