Canada, AB: Changes in Alberta’s legislation make craft brewery business thrive

Thanks to two landmark changes in Alberta’s legislation, along with a powerful — and growing — appetite for local food and drink, the craft brewery business in Wild Rose Country is in full bloom, Edmonton Journal reported on September 16.

In less than three years, the number of craft breweries and small brewpubs (defined as brewers producing less than 300,000 hectolitres per year) has almost quadrupled, going from 14 to 52.

According to the Alberta Gaming and Liquor Commission, there are another eight craft brewery licences pending. And according to some industry observers, things could double again within five years.

Alberta Small Brewers Association executive director Terry Rock is convinced microbreweries are the next big thing for Alberta’s economy and tourism.

“We’ve got the natural environment that people want to visit and you can start to connect the natural environment, our agriculture and the people that work here with this industry that makes a real neat package,” says Rock.

“Unlike other places, the barley is grown right next to the brewery.”

The upswing for Alberta’s craft brewery business really began in 2013 when the Alberta Gaming and Liquor Commission removed minimum production requirements.

Up until then, manufacturers had to produce a minimum capacity — 5,000 hectolitres a year for brewers, and 2,500 hectolitres a year for wineries and distilleries. The change meant that any fledgling brewer or distiller who was able to meet food safety standards could start a business, without having to meet a certain volume output on Day 1.

Dive into the craft beer scene and you’ll quickly realize that the varieties of business models, locations and sizes are as varied as the styles and flavours of beers being brewed.

Bent Stick Brewing is a small operation. Really small.

Located in a boxy stall in an industrial park in Edmonton’s Belvedere neighbourhood, Bent Stick has the capacity to produce just 400 hectolitres a year.

Its four owners — Scott Kendall, Kurtis Jensen, Patrick Gaudet and Ben Rix — all have day jobs and brew on the weekends. There are no brewery tours for visitors, and there is no tap room for sampling the product.

For Bent Stick, being small gives the brewery a chance to be flexible, dynamic, and to keep the focus on a rotation of unique beers.

“We just want to focus on quality not quantity, making the best beer we can and slowly grow and expand the business as opposed to a huge investment initially where you don’t know if you are going to have that support right away,” Kendall says.

The four met while working at Alley Kat Brewing Company, considered by many to be the grandfather of craft brewing in Edmonton. They bonded over their love of craft beer.

They decided to break out on their own and, in just under 18 months, had drawn up a business plan, secured financing, located a production facility, applied for federal and provincial licences, sourced and installed equipment and started brewing their small batch beers.

Over the Canada Day long weekend, they offered two of their beers — Swap the Hops and Brick is Red — for sale through the south Edmonton Keg n Cork retail outlet on 99th Street. They sold out.

None of the team had a huge bankroll going into the project, so they had to be smart about how they deployed their limited resources and do it in such a way they could grow at a pace they were comfortable with.

“We want to make the beers we want to make, as opposed to making a beer because it sells a lot. We want to make beers and share those with people who are going to appreciate them,” Kendall says.

Bent Stick is the newest addition to craft beer market, but that term is relative.

Considering the explosion in Alberta’s craft beer market, soon enough it will be considered a veteran.

It’s not too often you find an industry singing the praises of government, but the fresh crop of sudsy start-ups wouldn’t be here had it not been for the 2013 policy change that removed a minimum production-capacity requirement of 5,000 hectolitres per year.

But as it turns out, that was only one of the factors that have brightened the business world for small brewers.

In July, Alberta’s still-new NDP government made two significant moves.

First, it announced it would be setting a $1.25 per litre markup for beer sold in Alberta regardless of the producer’s size or location. This eliminated the sliding markup scale that had some of the smallest players paying just 10 cents a litre.

Small brewers were concerned, but the government also pledged that help would be on the way.

About two weeks later, they made good on their promise, announcing a $20-million-a-year grant program that returns a significant portion of that money back to small Albertan operators.

Even municipal governments are getting into the act.

Calgary, for instance, introduced a new bylaw that amends zoning rules, making it easier for craft brewers to establish production facilities and brew pubs in more populated commercial areas. Edmonton is looking at making similar changes.

But the real boon for the industry has been the marked change in consumer attitude towards the local food movement.

Beer writer Jason Foster says a decade ago, the instinctive reaction among Albertan consumers was that local was sub-standard. That mentality has shifted.

“We’ve hit a cultural critical mass in Alberta,” Foster says. “The local food movement has finally caught momentum … and with that then comes the push for local beer.

“The whole vision of what a craft brewery is, is shifting. The people who are opening their places now are very much seeing themselves as small local markets.”

And there’s plenty of room to grow.

Depending on who you ask, craft beer makes up about two to five per cent of beer sales in Alberta. Comparatively, in British Columbia the number is closer to 25 per cent. And in Portland, Ore. — considered by many as the holy land of hops — the majority of beer sold is craft beer.

