Barley Mowat 

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The Path To Glory

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Every few months the LDB publishes their Quarterly Market Review, and every few months you see a few stories appear in the paper about how liquor sales are effectively flat year-over-year, except for craft beer, which has shown a 20% annaul growth for years on end. This article invariably makes the rounds of the beer blogs, is discussion with great pleasure at bars and at house parties by people with large beards, glasses, or both. And then we forget all about it.

Seeing that March is done, we can expect another such report shortly and another good round of “feeling-good-about-craft-beer-itis.” Yes, craft beer growth at 20% is a good thing, even I can’t argue with that, but that’s not what the report actually says. It says that breweries producing less than 150,000 hl are growing at ~20% annually. 150,000 hecto-litres is 15,000 kilolitres, or 15 mega-litres. That’s a shit-tonne of beer.

As previously discussed here, that number includes an awful lot of larger breweries you wouldn’t normally let in the same room with the word craft (for instances, Granville Island makes 7 mega-litres, so they absolutely qualify). There’s a good chance that a large amount of the growth is concentrated on the uppper end. We just don’t know, but I have a strongly biased pre-formed opinion, and that qualifies as objective journalism around these parts.

But let’s assume the little guys are doing just as well. Heck, on my recent tour of Victoria it seemed like every brewer I talked to had plans to knock out a wall and take over a recently vacated neighbouring spot. Add to that the fact that a brand new brewery operating in the area was seen as positive thing rather than more comptetition and we are painting the picture of a rapidly growing sub-industry.

We’re also painting a picture of a string of bankrupt businesses near breweries. Please.

But what does 20% actually look like? A 20% increase in sub 150,000 hl domestically made beer sold in BC means 7,000,000 litres more produced, per year. Granted, that’s production across Canada, but that’s not too shabby. That’s the equivalent of a whole new Granville Island Brewery per year.

Of course, compared to the big boys it’s nothing. The Molson’s and Labatt’s of the world are looking at a 5% year over year growth. Or about 9,500,000 litres. Yup, even with growth that most people consider “stagnant”, they’re growing faster in terms of sheer volume than the little guys. And sheer volume means people. For every 7 new people that reached for a (potentially) craft beer these past 12 months, 9.5 new people reached for a mass market brew (or maybe 8 normal people and 1 pregnant woman?) Of course, these numbers could also mean that 9.5 macro drinkers are now drinking twice as much. It’s hard to say with any certainty.

What is certain is that people just love their light beers. Macro beer outsells micro 6:1, and a good chunk of that :1 is lighter beers like lagers, pilsners, honey lagers and… uh… honey pilsners? I guess?

This creates an interesting dilemma for brewers. Imagine you’re setting up a new brewery. Do you brew the beer you want to drink but won’t sell, or do you brew the beer you can’t stand but will pay the bills as the mouth breathing masses consume it out of funnels after bouncing ping pong balls into it?

True ladies squat to funnel. And don’t wear pants.

I know which one the bank wants them to do. And the company president. And the LDB, who seem rather irked by this whole “good beer” thing and rather hope it would just go away already.

Brewers manage to make this more acceptable to bear by compromising. “Fine,” they say, “I’ll brew idiot juice for the masses, but I’m going to do it my way. Quality malt, interesting yeast, and maybe some slick hop blends.” And thus is born the best boring beer you can imagine.

The beer goes out, it sells well, and profits come in. The business guys in charge of the brewery look at this, smile, and instruct you to take this new money and… brew even more of the same shit. You, of course, want to branch out and try something new, perhaps something weird that appeals to a smaller, more select audience.

The MBA running the place, though, just hears you spewing insane nonsense. Your bold new business plan is to not brew the product with a proven customer base, brand recognition, and solid profit margins. Instead, you want to do something totally new that may or may not actually sell. This goes against everything the MBA learnt in business school.

I thought that idea sounded familiar.

Even Driftwood isn’t above this. Their launch line-up included an amber ale, a pale ale, and a wheat ale. Yes, I know they’re very good examples of those styles, but that’s sorta my point. Only after they’d established a fan base and gotten a steady revenue stream did Jason start fucking around with new (to BC) styles like barrel-aged stouts and barley wines. And that’s in a brewery RUN BY A BREWER.

