Tuesday, August 10, 2010

What if Ontario held a Beer Revolution




I was asked if I wanted to speak at the Toronto Festival of Beer this year and I said yes, of course (I like to talk), but I didn’t want to just do the regular this-is-the-brewing-process or the my-dad-and-I-started-up-the brewery... kind of talk, I figured after saying it at the booth for a couple days, it might come out a little over-rehearsed. So I decided instead to give a pitch instead for drinking locally brewed beer in general.

As it turns out, the format was interview style and the placement of the speaking corner was in direct line of the main stage so it was impossible to hear and the tent (which was named craft beer corner) wasn’t given any signage that might let people know where to find it. Suffice to say, I didn’t get to give my pitch and there weren’t a lot of folks that would have heard it anyway.
So instead, I figure I might as well throw this on the blog, and see if it can get some traction here...

But a word of note first...I've footnoted my sources used, but I’m sure there are some better pieces of data out there that would refine some of the projections used. Please comment with better sources if you have them. I’ll edit the piece to include better figures as I get them and leave the comments in place to show the progress.

With that here is my pitch...

Thanks for coming, my name is Steve, and my Dad and I started up Beau’s All Natural Brewing Co 4 years ago. We’re a local, organic, family-run, award winning and totally independent brewery. But I’m not going to talk much about my brewery today; instead I’d take this time to throw out a pretty radical thought...What if Ontario had a beer revolution?

What do I mean by a beer revolution? Well revolutions usually involve overthrowing tyrants, and instituting a new form of governance, but my revolution is maybe a little less violent than that, although by no means is it less radical.

Right now in Ontario, 1 out of every 20 beers drunk came from an independent, Ontario brewery.(note 1) By beer revolution, I mean, what would happen if Ontarians chose to drink an Ontario-made independent beer 1 out of every 2 times they drank beer?

I’ll talk about how this revolution might begin and what it would look like a little later, but I think it is important to address why this would be so important first and the best way to do that is describe what Ontario would look like after the revolution, when 1 out of every 2 beers drunk in this province was independently made in the province.

So let’s look into the crystal ball...

Canadians drink about 85 litres of beer every year, which means in Ontario, about 800 million litres of beer are drunk each year.(note 2) That means that after the beer revolution, Ontario brewers will have grown from selling about 40 million litres of beer to 400 million litres.

What is the most important change that would occur after the beer revolution?
Just think of the beer we’d get to drink!

Our 35 independent brewers on average produce about 1 million litres of beer every year, with about an average of 4 brands each (note 3). To get to 400 million litres of beer, we’d need to add 315 new breweries (for a total of 350 breweries) and 1,260 new brands of beer (for a total of 1,400).

One thousand, four hundred brands of beer!!! It would also mean that almost every city and town in the province would have at least one local brewery to check out when you visited.

The Beer Store currently boasts 350 brands from 90 breweries (note 4), the LCBO claims 341 (note 5). Think of how much more choice there would be if Ontario alone had 1,400 brands from 350 brewers – and that was still only half of the beer drunk! Think of what the Toronto Festival of Beer would look like...It would be heaven on Earth.

If this sounds outrageous and unachievable to you, consider that the German state of Bavaria has a population about the same as Ontario’s6 and is home to 629 breweries. (note 7)

After the revolution, with independent breweries holding 50% of the Ontario market share, think of the employment that would create...

Independent Ontario breweries hold less than 5% of the Ontario market share, but they make up 20% (note 8) of the direct employment, or 600 hard working Ontarians – this works out to an average of 17 employees per brewery

The two main reasons – smaller batches mean more people required and imports only have selling functions locally, no production at all!

If independent breweries were producing 50% of the beer drunk in Ontario, they would create 5,400 new direct brewing jobs! The other breweries would lose around 1,136 (most of whom would end up working for a local brewery) for a net increase of almost 4,300 new jobs in Ontario. (Note 9)

But, that is only the tip of the economic iceberg; if independent breweries produced 50% of the Ontario market share, think of the economic spin-off that would create. The creation of 315 new breweries in Ontario would send ripples to so many facets of life in Ontario, it would be unfathomable...