Terry Rock, from the Alberta Small Brewers Association, says these factors will provide staying power for the province’s small brewery industry. He also envisions the growth of Alberta beer tourism, along the lines of the Okanagan wine industry.

“It’s undeniable that beer tourism is a force in North America and in Europe, so why can’t Alberta have a beer tourism industry?” he says.

“We have the best barley in the world. … We have enough of a natural advantage that I think the long term looks amazing to be a place that ties the local agriculture economy into the beer industry.”

Alberta is certainly following a national trend.

Across Canada, the number of all licensed breweries (not just craft breweries) has more than doubled over the past five years to 644 in 2015. The bulk of those are located in Ontario (200), Quebec (160) and British Columbia (120).

Like almost everyone in the burgeoning craft beer world, Wayne Sheridan was pulled down the sudsy rabbit hole via homebrewing.

He then faced the question that all home brewers at some point ask: How do I commercialize my hobby?

After toying with the idea of a small brewing operation, he decided to start Situation Brewing. The Whyte Avenue-area brewpub seats 90 in the restaurant and offers tours to tap into the same demographic now fixated on supporting local, unique eateries which source local and sustainable ingredients.

Half of the 2,500 hectolitres Situation produces each year is sold through the restaurant; the remainder is sold to other restaurants, pubs and liquor stores with growler refill stations.

“If it’s just about what’s in the glass, you can get as good a beer in five or 10 other places in Edmonton,” he says of his decision to open the brewpub.

“So the brewpub is interesting and novel because it’s about the process and the people, and not just about the product.”

He’s confident there’s room for more brewpubs, arguing that those enjoying craft beer aren’t likely to return to mass-produced beer from macro breweries.

“There won’t be an industry reversal opting for corporate chain food instead of locally sourced, will there?” he says. “There is an evolution culturally in our society to look at beer not just as an alcohol delivery device.”

The decision by Hans Doef and Dave Vanderplaat to remain in their hometown of Lacombe was as much to do with lifestyle choice (they both have young families) as their entrepreneurial spirit.

They partnered with Edmonton’s Matt Willerton, Kirk Zembal and Shane Groendahl to create Blindman Brewing, bringing their first ale to market from an industrial park on the outskirts of central Alberta community on Oct. 1 last year.

In the first year, they are expecting to produce 1,800 hectolitres to feed an unquenchable demand that keeps growing in part thanks to a front-of-house taproom and brewery tours.

“We wanted to have that healthy balance of space to allow people to come and taste our beers, but we mainly wanted to be a production brewery,” Doef says.

“The benefit of craft beer is that generally your customers are wanting that local aspect and it falls hand in hand with the local food movement and local industry in general.”

Blindman doesn’t just sell beer, it sells an experience and, like all the province’s craft beer players, it’s also benefiting the local economy by creating jobs and new supply chains as it sources local products which in turn benefits local farmers.

Jason Foster says the rural growth is exciting.

“I really think it’s a sign of a vibrant industry,” Foster says.

“It’s a sign that this growth is real and that it has hit critical mass of consumer interest.

“Craft is becoming mainstream.”

Red Deer’s Troubled Monk is proof that Alberta-made products can rival any on the international market.

Just down Highway 2 from Blindman Brewing in Lacombe, Troubled Monk is the product of avid home-brewing brothers Charlie and Graeme Bredo, who moved out of their garage to start a 3,000-hectolitre production facility.

They hired brewmaster Garret Haynes and assistant brewer Doug Ellertson, and they poured their first pint on June 12, 2015.

Not even a year later, in May 2016, they picked up a silver medal for their American-style brown ale at the World Beer Cup, an international competition held every two years featuring around 2,000 brewers from 55 countries.

They were the first Alberta brewer to win a World Beer Cup award in 20 years.

The win came as a surprise. Some locals liked it after launch, but it certainly wasn’t their best-seller. The win, however, boosted sales and reaffirmed the brothers’ decision to enter the market.

“People just weren’t familiar with the brown ale and it’s not the first thing they are going to ask for, but then they had a reason,” Charlie says.

Charlie thinks Albertans are ready for craft beer because they want local, and they want quality.

“A lot of these smaller communities are often skipped over for some of these cooler, trendy big city type things and so people often have to go to the big centres to get exposure,” he says.

When Neil Herbst started Alley Kat in 1994, Alberta didn’t really know what craft beer was and were hesitant to give it a try.

“They sorted of equated it to Uncle Joe’s homemade beer so a lot of people assumed we must have been doing it in our basement,” he says.

Those days are long gone.

“People are very supportive of local,” he says, “but it’ll be up to Alberta breweries to ensure that they are producing world class beers.”

18 September, 2016