The eight craft brewers who participated in the Kawartha Craft Beer Festival approach their businesses with a hybrid mix of entrepreneurship and community economic development.
Like other entrepreneurs, they want to grow their businesses, but not at the expense of distancing themselves from their communities. Not only do they understand the importance of supporting other businesses in their communities, they practice this understanding every day. Wherever possible, they buy their supplies locally. They hire local people. They sell locally-produced products whenever possible. And they live in the communities in which they brew their beers.
Building Local Business First
This community approach to building a business means that these brewers are very good corporate citizens. For Church-Key Brewery’s John Graham, building a strong local business means adhering to a refreshingly holistic business philosophy that sustains his brewery, his local community and the local environment: “We approach each day with three bottom lines in mind: environmental, social and economic, and we try to balance the three out. I like to think we have created a fun place to work for the local people we hire. We are in a very rural area, so our neighbours pick up our spent grains and feed them to their livestock. Our filter medium is composted, we run solar panels to heat our water, and we run a heat-reclaiming unit on the walk-in refrigerators. We try to source our merchandise as locally as we can; first Ontario stitch, then Canadian stitch, then NAFTA stitch and then, if we have to, an Asian stitch. If we have to go with an Asian stitch for a hat or T-shirt we make sure we make it fun and we give the consumers the option of choosing a charity, so that a buck off everything goes to a consumer-selected KIVA project.” (KIVA provides small, micro-financing loans to entrepreneurs in the developing world).
John’s economic analysis is grounded in one the tenets of the new economy: economic development must focus on the local level first: “We try to source our supplies locally whenever possible. I always liken it to throwing a baseball around. You and I could stand here all day and throw a baseball around and it would always come back to us. But once you add more people, and the ball gets thrown farther and farther around the world, the chance of it coming back to you gets less. So if you want to keep playing ball, throw it as short a distance as you can. I hope our business philosophies carry through to a (good feeling) when you purchase our products.”
This local orientation to building their businesses starts for some brewers before they brew their first batch of beer. Jack Doak of Old Flame Brewing Co. says, “When we bought our building in Port Perry just over a year ago, we spent a lot of time engaging with the local community, so there was a wonderful anticipation for the opening of the brewery. We had tremendous support and buy-in from the local community; I think that was the key to our success. The local people really wanted to support their own brewery. … We took an old heritage building in Port Perry and returned it to its former grandeur. It was an old carriage factory that was built in 1884 so part of what we do is to tell the stories and the history of Port Perry. … We have a tasting room where people can have a 12-ounce glass of beer, so we are not a pub, we are not a restaurant, we are a brewery but we serve simple snack foods (all catered locally) like cold meats, cheese and crackers and the like. People just love the building, and they love the history of the building. I like to say that people don’t appreciate history until they are sitting in it — and drinking it!”
Several of these breweries weave local history into their branding. For example, Kim Cranfield, the marketing director for The Publican House Brewery in Peterborough, describes how history influenced the naming of the brewery’s beers: “One of our beers is called Square Nail; it’s called that because when they were going through the house (renovations prior to the opening of the brewery), they found hundreds and hundreds of square nails in the woodwork. One of our beers is called Henry’s Irish Ale because of Henry Calcutt. (Henry) was a brewer in Cobourg who moved it to Peterborough. He developed some equipment used for cooling beer that is still used (and) his brewery burned down so he built a new one. It is a pretty interesting history. One of our customers collects beer paraphernalia and he has some of the old bottles that have the Calcutt name right in the glass. We worked with some students from Fleming College in their museum program who wanted to do a display, so we talked about our beer, we partnered with them, and this customer bought in all these artifacts. It was pretty interesting to see, so we are just trying to bring back that history.”
To Grow or Not to Grow?