If it took that much effort for Driftwood to make solidly interesting beer, imagine how hard it must have been for places like Lighthouse, Phillips and Russell to start pushing out interesting one-offs. It requires some serious balls to take the profit from one pallet of hot-selling insipid beer and use it to create anything but another pallet of the same old stuff, but they’re doing it. And holy shit, these weird new beers selling. And not just to me.

Every brewery that produces a specialty line of one-off beers makes it easier for the brewing crew at the next brewery to convince management it’s a good idea. And every release that we, the beer drinking public, consume with manic fervour only fuels that fire.

Together we’re creating a mature market for high end beer, and demonstrating the profitability of competing in that market. The market is mature enough that Driftwood is contemplating ditching some of their lower-end beers to free up space to pursue the high-end. Crooked Coast and Driftwood Ale, we hardly knew ye.

So there you have it. The best way to fill the shelves with a broad selection of beer of increasingly complexity is to make it profitable to do so by going out and drinking what’s out there now. We’ve finally reached the point where every beer you take off that shelf will be replaced by something better, and I’m game for leading the charge to perfection.

Written by chuck

March 31st, 2012 at 1:58 pm

Posted in Breweries

How Small Is Small Enough?

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Oh boy. THIS issue, eh? For those not attuned as keenly as I to the internal angst of the craft brewery business, the definition of “Microbrewery” is the subject of much intense debate. Some places (like BC), don’t even bother to officially define it, while others (like the US) have defined and re-defined it multiple times over the years.

What’s the fuss about? Ultimately, breweries are normally categorized by annual volume of production. As in, how much beer they make. This is measured in one of two amusing ways, both of them being pretty much unused outside of the brewing industry. These measures are either barrels (bbl) or hectoliters (hl).

No one seems quite sure which is the more appropriate measurement, so often you’ll see production values reported in both litres and barrels. Which itself is fairly silly because a beer barrel is roughly equivalent to a hectoliter. Seriously, 1 bbl = 1.15 hl by most definitions, although a “barrel” is about as well defined a term as a “pint” and we wind up with varying sizes from 96 litres all the way up to 160 litres, logically based upon what you’ve put in the barrel.

In this case it holds 1.
I tried for 2 but the cops were called.

And, of course, no barrel of any kind is defined in the Canadian Weights and Measures Act, meaning that if you try and sell stuff by the barrel, the Queen Herself will pop in, kick your ass then insist you remeasure that shit in litres.

But enough background. How much beer makes a microbrewery? The American Brewers Association uses the following definitions based on volume:

“Craft Brewery”: < 7,000,000 hl "Regional Brewery": < 2,300,000 hl "Micro Brewery": < 18,000 hl (Note, despite the name of the biggest category, all these types of breweries are considered "Craft Breweries" if they meet the criteria below) The value for Micro is even endorsed by CAMRA BC. To give some perspective to those numbers, if BC’s newest Craft Brewery (Hoyne) brewed a full batch in their brew kit every single day of the year (and lost nothing to spillage, bad batches, or steam), they’d hit about 9000 hl. So yeah, 18,000 hl is a lot of beer.

Volume alone isn’t the only requirement. To even start looking at those numbers above, breweries must also brew at least 50% of their volume in all malt beers (no cereal or corn), and only use adjuncts to enhance, rather than lighten the flavour (aka sugar is no good, but fruits are fine).

Then there’s the ownership question, a craft brewery must also not be more than 24% owned by another brewery who is not a craft brewery. Same for the owners, and so on, all the way up the chain. Basically you can’t be owned by Molson, or by a company that is owned by Molson, or by a company that is owned by a company who is owned by… etc.

So where am I going with this? I’m hopping the old #50 down to Granville Island with these definitions. Yup, Granville Island Brewing just can’t wait to tell you about what a wonderful MICROBREWERY they are, and boy, did you hear that they product CRAFT BEER? Seriously, go look at their website. You don’t make it very far before one of those two words is thrust in your face.

How do they measure up, now that we have some numbers? Well, I wouldn’t be talking about it if it was good. Take volume: Microbrewery: 18,000 hl or less. GIB: 60,000 hl (and boy that seems low for GIB). Surely they’re just a regional craft brewery then. What’s the big deal if they’ve exceeded the allow production cap… three times over? Well, let’s talk about dependance.

