Craft breweries are changing the way we drink. In the last decade, the increasing interest in craft beer has gained worldwide traction. Consumers are looking toward local small-batch breweries to quench their thirst for good quality beer.
The number of craft breweries in Ontario—and even Canada for that matter—is at an all-time peak. There were more than 1,100 craft breweries in Canada in 2019.
But are people drinking more craft beer?
“Beer consumption in aggregate is declining,” says Larry Plummer, associate professor of entrepreneurship at the Ivey School of Business, who studies the North American craft beer market. People are actually drinking less beer than before, yet new craft breweries are constantly opening, he says.
On average, people now “live within a 10 mile radius from a brewery,” says Plummer. We have reached what he likes to call “peak beer,” where the market is fully saturated and new brewery entrants are forced to be competitive.
In the near future, “the concern would be that there’s probably way more breweries nationwide than the market can totally support,” says Plummer. “If beer consumption in aggregate continues to drop, I think you’re going to see a shakeout,” he says.
Peak beer
In London, craft breweries such as the London Brewing Co-op are still in the growth phase, says Aaron Lawrence, the head brewmaster at London Brewing.
The most important thing for standing out amongst the other breweries is “making sure that people understand the value of the product that we’re offering,” says Lawrence.
According to Plummer, many craft beer drinkers are those who have switched from drinking legacy brand beers. These individuals have a genuine interest in “drinking good beers, with good flavours, and higher quality ingredients,” he says.
For London Brewing, “quality” takes on different meaning than at large brewing facilities, where quality control focuses on ensuring consistency in taste.
“People are interested in a story,” says Lawrence.
“We do a lot of work to make sure that our beers are consistent, but the quality comes through in the sourcing of the ingredients—supporting local farms, supporting local agriculture, supporting local industry as well in the micro-malts,” he says. “About 40% of our grains come within 117 km of the brewery, which is significant and different. I think people gravitate toward that story.”
Many of the small-batch breweries in London have flourished within their own niches in the craft beer industry, says Sam Chard, the taproom manager at Anderson Craft Ales.
“We’re all competing in the same market…but there’s a major camaraderie between all of us,” says Chard of the other local breweries. “It ends up being a community within a community in a lot of different ways,” he says, and “it goes back to each of us having our own niche.”
The London Brewing Co-op
The London Brewing Co-op defines its niche with a focus on beer made from locally-grown and organic ingredients. They produced their first batch as an officially incorporated worker-owner operative in 2014.
Since then, they have operated democratically on a one-member, one-vote system where everyone has the right to partake in major decisions, says Lawrence, who is also the board of directors president.
“The value of supporting local and the value of supporting sustainability is baked into our business structure,” explains Lawrence.
Local ingredients
London Brewing is the first craft malt certified brewery in Canada, which means that they have committed to using at least 10 per cent craft malt in each of their beers, according to Lawrence.
Malt is a general term for types of malted barley used in the brewing process to add fermentable sugar to beer.
“Roughly about half an acre of grain goes into a batch of beer,” says Lawrence. Brewing with local barley helps to “showcase our commitment to supporting our local community,” he says.
Organic
The London Brewing Co-op recently became certified organic when it launched a line of beer made with organic ingredients. It is the second brewery in the province to do so, says Lawrence.
“There’s a long list of regulations that we have to abide by in order to be certified organic that lets the customer trust that the product they are drinking is natural and pure,” he says.
London Brewing’s sustainable practices are inspired by a commitment to their community and a dedication to making good quality product.
“You don’t have to feel bad about drinking beer,” says Lawrence. “You should feel good about it, especially if you’re drinking quality craft.”
Community outreach
The London Brewing Co-op also holds weekly events where all community members are welcome, says Jim MacDonald, the music curator at London Brewing.
“We definitely want to be a community hub,” he says. “We want to educate people on not just craft beer, but the idea that you can make craft beer while still engaging and working with your local farming community and those who live in the neighbourhood,” says MacDonald.
The brewery hosts weekly euchre games, music events, open mic nights and a range special programming.
“I think that having a unique format, whether it be what you’re brewing with, how you’re brewing, what you put on in your taproom, or how you reach out to your customers… Those are the unique difference between all of us breweries,” says MacDonald.
When it comes to the craft beer industry, says Larry Plummer, “we're not just dealing with standard economics of supply and demand.” Traditional economics don’t explain the behaviour he sees from suppliers and consumers.
“The kinds of beer you drink become part of who you are and how you express,” he says.