While these brewers want to stay in their own communities, like other entrepreneurs, they look for opportunities to distribute their products to a wider market. Randy Smith of Smithworks Brewing Company has had considerable success in growing his business through traditional channels: “We are in about 90 bars. In the wintertime we went to a bunch of bars, let them taste our beer and it’s just rocketed from there. We were lucky to get one of our beers in the LCBO — they decide if they will take your beer or not — so that was a huge boost for us so we could up our production and spend some money on our plant, knowing that we were in the LCBO. When that happens, you literally go from one store to 800 stores. We’re not in all 800 right now, we’re in about 70, but as we increase our production we want to make sure we have enough supply for them.”
For Kim of The Publican House, sustainable growth is preferable to growing too fast: “In the beer industry, as you can see, there is so much growth, that it is easy to try to keep up with the expansion as fast as you can, but we’ll decline things if we need to. We can’t be involved if we don’t have the beer. We want steady growth so we want to grow naturally instead of growing too fast then fading away.”
How to Build a Customer Base
How do these craft brewers market their products to beer drinkers who have grown up being accustomed to the tastes from giant mainstream breweries? For Jack at Old Flame Brewing, it is important to start from where his local beer drinkers are: “It’s important to really know your market, know the town you are going into, and understand what type of beer drinker is in your town. If you bring some really crazy double-IPAs to a town where people are used to drinking the macro brews, they’re not going to accept you right away. So if you want to hit the ground running, make sure you make some very drinkable beers first, get an audience, then make all that funky stuff down the road.”
Randy at Smithworks takes a consultative approach to introducing new tastes to his clientele: “In our tasting room we have new people coming in every single day and they are new, they are hesitant, they haven’t tried something different. Everyone knows what a Coors Light tastes like, what a Molson Canadian tastes like and they ask, ‘What do you have’. How do you explain a taste? That’s why we have a tasting room. … We don’t have millions of dollars to spend on marketing, we are all just small businesses. What I really enjoy is when people come up and I say this is a wheat beer and they say ‘I don’t like wheat beer’ and as we are chatting I tell them about our other beers, our blonde, our this, our that, all the other beers we have and then I pour them a sample and they go, ‘Oh, what’s this one? I really like this beer’ and I tell them, ‘That’s our wheat beer!’ Maybe they are used to an American wheat beer that has a different taste.”
Raising Investment Capital
Making the successful transition from start-up to full production can be a risky time for craft breweries. One of the most common mistakes is underestimating the capital investment required. “A lot of people have all these grandiose plans, but they don’t have enough money,” says Randy at Smithworks. “In the craft beer business everything is expensive. A little mechanical part, for example, can cost $400. Over the last couple of months I’ve spent several hundred thousand dollars, so with growth, comes the need to invest.”
How do these entrepreneurs raise the funds they need to get started? The major banks won’t lend to anyone who does not have sufficient collateral to backstop a loan. “A lot of microbreweries look for other investors, people who don’t necessarily want to be running a brewery but want to be part of it because they like the beer and enjoy the excitement. Some microbreweries have four, five, six or even seven owners like this,” Randy says.
Competition Versus Collaboration
Every brewer, owner and representative was emphatic about collaborating with other craft brewers. They do not see each other as competitors; instead they see each other as fellow travellers on the same adventure. Kim of the Publican House says, “All of us are very collaborative. For example, we worked closely with Smithworks to put on this beer festival (Kawartha Craft Beer Festival). … When Smithworks came into town, a lot of people were saying ‘Now you’ve got this competitor in town’, but the more people who find out about craft beer the better it is for all of us. We all have very different styles of beer, so people don’t steal from each other. Rather, it’s all of us against the big guys. For example, our owners went to Old Flame Brewery (Port Perry) a few weeks ago because they installed a new piece of equipment that we are going to get soon, so they invited us in for their training session so we could learn at the same time. We sell used equipment to each other. People are now calling me for help putting together their local beer festivals. It’s a nice environment to work in, it’s exciting. We are not pitted against each other.”
In our next post we’ll look at the ways in which these brewers strive to make beer with a minimum amount of negative environmental impact. How green is your beer?
Brewing Up Community Engagement