E-Malt.com News article: Canada: Ottawa’s booming craft brew industry faces challenges of an ever-changing market

Ottawa’s burgeoning craft beer industry can’t afford to rest on its laurels if it hopes to thrive in an age of foreign competition and falling overall consumption, Paul Meek, the co-owner of the city’s largest brewery said on September 17.

“This is still a very, very young industry and I still think a very fragile industry,” Kichesippi Beer Co.’s founder Paul Meek told an audience of businesspeople during a presentation at the Sheraton Ottawa. “The reality is that it’s not as easy as it looks.”

The number of breweries in the region has jumped from two when Kichesippi Beer Co. was launched in 2010 to 15 today, mirroring a national trend. There were 520 breweries in Canada last year, up from just 90 in 2004.

Overall beer sales, however, have remained flat over the past decade. Meanwhile, foreign brews keep gaining in market share, from less than five per cent in 1994 to 14 per cent in 2014.

In contrast, craft brewers still account for less than five per cent of overall sales in the province.

“What’s great to see is all those numbers (of local breweries) are growing,” Meek said. “What’s great is there’s a lot more selection. The problem is that we’re just diluting it. As much as things are going in the right direction and things are going good, our customers are still telling us that we’re not always their first choice.”

Still, the craft beer business has made huge gains, with sales in Ontario soaring to more than C$50 million in 2014 from C$11.8 million in 2009. “Ottawa was “definitely behind the times” early in that trend,” Meek said, “But has made great headway in recent years.”

“I think Ottawa has definitely caught up and has got a strong presence in the beer industry,” Meek said, crediting Beau’s All Natural Brewing Co. of Vankleek Hill for triggering the wave of locally brewed suds with its hugely successful debut in 2006.

But Meek said "as frothy as the beer business might look to outsiders, it is laden with pitfalls for brewers who don’t do their homework.”

“This is a sexy industry,” Meek said. “It’s a fun industry. What happens is people wanting to come into the game, they look and they go, ‘Hey, when I see you guys, you’re at a trade show, you’re at a restaurant, you’re having a beer. This looks like fun.’ They don’t see supply issues, they don’t see the taxation issues and they don’t see the wastewater issues – all those things that are not the sexy part of it. As the industry continues to grow, we need to make sure that those people coming in are educated enough to keep the industry strong.”

With sales of 500,000 litres a year, Kichesippi Beer Co. has become one of the local industry’s biggest success stories. Many others have followed suit to strong reviews and growing revenues, including Beyond the Pale, Big Rig and Broadhead.

But with new players entering the game seemingly every few months, Meek said it’s not unfair to wonder if the local craft brew scene has hit its saturation point.

Noting he has heard some pubs complaining about product inconsistencies, Meek said he worries a rush to enter the market might lead some upstarts to churn out brews of inferior quality that could turn off potential craft beer fans.

“My biggest concern – and this is something that keeps me up at night – is that this becomes a trend,” Meek said. “Competition is a good thing, but we need to make sure that those coming into the game continue to make good product.”

Even then, just brewing a quality beer isn’t enough, Meek added.

“There are so many things going against you,” Meek told the crowd. “It’s a very highly regulated industry. You have to have a good balance, like any business. You need to have a good product, but can you bring it to market in an efficient manner?”

Meek called on the Beer Store to help “grow the pie chart” by allowing craft brewers to showcase their products through means such as sample taps and special tastings.

Kichesippi Beer Co.is set to start selling its Heller High Water and 1855 brands in tall cans at the Beer Store on a trial basis with no listing fees. Meek said the retail chain’s move to make it easier for microbreweries to get beer on its shelves is a good first step, but doesn’t go far enough.

“They know they’re on notice,” he said of the province’s main beer vendor, which is owned and operated by Denver’s Molson Coors Brewing Co., Anheuser-Busch InBev Brewing Co. and Sapporo Breweries.

“The matter is, the Beer Store needs to stop looking at things in terms of how many two-fours of Labatt, Molson and Sleeman we can sell versus how we can take care of our customers and get more people at the door. I think it’s a good thing that the Beer Store is changing, but I don’t think it’s even close to where it needs to be.”


18 September, 2015