Yeah, they’re owned by Molson, who won’t admit to using non-malt cereals in their beer but also certainly won’t tell you what, exactly, IS in there (although they do admit to using corn in the low cal version). Also, they’re way over the absolute cap of 7 million hl. So GIB could shut down production tomorrow, then brew a single, tiny, can of shitty lager next year, and they still couldn’t claim to be a microbrewery. Except in BC, of course, where we don’t bother to define such terms.

We could give them credit if they made it so small it disappeared altogether, though, right?

Written by chuck

March 15th, 2012 at 8:17 pm

Posted in Beer and You,Breweries

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A Nightmare on Triumph Street

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Alright. I can do this. I’m a big boy. Deep breath.

You know how I tend to be the blogger that “calls it like I sees it”? Well, that apparently comes with a bit of a responsibility in this industry. I’ve said this before, but it bears repeating: everyone in the beer industry is nice. Very nice. Almost cloyingly nice. They’ll never say ill about someone else in craft beer, ever… in public.

They will, however, pull aside the loudmouthed angry blogger known for calling out people and confess, in hushed tones, their concern about a recent brewery startup. They will do that, a lot, in the quiet hope that someone (aka me) says something.

And such is the situation I find myself in right now. Everyone wants to talk to me about Coal Harbour Brewing, and everyone has serious concerns about what’s going on down on Triumph Street. Guys, you have a problem, and we’re here to help.

Should… should someone say something?

Note that I said “concerns” not “criticism.” You see, these fine folks want nothing but the best for everyone else in the industry, and when a new brewery starts behaving in ways that frankly make no sense, they’re concerned. They want CHB to succeed, but don’t know how to tell them what’s wrong.

So, where to start? Well, what with them being a brewery and me being a beer snob, it seems natural to start with the beers.

The Beers: They aren’t very good. Their lagers range from distressingly awful (Three-11) to brutally insipid (Vancouver), and their rye ale (Triumph), while arguably the best thing they make, is still a solid meh.

Is that enough to issue a Chuck-standard warning? Nope. Breweries have bad batches, and it takes time to work out the kinks in a new system. I had thought it perfectly likely that the beer as I’d tasted it was not the beer they’d wanted to brew. However, as more pieces clicked into place that became less likely. Like this one: their brewmaster is an import from Surgenor, known for pale insipid lagers meant to appeal to island folk who grew up on Lucky. Sorry folk, these are their beers as they are meant to be produced.

Naming: This is a minor point, and really I only mention it as part of the whole picture for a sense of completeness. Breweries tend to have boring names; they’re founded by brewmasters who maybe don’t have the best imagination around, so they are typically named after either the person making the beer (Hoyne, Russell, etc) or, much more commonly, the place where the beer is made (GIB, VIB, Howe Sound, etc). Occasionally someone gets all creative and we wind up with a Crannog or a Driftwood, but those are the exceptions to the Tofinos, Central Citys and Craig Streets of the world.

Sadly, once in a while, you get a brewery that attempts to make their slightly-depressing location in an industrial district more exciting by just up-and-pretending they’re somewhere else. Take Stanley Park or Hell’s Gate, for instance (both shadow brands under Turning Point). This is the case with Coal Harbour. The brewery is nowhere near Coal Harbour. It’s on Triumph Street, in East Van, in one of a row of anonymous warehouses. However, unlike Stanley Park, they make no effort to hide the true location of their brewery. They even have a map on the website.

Being creative with the name is fine so long as you don’t outright lie. It gives them a chance to invent a slick, cool logo (which is awesome, btw), and maybe do something less UK Warship name-ish than “Triumph Brewing”. Again, no biggie unless taken as part of the whole. Trust me, though, I’m going somewhere with this.

Equipment: Now we’re into the meat of things. When one starts a brewery, one orders some brewing kit. Usually, before one does this, one measures the space into which one hopes to install said kit. This step seems to have been skipped, as CHB discovered that their shiny new fermenters were too tall to fit in their existing space. Again, no biggie. They’re brewers and brewers don’t always think things through.