For a while, there was a trend amongst brewers to add extra hops to beer in effort to raise the beverage’s IBUs, or international bitterness units, says Plummer. IBUs are a scale used to measure how much hops you’ve put in a beer.
A regular bitter beer might contain 40 IBUs, but it became “somewhat like a competition as to who could make the bitterest beer—and so now you see IBUs in the 80 to one hundred range, which is crazy,” says Plummer.
It ended up hurting the beer industry long-term because the people who were switching from the mass-produced beer were looking for strong flavours, he says. “Well now they’ve reached ridiculous levels… and then people would say, ‘well I don’t like drinking craft beer because I don’t like drinking really bitter beer.’”
As a result, bitterness became synonymous with craft beer, and brewers needed to become more creative with their flavours to regain the attention of beer connoisseurs.
Identity tied to size
“One of the fun things is to tell people about a beer they’ve never heard of or surely they’ve never tried,” says Plummer.
The appeal of “discovering” microbreweries and the local allure of craft beer is a significant factor in the success of the craft beer industry.
As a microbrewery, “your identity is tied to size,” says Plummer. “There is actually an upper limit to when you grow too big—when people stop drinking your beer,” he says. When a craft brewery is purchased by a large corporation—even if the beer stays exactly the same—the appeal is lost, says Plummer.
For Anderson Craft Ales, a family-owned and operated brewery in London, they've always steered clear of a potential buy-out by large beverage companies.
Anderson Craft Ales
“Even though we are growing, we are never going to get too big for what we do and what we’re passionate about,” says Sam Chard. As taproom manager, he interacts with brewery customers on a daily basis.
“The big thing with the Anderson family has always been that if we’re going to be in this community, then we need to be a part of it, and not just operate as a business that is located here,” says Chard.
Community hub
Anderson Craft Ales was founded in 2016 by a father and son duo, Jim and Gavin Anderson. Since then it has opened its doors to the Old East Village community as a hub for events and outreach initiatives.
The Run Club, for example, is a weekly running group event followed by a social gathering at Anderson. “Run Club has become this really beautiful thing in a lot of ways where people who didn’t know each other have become friends,” says Chard.
Outside of weekly events, Anderson also has a roster of regular visitors who contribute to the growing success of the brewery.
“We have people who are here a couple times a week,” says Chard. “We really get to know their story and create an even bigger community outside of just us.”
The brewery lets the community choose a charity each month to whom they donate money from beer sales on every Thursday of the month. They also acted as a donation point after a large explosion struck the Old East Village this past summer.
High standards
Those at Anderson Craft Ales have recognized their community’s desire for high quality, locally-made beer.
“You go to a craft brewery for the love of beer, and that’s really it—you want to experience that quality product,” Chard says. While big breweries mass-produce their beer, smaller breweries like Anderson take pride in their hands-on approach, he says.
Anderson’s niche speciality is producing technically sound and stylistically spot-on beers. “We brew beer that is true to style,” says Chard. “If you were to look up the beer-judging certificate program guidelines for a specific style of beer, and then compare it to ours, you’re going to find that it’s dead on,” he says.
Widespread appeal
At Anderson, the core demographic is 25 to 39-year-olds, but they often get a wide assortment of visitors, says Chard. “We have a group of gentlemen that come in every Friday and sit and talk—they’re probably in their 70s or 80s now—and every week, without fail, they’re here.”
“I would say that we have something for everyone,” says Chard.
“With craft beer you’re generally going to see a wider range of styles of beer, and in a lot of cases it’s beer that a lot of people haven’t experienced before.”
So why does he think consumers are increasingly interested in craft beer?
“There’s a lot of big pushback to mass production, whether it’s the food that we eat or the beer that we drink. What it comes down to is that people are wanting more and more transparency,” says Chard. Anderson Craft Ales openly welcomes members into their community through community charity events, in-depth brewery tours or friendly discussions about beer.
What's next for craft breweries?
In Ontario, craft breweries sell their beer through brewpubs and bars, the LCBO, the Beer Store, online or directly from their taprooms.
However, if you sell beer through the LCBO or through someone else’s restaurant, then a portion of the proceeds will go to that entity. The brewery ends up receiving only a small percentage of the profit, according to Larry Plummer.
“Once I find a brewery that I like, I will personally drive to buy from that location,” says Plummer. “You’re helping them much more financially if you physically go to their taproom to buy your beer.”
