Nigel Springthorpe | BCBusiness
Nigel Springthorpe sells beer only to customers who walk through his door.
B.C.’s independent brewers are stealing market share from the global giants at a stunning rate. The biggest challenge these days? Keeping up with a seemingly insatiable demand for local, artisanal beer—and not becoming victims of their own success
A three-inch-thick red hose snakes across the polished-concrete floor of Brassneck lounge on Vancouver’s Main Street. From behind the partially opened door to the adjoining brewery comes the near-deafening squeal of a winch slowly lifting the lid to the mash tun, the giant vat where malted barley is steeped in water to produce the “mash” that will be transferred to a fermenting tank then a conditioning tank before becoming the beer that will flow from the lounge’s taps in a few weeks.
It’s one o’clock on a chilly spring Tuesday afternoon, an hour before opening time. Co-owner Nigel Springthorpe, bearded and wearing jeans, a flannel jacket and a toque, pushes the brewery door closed before taking a seat at one of the lounge’s rough-hewn reclaimed-fir tables. The brewer is just transferring some beer to the cellar, he explains when I ask about the hose.
For Springthorpe, Brassneck is the realization of a dream more than 15 years in the making. A veteran of the local bar scene, he started out 16 years ago as a bartender at the Alibi Room in Gastown. Eight years later, with his wife’s sister, Raya Armstrong, he would buy the bar and restaurant and transform it into his ideal watering hole: a neighbourhood hangout with a lively ambience fuelled by great food and a beer selection that has become legendary.
The logical next step was to start brewing his own beer, so after four years of planning and saving, he and his business partner, brewmaster Conrad Gmoser, opened Brassneck last October.
Springthorpe’s timing was perfect: Brassneck opened just as the market for anything not just local but artisanal (crafted by hand and with care) was hitting full stride. The trend is evident in a resurgence of farmers markets and online exchanges like Etsy serving a neo arts-and-crafts movement, but nowhere has the rebellion against corporate blandness found more traction than in the beer market.
In B.C., the numbers are telling: after generations of unchallenged market dominance, multinational beer conglomerates have ceded a big chunk of the market to smaller independent brewers. Five years ago giant brewers reporting to foreign shareholders commanded 90 per cent of the B.C. beer market. In the past five years, the market share for the big brewers (including Labatt Brewing Co., a division of Anheuser-Busch InBev SA, and Molson Canada, a division of Denver-based Molson Coors Brewing Co.) has dropped 10 percentage points: they now account for 80 per cent of beer sales in B.C., compared to 20 per cent for locally owned brewers. That’s a loss of $126 million in annual B.C. sales for the multinationals, while the locally owned brewers gained $90 million. (A four-per-cent shrinkage of the overall beer market accounts for the remaining $36 million in lost sales.)
And it’s not just the tiny neighbourhood breweries that are rising with the anti-corporate tide: a handful of mid-sized B.C. brewers with big aspirations, some of which started out as neighbourhood microbrewers, are capitalizing on the demand for local beer. Northam Brewery in Kamloops (brewer of Whistler and Bowen Island beers), Pacific Western Brewing in Prince George and Fireweed Brewing in Kelowna (brewing under the Tree brand) have all seen sales grow in tandem with the drop in big-beer sales. Pacific Western, for example, has seen its B.C. sales double in the past five years, to $37 million in 2013. Fireweed, Northam and Vancouver Island Brewing have seen similar growth.
It’s the smaller craft brewers, however, that have really taken off. In that same five-year period, Phillips Brewing Co. Ltd. on Vancouver Island and Howe Sound Brewing Co. Ltd. in Squamish have seen B.C. sales triple (to $14.5 million and $8.6 million, respectively), while Central City Brewing Co. Ltd. in Surrey has seen B.C. sales jump nearly fivefold, to $2.7 million. Over those same five years, Molson Canada’s B.C. sales dropped 18 per cent and Labatt Breweries of Canada’s B.C. sales fell 29 per cent.
Image: Peter Holst
Central City Brewing opened a $20-million
brewery in Surrey last November.
Nigel Springthorpe’s biggest challenge is keeping up with demand. The soft-spoken co-owner of Brassneck seems almost embarrassed by his success. “I don’t think we’re the goose that laid the golden egg,” he says, adding that there’s lots of room for improvement. Pointing to the chalkboard listing beers currently on tap, he explains that “originally we wanted to have that board really busy, six to 10 beers up there, rotating all the time. We’re managing to keep some of that promise, I guess....” He trails off. “We’re tiny,” he says. “We have 50 seats and a shop, and that’s it, and right now we can’t keep up with demand.”