So they altered them. By cutting off the yeast cones and slapping on domed bottoms. Now that’s an interesting take on the matter. Given the choice, most folk would have shortened the tank (at the expense of volume) rather than cut off the cones and basically have to reinvent how to brew beer at industrial volumes. This might not be a bad thing, as flat bottom fermenters means the yeast is all happy and free, and your beers come out very cloudy and yeast-tastic. This is part of what gives home-brewed beer that distinctive flavour. This is not necessarily a bad thing, unless, say, 2 of your three beers are lagers, which are known for their clarity. Now you basically have to filter the ever-loving fuck out of your beers, and as anyone will tell you: filtering also strains out character and flavour. There’s a reason other micro-breweries proudly state “unfiltered” on the sides of their bottles.

The other problem with their brewing equipment is that there’s a lot of it. A giant fucktonne, in fact. It takes a lot of beer to fill all those snub-nosed fermenters and conditioning tanks. And it takes an awful lot of sales to keep the flow going and your beer at it’s freshest and bestest. When the sales are down, and you have a giant bank loan to pay off, are you going to pour out that past-its-prime 20hl CT like you should, or just look the other way and keg it? Exactly.

Product Pricing: Three-11 is a economy product competing on price. Translation from marketing speak: It’s cheap. Say what you like about the flavour, style and quality, but boy it sure is cheap. That is attractive for bars that also serve marcos, as somewhat shockingly, macros are not cheap, but their clientele sure as hell are. This is a perfectly fine approach to selling bad beer, but then CHB had to go out and create a not-quite-as-bad lager that is nowhere-near-as-cheap. Their Vancouver Lager is much more expensive for a bar to bring in compared to Three-11. This sounds like no problem to bar owners until a meathead who’s been drinking “CHB Lager” all night for $4 a glass down the street walks in, sees “CHB Lager” on tap for $7 a glass, and proclaims the bar to be a rip-off. This image hurts any bar that sells the better beer, making keeping it on tap a hard proposition. Yes, they’re both likely properly labeled, but do you think lager louts can read?

I’m seriously impressed when they remember to breathe.

Marketing: Their marketing strategy thus far appears to be “find out where Driftwood is, and go there.” Not a bad strategy… at first glance. They’re a small brewery and don’t have a lot of money to invest in finding the best spots, so why not ride the coattails of BC’s best microbrewery to find all the markets where people like good beer? Well, that’s the problem. CHB isn’t good beer; it’s not meant to be good beer. It’s brewed to compete against Stanley Park Amber and Pilsner, whether the folk at CHB believe that or not. Sure, putting a tap handle next to Driftwood Fat Tug means you’re front and centre in an establishment that likes to try new things. And yes, that bearded beer geek blogger who just saddled up to the bar and who has never heard of CHB sure as hell will order one. Then I’ll drink 1/2 of it, send the other half back, tell the bar manager to never order that shite again, and move down the menu to see what those whacky US breweries are up to.

Here’s a hint to the CHB sales department: get a tap next to Stanley Park Pilsner. That is a beer positioned in a bar mostly dominated by macros. And a good chunk of those patrons will find even the moderate flavour of Stanley Park Pilsner a bit much of a leap from the watered-down goat piss that is Canadian. That’s where you come in. You’re better than Canadian, but not as “weird” as Stanley Park (I mean, there’s *hops* in that! Who likes hops?!). There’s a niche there. Fill it.

So there’s our advice: Streamline your beer lineup, go after Stanley Park, make money, and then (hopefully), use those profits to brew actual good beer. Sure, this isn’t a great strategy, but it’s a lot better than what you’re currently doing. You can’t compete with the craft breweries on quality (or at least you don’t seem to want to), and you sure as hell can’t compete with the macros on brand recognition. What’s left is the quasi-craft market, where you will be up against Stanley Park (aka Mark Anthony), Granville Island (aka Molson) and Okanagan Springs (aka Sapporo). That’s a hard market to work in, but at least it’s a strategy that makes sense.

Or, you know, brew good beer. Switch to the classic 1-2-3 of craft beer start-ups: an IPA, a hoppy Pale, and a punchy Pilsner. Or branch out a bit and do a funky Saison–your cone-less fermenters could be perfect for this. We’ll drink them, I promise, and it’s an easier market to work in.

Written by chuck

March 10th, 2012 at 12:49 pm

Posted in Breweries

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