Number of craft breweries reaching limit for Ontario, says South River brewer

Posted by Dean Rowan on

Craft breweries in Ontario are growing at a faster rate than the demand for the product.

“There are 250 craft brewers in Ontario today and about 100 new breweries are in the planning stages,” said Dwayne Wanner of the Highlander Brew Co. in South River. “It takes about 50,000 people to support a brewery and by those numbers we are just about at our limit in Ontario now, and some are starting to fail because there are just too many.”

Wanner was one of the speakers at the May 5 Powassan Food Fest where he outlined the struggle the small brewers have had to get their product on shelves in the Beer Store and the LCBO.

“There are only 100 of our breweries that have product in the LCBO,” he said.

“There are 250 craft brewers in Ontario today and about 100 new breweries are in the planning stages.” Dwayne Wanner

Despite the number of different beers brewed by Highlander, only two have been accepted for LCBO shelf space.

“When you apply you just wait and see. No one seems to know how they make their decisions, so it’s a pretty scary business,” Wanner said.

The craft beer industry started in the early 1990s and has taken off in the last few years.

“In the 1980s beer tastes were changing in North America, the craft brews took off in the U.S. around 1990,” he said. “As people travelled more they became aware that there was more than Molson Canadian out there. That there were beers that had taste, and texture and had all sorts of good qualities about them, so people started going to the LCBO to buy imported beer.”

This led brewers to conclude that “if people will buy imported ales, we could be making them here. That was the start of the craft beer industry.”

But brewing it and selling it are two very different things.

“There’s problems in selling it because the big guys control the industry,” Wanner said.

Wanner has been one of the craft brew masters that has lobbied long and hard to see changes in alcohol marketing that has allowed craft beers into the Beer Store and the LCBO and he credits Kathleen Wynne for using some strong arm tactics to make it happen.

“Big guys own the beer business and have since about 1927. Up until recently they controlled 85 per cent of the beer sales in Ontario. These companies own the Beer Store,” he said.

To get Highlander, or any other craft beer on the shelves brewers had to pay a significant amount of money with little chance of return.

“What I get for my money is a small little picture on the wall. How much beer am I going to sell from that? Nothing.”

Despite the fortunes made by selling beer, the Beer Store has never paid royalties. The province, in support of the small brewers, adjusted the beer sales contract to be the same for all breweries, large and small, and dictated that 25 per cent of the craft beers had to be on display at the front of the stores.

It also added four more directors, one of which had to be one named by the craft beer sector and who would have a veto over board decisions.

The government also “demanded a $100 million a year royalty because Beer Stores had never paid a penny for being allowed to dominate the market for decades,” Wanner explained.

There were also changes made to the LCBO that allowed stores to promote 12 and 24 packaging and increased shelf space.

“Retail sales is about square footage and we’re going to need a lot of it if we are going to be successful,” said Wanner. Which is how the craft brewers got into the larger grocery stores locations.

“People buying craft beer are also buying expensive foods, expensive cheeses and bread so the basket analysis has been a good one for the grocery stores.”

Wanner expects that in a few years the demand for craft beers will reach the 15 per cent that it is in the U.S. and he wants to ensure that northern Ontario brewers get a share of that market.

There are 16 breweries between South River and Kenora and Wanner has recently brought them under the umbrella of the Northern Ontario Brewers Alliance to promote the product and to meet specific LCBO sales requirements.

The Alliance’s first promotion was the Northern Sixer, a package containing six different northern beers.

“We took it to the Royal Winter Fair and sold 310 cases,” Wanner said. “We officially launched it on Nov. 15 and by the end of December had sold 10,000 cases.”

The product is being put in the Beer Store and he is hopeful it will soon be in the LCBOs.

But Wanner says craft breweries are about more than a better beer, they’re about community.

“Breweries give a local consciousness,” he said. “In my village of South River people are very proud of the brewery. It’s their brewery. It gives a sense of respect. It gives you a local product and changes the whole way people appreciate their local economy.”

They are also fighting a battle against globalization and large companies like Labatt’s owner the 3D Corporation out of Brazil that owns one-third of the beer in the world.

“Craft beer is a strategy to combat globalization,” Wanner said, relishing every small success the industry has made and looking forward to a growing share of the beer market.

After his presentation at 250 Clark St., Wanner held a free beer tasting for participants in the food festival. Powassan is holding a craft beer festival on June 16 at the Sportsplex where Highlander beer will be featured along with a number of other northern brews.



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