It’s an unprecedented time for beer in British Columbia.
With no end in sight to new breweries opening, the province looks set to become home to more than 100 beer producers by the end of 2015.
As craft beer keeps growing and diversifying, it keeps eating into the profits of the largest beer companies. As of last December, the province’s smaller breweries were enjoying a 22-per-cent cut of B.C.’s beer sales — up from about nine per cent in 2009 — according to B.C. Liquor Distribution Branch figures.
There’s never been a greater variety of beer on B.C.’s liquor-store shelves. And our apparently unquenchable thirst for craft beer often has breweries struggling to keep up with demand.
Many breweries that have opened in the past few years have needed to order new brewing tanks within weeks of opening. Some of them have found themselves among the biggest in B.C. within just a few years.
Traditionally associated with the small, neighbourhood model, craft breweries are now becoming beer behemoths, capable of producing millions of litres every year.
There are many obstacles involved in opening a brewery from scratch — the huge financial outlay and navigating bureaucracy being just two of the biggest — but those that have succeeded and grown are now facing different challenges.
Anatomies of growth
Growth in itself is a challenge that breweries address in different ways.
“It seems like our demand has always been exceeding our capacity,” says Gary Lindsay, co-owner of Driftwood Brewery, which opened in Victoria in 2008.
“Every time we add more tanks or more volume, it just seems to get gobbled up. We’re never sitting on inventory wondering where we’re going to sell it.”
Driftwood has recently undergone its biggest expansion to date, installing an automated packaging line and new tanks that should see its production double.
In its first full year, Driftwood produced between 1,800 and 2,000 hecto-litres of beer, Lindsay says. This year it’s set to exceed 16,000 hl — that’s 1.6 million litres.
With such a hectic pace of growth, it’s particularly crucial to keep tabs on the quality of the end product.
“That’s a big challenge, maintaining consistency and quality through all the changes in expansion,” says Lindsay.
Lindsay says that Driftwood has kept a check on its growth by restricting itself to selling its beer in B.C. alone. “We’ve limited ourselves to this market, so there is definitely a ceiling there,” he says.
For some other breweries, particularly ones that have been around a bit longer, growth has been more of a gradual, organic process.
Matt Phillips opened his eponymous brewery in Victoria in 2001. After moving to a downtown location in 2004, he gradually took over the leases of neighbouring properties as demand for his beer grew.
Phillips Brewing Company now occupies most of a city block and has become the sixth largest brewery in B.C., according to a list of the province’s biggest breweries and beer distributors published in February by Business In Vancouver magazine.
As a rough estimate of how his business has grown, Phillips says that on a good day his brewery makes the same amount of beer that he made during his first entire year of operation.
By contrast, Central City Brewing Company decided on a bold leap of growth after it maxed out its capacity at its Surrey brewpub.
With financial help from the City of Surrey, Central City built a $20-million, state-of-the-art, 65,000-sq.-ft. custom brewery and distillery near the Fraser River.
The rebranded Central City Brewers + Distillers opened in late 2013, around the company’s 10th anniversary. The brewery’s growth since has been staggering, with sales quadrupling in 2014. It’s on course to double them again this year, says president and founder Darryll Frost.
An additional $5 million worth of equipment, including a dozen fermenters, has been installed since the new facility opened.
“We could go faster, believe it or not, but we’re not going to,” Frost says of the company’s five-year plan.
A custom-built facility is the goal many breweries are working toward. Lindsay can see Driftwood moving to its own space at some point in the future. “The ultimate dream would be to build your own from scratch and design the whole operation around your ideas and what you’ve learned,” he says.
The problem with ‘craft’
As craft breweries keep growing, they face a rather more abstract challenge: the fact that size matters to some people. It all comes down to the elusive meaning of that slippery word “craft.”
Beyond describing a fermented beverage made purely of natural ingredients, the term “craft beer” is nigh-impossible to pin down. Many in the industry have given up trying to define it, and say it simply comes down to a gut reaction.
Nevertheless, the Brewers Association in the U.S. has boiled down a three-point manifesto on what defines a craft brewery: “small,” “independent” and “traditional.” Perhaps tellingly, it’s had to revise its definition of “small” several times to keep the largest of the large U.S. craft breweries in its fold.
