Craft brewers look to new avenues
Breweries want province to loosen sale restrictions
Five years ago, Oshawa brothers Jeff and Eric Dornan were making beer on contract at an established brewery because they couldn’t afford to open their own.
Now, they’re turning a vacant Beer Store in their hometown into the new location of their All Or Nothing Brewhouse, likely in April, with an expected staff of about 17.
As General Motors prepares to close its nearby assembly plant, “we’re part of the economic revival of south Oshawa,” says Jeff Dornan, who is also chair of the Ontario Craft Brewers Association.
The association is keen on new opportunities for brewers as Premier Doug Ford’s Progressive Conservative government reviews the rules governing beverage alcohol sales. The association says craft beer sales are about 8 per cent of the total beer market in Ontario and have been growing by about 20 per cent annually.
Finance Minister Vic Fedeli is considering the next steps after six weeks of taking ideas from the public on a website following a promise to “improve customer convenience and choice, and enable more opportunities for businesses.”
Aspokesperson for Fedeli said the government received more than 33,000 responses through the consultations. “We are currently reviewing the responses, which will help inform our plan to expand the sale of beverage alcohol into corner, grocery and big box stores,” Robert Gibson said.
With Ford keen to cut red tape, the craft beer association says a few changes to existing rules would go a long way to creating more jobs by fostering success stories like the Dornan brothers.
Top on the association’s list is allowing Ontario’s almost 300 craft breweries to open more than two retail stores and letting brewers — particularly small ones needing more exposure to customers — to sell growlers or six-packs at farmers markets.
“Ontario wineries are allowed to do it but we’re not,” says Dornan, who would also like to see Ontario-made craft beer sold at street and cultural festivals in growlers or six-packs.
That would help small brewers, particularly ones who brew on contract and are limited to selling draft beer to pubs because they don’t have storefronts, get face time with customers and build their businesses to the point where they can open their own breweries.
Scott Simmons, president of the craft beer association and a former Beer Store executive, says the Ford government’s review means “we finally have an opportunity to build a retail system that makes it easier to find more locally made craft beer on more local shelves.”
Since the Liberal government decided in 2015 to allow 450 supermarkets to sell beer, wine and cider, craft beer market share in grocery aisles has doubled to about 20 per cent, compared with just 2 per cent of sales in Beer Store outlets, Simmons adds.
He credits the success to the fact that customers can see the beers on supermarket shelves, while the displays are not as prominent in the Beer Store.
“Craft is an interesting segment of the industry where a lot of the smaller craft brewers don’t have the brand recognition some of the larger brewers do and rely on people actually seeing the product,” Simmons says.
There are questions, however, about how many more supermarkets could sell beverage alcohol, given an agreement on the 450 stores is in place until 2025 and could result in penalties on the government if it’s broken, Simmons notes.
The smallest brewers have the most to gain from easier access to customers, says Simmons, given many can’t afford the fees to get their products into the LCBO or Beer Stores.
Many contract brewers, for example, who rent time and space at established breweries, have no point-of-sale contact with beer lovers unless they promote their suds at beer festivals or mingle with customers in pubs selling their brews on draft.
“Would I have welcomed the chance to sell my beer more easily and in more ways? Abso- lutely,” says Victor North, an instructor in the beer program at Niagara College whose company Garden Brewers of Hamilton folded in the summer of 2016. “Would it have helped my company survive? I would like to think so.” North, who hoped to make enough money to get financing and open his own brick-andmortar brewery so he could sell beer to customers coming in the front door, cited the slim margins for contract brewers.
“We simply didn’t have the money to chase this dream, but we wanted to chase it anyway, so contract brewing was the method we picked to jam our foot into the door,” he wrote in a blog post.
“It’s not something that is sustainable for very long. You either open the door, or it gets painful pretty darn fast! The idea, typically, is to move past contract brewing — and do so quickly — before you lose your shirt! (or foot!).”
Craft breweries employ more than 11,000 people in Ontario, with at least 2,200 working full time and another 9,000 working part time or seasonal, Simmons says.