Company tests brewer-for-hire model
Waterloo brewery grows beyond craft roots to become go-to producer
Waterloo Brewing Ltd. has spent eight years and $85 million expanding its facilities, all so it can make booze for someone else.
The Ontario-based company, which got its start making craft lagers 40 years ago, wants to be the go-to producer for global brands selling everything from hard seltzers to canned cocktails in Canada. In the next two years, it plans to more than double the volume of beverages it’s producing for other brands — known in the industry as co-packing — to 650,000 hectolitres from around 300,000 hectolitres this year.
Its craft brew business is still growing — Waterloo’s namesake brands posted volume growth of 25 per cent in its most recent quarter — but even those gains can’t keep pace with the demand the company is seeing from global conglomerates, like Pernod Ricard SA and Carlsberg AS. Seeking to expand the reach of the beverage brands they’ve snapped up in recent years, these ever-growing giants are also looking for ways to trim costs.
At the other end of the scale, Waterloo is getting an additional boost from new hard seltzer companies and other beverage startups, keen to focus on marketing and leave production to someone else.
“Our owned brand volumes continue to grow, but the exponential growth is in our co-pack business,” chief executive officer George Croft said in an interview.
It’s a major transformation for a company that barely had a toehold in the co-packing business when Croft came aboard 12 years ago. (His previous employer, Canada’s storied Labatt Brewing, is now owned by much larger Belgian beverage giant Anheuser-busch Inbev SA.)
Founded in 1984, Waterloo Brewing claims to be the first craft brewery in Ontario. Originally called Brick Brewing, after founder Jim Brickman, it was renamed last year in homage to the Ontario region where it’s based.
Waterloo produces a stable of traditional craft-beer styles, including a golden lager, an India pale ale, as well as dark and amber lagers that for close to forty years have been the choice of customers who wanted bolder flavors than those provided by mass-produced brews.
Since Croft came aboard, it has expanded beyond beer with the purchase of the Canadian rights to Seagram coolers, as well as the Landshark and Margaritaville brands. It also has co-packing deals to manufacture Absolut Vodka’s canned cocktails, Somersby ciders and Mott’s Clamato beverages, along with nine other undisclosed brands, in Canada.
While it’s difficult to find hard figures, co-packing has become increasingly common for large beverage companies that want to quickly capitalize on hot new drinks trends and keep their costs low, said Kenneth Shea, an analyst at Bloomberg Intelligence.