“Big” is still equated with “bad” in many beer drinkers’ minds. “Big” has natural connections with global beer corporations such as AB-InBev and MillerCoors, whose products, most agree, are as far from handcrafted, artisanal beer as it’s possible to get. For that reason, some of B.C.’s bigger craft breweries are hesitant to release their production volumes for fear of a drinkers’ backlash.
At the same time, many say it’s nonsense to equate size with quality, particularly when referring to B.C. breweries that, on the global scale, are tiny. They point to those U.S. breweries that are still regarded as craft: huge operations such as Lagunitas, New Belgium, Sierra Nevada and Stone.
“They’re massive brewers compared to Canadian brewers,” says Ken Beattie, president of the B.C. Craft Brewers Guild. “Somehow we embrace that across the border but some people disdain that locally.
“If you’re a true craft enthusiast, you need to get your mind around the fact that size is irrelevant to the brewery.”
Lindsay sees California’s Sierra Nevada Brewing Company as a great example of how to grow and maintain credibility and integrity.
“I consider them a craft brewery by the way they brew their beer and the authenticity behind their styles ... It’s independently owned, the brewers and owners are involved in the business every day and there’s a real connection to the community in which they brew their beer, just like the local baker.”
Diversify and conquer
One reason for the success of these growing breweries is their constant desire to innovate.
It’s crucial for breweries to keep offering customers something new and to stay relevant, otherwise their product might turn into “your dad’s beer,” says Beattie.
“To be successful the bigger breweries have to innovate and create, whether it be through seasonals or one-off releases. But they have to keep that interest going.”
Howe Sound Brewing Company has a roster of 34 different beers that it brews each year, says co-owner Leslie Fenn, many of which are limited-release seasonal offerings.
This creative streak is partly due to Howe Sound’s origins as a brewpub in Squamish in 1996, when such premises weren’t allowed to package and sell their product. Nevertheless, it offered the perfect testing ground for new recipes, Fenn says.
“I think if people retain the artistic profile and that interest — so that they’re not making three, four or five beers and then just growing those products — then they keep the artisan in craft brewing ... It was important to us never to lose that,” says Fenn, who founded Howe Sound with her brother Dave.
Howe Sound began the path to growth when the brewpub restrictions were lifted at the start of the millennium. It really began gaining traction when some of its products became listed by the B.C. LDB in 2007, meaning that its beer found a place on government liquor-store shelves across the province.
Up to that point, Howe Sound was producing around 3,000 litres of beer a month at the brewpub. “We thought that was big news,” says Fenn.
That figure has now soared to 170,000 litres a month.
Some breweries have diversified into distillation, offering spirits such as whisky, gin and vodka, while others have started producing sodas. These two options offer brand exposure in different sectors and provide an additional revenue stream.
“Most people don’t know that spirits is one more step past beer. Whisky is beer first,” says Frost, who says his favourite room in Central City’s new facility is the one containing 400 barrels of maturing whisky.
“Think of the capital expenditure that’s required to make a brewery. Just add one more step and you’ve got a distillery. It makes all the sense in the world to become a distillery as well.”
Phillips has been taking its creativity in other directions. A big push toward reducing its carbon footprint — including designing its own CO2 reclamation system — led to the brewery being recently named green company of the year by Drinks Business magazine.
The brewery is also in the process of becoming the first in B.C. to malt its own barley sourced from local farmers, and is employing a maltster to oversee the creation of proprietary grains.
Meanwhile, both Central City and Howe Sound are taking advantage of the province’s recent relaxation of rules that restricted breweries from owning off-site pubs, to open up new tap rooms in downtown Vancouver.
Central City will be opening its second brewpub in the summer on Beatty Street — coincidentally, two blocks south from where Howe Sound opened its Devil’s Elbow Ale and Smoke House late last year.
Some breweries are looking further afield as well, shipping their product across Canada and even to some states. Exports are likely to become even more common as shelf space in B.C.’s beer market becomes increasingly competitive, Beattie says.
Amid all this export, expansion, hustle and bustle, there is a risk of the brewery’s original identity being lost. Brewery owners warn about priorities shifting as the business grows.
“One of the things we’ve really been conscious of is trying to maintain our identity as we grow and ... maintain the focus on being about beer,” Phillips says.
“When you start with one person or five people and you really know who you are and what you’re doing, you just want to retain that.”
“Big companies are generally run by the finance department,” Beattie says. “Whereas big craft companies are run by their owner and he started as a small guy.”