First off Profits would be reinvested in the Province! Ontario is no longer home to any major brewery, so all the profits made by non-independent non-Ontario breweries leave the province for good. This is millions and millions and millions of dollars that leave us every year.

Investment in Ontario would be mindboggling. In a 5 year period from 2002 to 2007, the 30 or so breweries in the OCB invested $20 million. (note 10) 350 breweries would invest somewhere in the neighbourhood of $230million in the same time period.
The tradespeople required to install all this new equipment, the marketing, apparel and promotional companies, the printing houses, box makers, and raw material suppliers. Whole new industries would be created or revived. Did you know Eastern Ontario used to have a thriving hop industry? Equipment manufacturers, raw material suppliers and bottle manufacturing plants would choose to locate in Ontario and a whole manufacturing cluster would be created.

Ontario’s tourism sector would explode. With 350 breweries, Ontario would be a beer connoisseurs dream, a North American Belgium or Germany. The Agritourism sector would come to life as cheesemakers, restaurateurs and other food producers rose to the challenge of pairing these 3,400 brands of beer with just the right nibble to perfectly accentuate it.

Philanthropy would expand in unimaginable ways as local breweries fought to earn the loyalty of almost every conceivable niche market through sponsorships and donations. I don’t have industry statistics, and I believe that my brewery is among the most active sponsors and donors in the brewing industry, but using my breweries stats on giving, we intend on donating or sponsoring over $100,000 this year and expect to produce about 800,000 litres of beer, or $1 for every 8 litres of beer we sell.

If our giving was the norm for small breweries, there would be more the $50 million donated every year by small breweries!

And as one last spin-off effect, remember the 4,300 employees we hired? They pay income tax, property tax, and sales tax. They buy groceries, furniture, and clothes locally. When they travel in the province they buy gas, stay in hotels and visit attractions.

So that’s what the final outcome would look like. A province filled with beer choices, thousands of new (awesome) jobs, entire new industries, a huge influx of tourism, and a better standard of living thanks to the additional tax base and corporate giving.

I know what you are thinking, where do I sign up?

But how would the revolution start and what would it look like?

Maybe it will be an incendiary article written by Josh Rubin. Or maybe some out-of-province brewery will get caught in a corruption scheme, who knows? Or maybe, just maybe it starts today. Maybe it starts with us right here right now...

Truth is, 10 years from now, after the revolution has occurred, it’s more likely that historians would say its already started! Independent beer is growing by leaps and bounds, there already have been incendiary articles about the Ontario beer industry, political candidates in both the governing party and the opposition parties are talking about beer policy as part of their platform and the website Freeourbeer.org is already out there trying to change the Ontario beer landscape while at the same time the new brewing training program at Niagara College will be sending out dozens of aspiring brewers every year.

So what will the revolution look like? Will blood (or beer) flow down the streets? Will there be armed protests? Will families be torn apart?

I don’t think so. This is the most powerful part of this idea; it would actually be pretty easy to do. Laws and regulations wouldn’t be required (although government could help the revolution along if they did change some of the laws that favour foreign breweries). No major change is required, other than a consumer shift based on the understanding that local, independent beer is beneficial to the entire province.

It would look like this – an ordinary couple walk into a restaurant (or, two guys walk into a bar). When the waiter arrives to take the drink order, they ask what beer offered is independent and brewed locally. If the restaurant does not offer an Ontario option, they politely get up and leave for another restaurant.

It looks like this – A regular guy finishes hockey practice and the team decides to go out for a drink. The sportsbar recommended doesn’t have a local option, so this regular guy insists that they go to another spot instead because he knows they have independent Ontario beer on tap.

And it looks like this – when visiting a friend for a dinner party, it becomes customary to bring a different Ontario made beer and an Ontario made wine each time (why not start a wine revolution, too?). A tasting becomes the best way to start a backyard BBQ and people begin to feel embarrassed if they don’t have a local beer to offer their guests.

And it looks like this – you just finished reading this piece and you send the link to your friend. That’s right; Right now, maybe the revolution starts with you.

Thanks for your time.