Josh Michnik, owner of 33 Acres Brewing Co. on Sixth Avenue, a few blocks down the street from Brassneck, points to a $60,000 bottling machine sitting on the brewery floor, unused because it’s all he can do to keep up with demand from his on-site lounge and his restaurant clients. “We can’t sit on beer; we have to sell it,” he says. “If we sell it to draft accounts, they’re going to keep wanting beer.” Michnik explains that soon after his July 2013 opening, he realized his original business plan, predicated on sales to a small but loyal local clientele, wasn’t realistic. “We had to reinvest right away and order more tanks.”
David Bowkett, founder of Powell Street Brewery, tells a similar story. “Our original plans included bottling, but we haven’t done any bottling lately; all the product is going out the front door,” says Bowkett, who with his wife, Nicole, owns and operates Powell Street Brewing. The two-person operation is the smallest of small nano-brewers, producing just 200 hectolitres last year (the equivalent of less than 1,000 six-packs a month). The former home-brewer moved cautiously into commercial brewing, planning to keep his day job as an architectural technologist while trying it for a few years. However, expansion has come sooner than he expected; he has secured a bigger site on Powell Street in east Vancouver, expected to open later this year, and his plans include expanding bottling and canning capacity and adding a lounge.
While Springthorpe, Michnik and Bowkett chose to start small (and Springthorpe has no intention of growing), other newcomers have bigger goals in sight. “I don’t want to be just a little craft brewery that supplies my neighbourhood,” states Don Farion, whose Bomber Brewing Corp. opened its doors on Adanac Street in Vancouver’s Strathcona neighbourhood in February this year. Upon opening, the brewery had three flagship beers (an India Pale Ale, an Extra Special Bitter and a Pilsner), annual production capacity of 6,000 hectolitres, a canning line and an on-site store and lounge. Farion says his brewing capacity could double within months, and he plans to take his product into Alberta before the year is out.
Image: Peter Holst
Darryl Frost went all in by expanding from
a cosy brew pub to a purpose-built brewery
geared to supply retail outlets.
some independent B.C. brewers, whose history predates the recent surge in local microbreweries, have been riding the growth curve for several years now. Central City Brewing in Surrey, is typical: it started out in 2003 strictly as a neighbourhood brew pub, but recently moved into a purpose-built $20-million destination brewery, with plans of increasing production more than tenfold within five years.
President Darryl Frost explains that Central City’s initial plan was to serve lunch and after-work drinks for tenants of the new ICBC head office that was planned for Surrey’s Central City development. When ICBC pulled out of the development, Frost had to reassess his business plan, and concluded that expanding packaged sales was the route to go. As Central City’s beers found traction in the marketplace, winning multiple awards, the brewery continued expanding production. When it finally maxed out at 8,000 hl a year, Frost decided it was time to go big or go home. “Every time we were making these little jumps, we weren’t becoming more profitable; we were just doing more capacity,” he says. “So the decision was to either reduce and stay small and focus on your local market, or jump and expand out to something like this.”
Frost gestures toward the gleaming new brewery that lies beyond the glass walls of the Central City conference room. It’s part of the new brewery and retail store that opened near the south end of the Pattullo Bridge in February this year. The facility was financed with venture capital and made possible by an agreement with Surrey City Development Corp., which would build the 65,000-square-foot building and lease it to Central City at market rates. Frost predicts that Central City will produce 25,000 hl this year, and the current site has the capacity to reach 100,000 hl, which he expects to hit within five years. Central City has an option on an adjacent two-acre property that could accommodate further expansion.
While Central City has enjoyed fairy-tale growth so far, Frost knows there are no guarantees in the beer business. “Is it going to work? Well, we’re in the middle of it, so I don’t know,” he says.
Meanwhile, a handful of other mid-sized breweries are building similar destination brewery/restaurants in Greater Vancouver: Red Truck Beer, Big Rock Brewery and Steamworks Brewing Co. Ltd. are scrambling to complete brewery/lounge/retail complexes.
Is there any limit to the beer mania sweeping the province? Will the Central Cities and Phillipses, or even upstarts like Bomber, one day supplant the multinationals to dominate the local, or even the national beer markets? It’s possible, but we’re likely nearing the limits of the rocket-ship growth trajectory for microbreweries, says industry consultant Joel Hueston, whose career includes heading marketing for Molson Coors, and whose company’s current clients include Molson, Whistler Brewing and Vancouver Island Brewing.
“It’s possible that some of the big players could get swallowed up.... It’s possible that the next generation of beer drinkers, because their parents included craft beers in their circle of brands, will have half their beer consumption be craft beer and it reaches a point where the craft beer category is larger than the mainstream category,” says Hueston. “But I’ll be dust before that happens.”