CRAFT CIDER
The next bumper crop for Ontario’s beverage sector
THE GROWING THIRST for craft cider in Ontario is adding up to some sweet sales numbers, with several Hamilton producers poised to cash in.
This fermented apple drink may not be new — history says it was the first alcoholic beverage produced and consumed in North America — but in recent years, its popularity has skyrocketed.
LCBO sales of locally produced craft cider increased 54 per cent to $5.1 million in 2015-16, according to the provincial agency’s recently released financial results.
Over the past three years, Ontario cider sales more than quadrupled, totalling $17.6 million in 2015-16.
This represents only a portion of the beverage consumed in Ontario, as many local cider producers opt not to sell their product in LCBO stores because of the markup (something they’re lobbying to have changed).
In the Hamilton area, there are four producers who are members of the Ontario Craft Cider Association.
The potential for Ontario’s craft cider industry and the impact it could have on the provincial economy is “monstrous,” said association chair Thomas Wilson.
“Cider right now is basically firstthrough-the-gate wins,” said Wilson, who is the owner and cider maker at Spirit Tree Cidery in Caledon. “The opportunity is huge.”
Part of cider’s appeal is its gluten-free recipe and status as a happy medium between beer and wine.
It’s also perceived as a new drink, despite its historical roots, Wilson added.
The association, which has more than 20 members, started lobbying the provincial government’s finance committee in January 2015 to discuss key issues for the industry. Two top concerns: getting cider into grocery stores, for which the government approved a regulation last winter; and getting the beverage recognized as a craft-beer-like product — the way many of its millennial drinkers view it. This would include benefits such as investment from the province and looser regulations around retail stores on site.
Starting in June, cider sales began at 60 grocery stores across the province already permitted to sell beer. Loblaws stocks 25 ciders, 20 of them from Ontario, company senior vice-president Greg Ramier recently told the Toronto Star.
The beverage is also a popular seller at some local restaurants.
Ronn Mattai, owner of Mattson & Co. on Locke Street South, said he started carrying West Avenue Cider this summer.
“We had such demand for it, we brought it in,” he said, noting he sold 24 bottles of the Heritage Dry in its second week.
That said, while it’s still early days for cider at his restaurant, Mattai said he doesn’t anticipate his cider sales will ever compare with those of beer.
Server Mallorie Edward, who has her Prud’homme Beer Certification and works at Brux House, also doesn’t see cider being on the same trajectory as craft beer. But there are enough patrons looking for the beverage to warrant having between one and three taps out of 16 dedicated to cider.
Demand has been “pretty consistent,” she added.
According to 2014 numbers from trade association Ontario Craft Brewers, the broader economic impact of small breweries was an estimated $600 million annually.
Ontario craft cider sales are projected to hit $35 million by 2018, with cideries squeezing out $2 million in tax revenue for the province, the craft cider association says. Total payroll, including benefits, is expected to total $12 million for the cider industry and its suppliers by then.
The markup structure on cider is a big hurdle, Wilson said. “Right now we’re handicapped by a 30 per cent margin difference between wines, craft beer and us. We’re literally working for nothing.”
Part of the problem is that cider producers are licensed as wineries, so they can’t get the break on markups available to producers of craft beer. And because cider is not made from grapes, producers also can’t benefit from the VQA program for wines.
This means Ontario craft cider makers must pay the full markup to the LCBO, which can be as much as 55 per cent, according to the LCBO’s website.
“The minute this markup changes, it’s going to be crazy,” said Wilson. “It’s going to be a real entrepreneurs’ environment.
“Everyone’s going to be jumping in to try to make these products.”
With that come concerns about whether Ontario’s apple industry will be able to keep up with the demand for juice-grade products — something the craft cider association is already working on with growers.
There aren’t enough Ontario-grown cider apples (they have higher tannin levels than eating apples) because the previous cider industry had long disappeared, so many growers need to learn how to produce these varieties.
To help with this, the provincial and federal governments have provided the craft cider association with $222,000 to study how well 29 types of European apple varieties will grow in Ontario.
If the apple supply problem can be sorted out, along with the markup enhancements and the creation of a provincial government marketing fund similar to the one helping craft beer and VQA producers, Wilson thinks the industry could surge.
This would bring money into the provincial economy and spur job growth in rural Ontario, something targeted by Premier Kathleen Wynne in her mandate letter to Jeff Leal, the Minister of Agriculture, Food and Rural Affairs, Wilson said.
“We could be the poster child for that.”