Sources and math calculations
1) Got this from the Ontario Craft Brewers (OCB)
2) So, the first note is that I couldn’t find the total beer consumption in Ontario. This Wikipedia article says that Canada’s per capita consumption is 83.5L so I multiplied by 10 million people and then rounded down to 800 million litres
3) OCB stats say 35 independent brewers hold 5% of market share. 5% of 800 million is 40 million, divided by 35 is 1.14million and again, I rounded down. OCB stats also state 150 brands, which again, I rounded down to 4 brands per brewery
4) Beer Store website
5) LCBO beer flyer I found at my In-laws house on the weekend
6) Wikipedia
7) German beer stats ()
8) OCB stats
9) First, to figure out how many new jobs would be created, I took 600 employees divided by 35 breweries = 17.14 employees per brewery. 17.14 employees x 315 new breweries = 5,400 gross new jobs.
To find out how many jobs would be lost by foreign breweries I figured if 600 jobs is 20% of the total beer jobs in Ontario, then the 80% remaining would be 2,400. 2,400 people divided into 760 million litres (total sales of 800 million less 40 million brewed by the indies) of beer works out to 1 job for every 316,000 litres of beer sold. If foreign brewery sales dropped by 360 million litres, then 360 million divided by 316,000 = 1,136

Net new jobs equals the 5,400 jobs we created less the 1,136 jobs they lost for a total of 4,264. I rounded up this time to 4,300 but was careful to use the word almost.
10) OCB Stats

15 comments:

Rico said...

...or...

- AGCO would stop legislating beer distribution to foreign-owned brewers

- AGCO would actually do their job with respect to the insane laws they keep alive, as they always choose small brewers to penalize, and large brewers get away with blatant illegalities

- or AGCO actually change it so that brewers can actually compete

- or AGCO can get rid of those stupid LCBO stores and let business be business

- or AGCO allow small beer festivals to pour like large beer festivals pour (like TFOB, supported by large brewers)

- Have brewers in Ontario make their complaints to the government published and part of their collective voice or mandate. It really is unfair to the point it's illegal. You can't keep a brewer from selling their craft, literally.

- And a suggestion that actually might work, is to introduce beer to chefs and challenge them to do a beer-related dish at some point.

Mark said...

Hey Steve, great essay.

The revolution has begun. You forgot one point: www.niagaracollege.ca/brew

Steve Beauchesne said...

Great point Mark...I've added a line in for Niagara.

Scott said...

In relation to Ricos comments. As much as we would like to change the AGCO and the distribution in the province, it all simply comes down to who, and what that who, are drinking that makes the final decisions. It starts with getting people to change.
In addition to points like backyard BBQ tastings, small craft breweries should be targeting specific beer drinkers and getting them the knowledge to make the decisions they would WANT to really make.
Off the top of my head:
CFB messhalls in places like Borden, Kingston, Petawawa etc. Go to any of these towns and watch the military personnel line up at the beer store and buy case after case of Canadian, or at the mess halls, pitcher after pitcher of the same. How many of them do you suppose, actually KNOW now that company is foreign owned? This is a LARGE group of purchasing power that would spill blood for their country, why not beer?
Unions: Steves entire blog post would bring tears to the eyes of the average auto industry worker in this province. If they don't see it though, or aren't spoken too, they will continue to get their Laker, and their Coors light when making their beer choices.
I'm sure there are many more examples, but that is where the real power lies for craft breweries, is in the hearts minds and wallets of the average Ontarian, who if given a choice they are educated about, would support Ontario business in a heartbeat.

Steve Beauchesne said...

thanks to Alan McKay for helping me with my drank/drunk tenses!

StevieRage said...

This is amazing stuff Steve. Well done@

Eva said...

Hi,

Just to let you know that I nominated you for a blogger award.

http://foodworld-eva.blogspot.com/2010/08/im-versatile-blogger.html

Rae in Ottawa said...

The irony is that I find myself not well when drinking some of these small brewery beers, and wonder what in the original German recipe of Beau's Beer would make me feel unwell? I'm not alone facing this issue.

You were the exclusive distributor at our Ottawa Gay Pride festival today, and I now find myself having to avoid pints at future pride days because this is the second time that Beau's ended our day early. I just don't understand why it makes us feel so ill, and after only two beers at that!

I would drink more Ontario brew if I felt that it would settle in my system like Stella or Heineken. That is the challenge that we face when choosing a pint at purchase time.

Steve Beauchesne said...