Beer sales are a huge revenue for the Ontario government. But you can support the small craft breweries that you enjoy by purchasing directly from their taprooms. You pay the same amount as you would anywhere else, and they retain 100 per cent of the proceeds, says Plummer.
For this reason, craft breweries have been looking for ways to bring people into their taprooms. Outreach events such as those at the London Brewing Co-op and Anderson Craft Ales in London have been successful in crafting the sense of community and loyalty that keeps people coming back.
But what about breweries that aren’t located in a large metropolitan area, with a strong community around them?
Destination breweries are a growing trend in North America, says Plummer. “They’re basically adapting the destination winery model and turning it into the same thing with beer,” he says.
Destination breweries have an onsite brewery, a restaurant, and in some cases even a hotel or a distillery. They attract local consumers and out-of-town visitors.
Craft brewers have the opportunity to make more money from the sale of beer on their premises at destination breweries. They offer additional experiences such as brewery tours and event rental spaces that attract larger crowds and lengthen the time people spend at the brewery.
Blyth Cowbell Brewing Co.
Blyth Cowbell Brewing Co. was opened in 2017 by the Sparling family. The brewery is self-described as “Canada’s destination brewery” which provides a “one-of-a-kind guest experience.”
“Craft beer is becoming a very, very competitive space,” says Grant Sparling, the Chief Development Officer at Cowbell. His family built the brewery from the ground up in their hometown of Blyth, Ont.
“We needed to find a way to differentiate ourselves and stand out in the marketplace,” he says. The Cowbell facility sits on a whopping 120 acres of land. Sparling and his team plan to develop a massive campus complete with a working farm, an onsite distillery, a packaging hall and a major outdoor event space for up to 15,000 people.
Sustainability commitment
Not only does Cowbell intend to be an all-encompassing brewery experience, but they also have a strong commitment to the sustainability of their community.
The building is designed as an authentic timber structure similar to that which farmers would have built a hundred years ago, says Sparling. “We wanted to build something that was authentic to who we are and where we are, here on the county, which is one of the most agriculturally productive areas in all of Canada,” he says.
Cowbell’s sustainability commitment is integrated into every aspect of their business.
The brewery sources over 75 per cent of the food served in their restaurant from the surrounding Huron County, says Sparling. They are also committed to supporting all four children’s hospitals in the province and have donated over $365,000 to date.
Cowbell claims to be the first carbon neutral brewery in Canada. By replanting trees on the property and installing more efficient equipment, Sparling notes “we might actually be carbon negative, meaning that our site absorbs more carbon than we admit.”
Closed-loop system
Sustainable water consumption is also extremely important to Cowbell, since the brewing process relies heavily on water. In Ontario, most breweries use about 10 to 12 litres of water to make one litre of beer.
Cowbell’s approach to reducing water waste is twofold, says Sparling. “We're consuming less, we're generating less wastewater, and then on the back end we also treat all our own waste and release it back into the ground on site,” he says.
“To our knowledge, there isn’t another brewery in the world that has this kind of closed-loop system.”
At Cowbell, Sparling and his team welcome competition from other breweries.
“Ultimately I think competition forces us all to be better,” he says. “We often say that no one goes to Niagara because there’s one winery, they go to Niagara because there’s 50 and they can spend a weekend there. Everyone offers a different experience and we see the same thing happening here in Huron County,” says Sparling.
They also recognize the increasing consumer interest in local, organic and good quality beer that offers a meaningful experience. Each craft brewery has a different story, says Sparling, and that’s what makes them unique.
“I think craft beer buyers are excited by the stories behind beers and understanding the message behind the business,” says Sparling. “It’s not beer for the sake of beer. It’s beer for the sake of everything else. For community, for local agriculture support, for whatever the case may be,” he says.
For now, it seems that craft breweries are still enjoying a healthy period of growth and welcoming other newcomers to the market.
The London Brewing Co-Op, Anderson Craft Ales and Cowbell Brewing have all found their niche category in this time of “peak beer.”
Consumers are enjoying the alternative that craft beer provides to mainstream products, and cherish the sustainable roots of an overall good-quality pint of beer.
This article was written prior to the COVID-19 pandemic. Since March 2020, a large percentage of craft breweries have seen a revenue drop of more than 50 per cent in the following months. Some breweries have pivoted to produce hand sanitizer for their local communities. However, there has been a lack of financial support from the government. Many employees were laid off and some breweries closed their doors for the final time. For more information, read this open letter by the Canadian Craft Brewers Association to the Members of Parliament.
Credits:
Mariah Brenders