Hey Rae,

Unless you have a wheat sensitivity, or gluten for that matter, there is nothing in our beer than any others (and many of the main stream beers you might try likely have a lot of other hidden ingredients that would be more likely to make you ill).

I think it might be far more likely that the sun, the heat, or something else would make you feel ill.

That being said, I'm glad to hear you were out supporting human rights and civil freedom today. Beau's has been a proud supporter since our first year in operation, this is now our 5th time in a row sponsoring Ottawa Pride. We may not agree on beer, but at least we can agree on individual freedoms in our society.

Cheers,

Steve

Rae in Ottawa said...

Thank you for the prompt response! I am pleased that Beau's Beer supports local events, encouraging community and dismissing prejudice -- I realize the power in supporting local breweries who care about these things.

Though we are not gluten intolerant, and we always have beers on tap, we do see a difference with wheat beers. There are actually a few disabilities affected by wheat beers, so this makes a LOT of sense!

Due to the German purity law from 1516, we assumed that your beer recipe did not pre-date it, and thus we wrongly assumed your ingredients were solely barley, hops, and water. Thus we kept trying your pints, as we believed it was other issues (like temp out, or exhaustion) while we enjoyed the flavour of your beer with every sip.

Lesson learned, and a hard one to swallow at that! I hope that others are not discouraged from experiementation, and will try a pint of Beau's for themselves *winks*

Steve Beauchesne said...

Hey Rae,

Our beer does follow the German Purity Act, as do many other German beers that contain wheat.

The key is that wheat (like barley) must be malted to be used.

Cheers,

Steve

Rae in Ottawa said...

Actually, you follow the newest law, not the original law.

The Provisional German Beer Law of 1993 allowed ingredients previously banned, like wheat. That differentiation can be read on the Wikipedia page about this purity legislation, and is a distinct consideration for those who may assume that the Reinheitsgebot (circa 1516) applies due to the age of your recipe.

I may not be the only consumer who hears first about your recipe, your company, etc. before having the opportunity to sample your beer. Hopefully this information will help others...

All the best to you and Beaus!

Anonymous said...

Love the post Steve... I'm a Canadian living in the UK and I spent last weekend in a field in rural England which hosted a beer festival with over 200 regional beers (coming from no further than 160km away) from what must have been 40 or 50 different breweries. Being able to sample such a wide variety of beer locally is a wonderful thing.

In Canada I always seemed to drink the mainstream beers (I left Canada two months before Beau's started up), here in the UK I never do. Why? It's partly choice but it's also the fact that the government seems to tax real ales at a lower rate giving them a bit of a leg up on the mainstream competition. Even when I'm on a budget it's actually cheaper to buy local beer than the foreign imports and national lagers. Perhaps a tax break on beer sold by microbrews by the Ontario government would help? Do I feel a petition coming on?

I think the UK benefits from a longer good beer tradition than Canada (having a few thousand years extra of beer history must help) but why not implement the same idea in Canada? That would neutralise the price advantange that the big boys have and push forward your plan to benefit the Ontario economy and give its citizens something that's actually nice to drink.

I get back to Canada a couple of times a year and now drink almost exclusively Beau's beer. My wife and I visited your brewery the week before our marriage last year (cheers for the free pint glasses which now host a variety of real British ales!). You guys are a great success story and I hope that your model is copied allowing for growth of an industry.

Keep up the good work. I'm hoping for a quick trip past Vankleek Hill to pick up some beers when I'm back in Glengarry in a few weeks.

Cheers!

Piet

PS: Could you please produce a real ale (without the fizz!) - I know it's not German but the flavours you can produce for real ales are so diverse and oh so tasty. Check out the Olde Stone in Peterborough which has modelled their real ales on our local brewery here in the UK - the Ringwood Brewery.

.dave. said...
This comment has been removed by the author.
Anonymous said...

What Rae said was very interesting. I'm mainly a microbrew drinker and I've noticed that microbrews do have very different effects from your regular heavy rice-diluted lagers from big breweries.

Microbrews might make you go feel like going to the loo to pass number two, and you'll get way stinkier beer stools after a night of heavy indulging. And for some reason even if you're drinking the same percentage alcohol content as a big brewer beer, a micro will get you drunk faster.