Ambitious entrepreneurs in B.C.’s craft brewing sector are investing heavily and poaching executives to gain market share as consumers increasingly turn away from big brewers.
The Surrey City Development Corp. is fronting $35 million to enable Central City Brewing owner Darryll Frost to occupy a new 65,000-square-foot facility and boost production to three million litres next year from 800,000 litres currently. Within five years, he expects annual production to jump to 10 million litres.
“I don’t look at my fellow craft brewers as my competitors,” Frost told Business in Vancouver. “I look at big brewers as my competition. It’s a US$100 billion beer market in North America, and there’s a movement afoot for consumers to want great beer and craft beer.”
BC Liquor Distribution Branch (BCLDB) statistics show that craft brewers are making headway against multinational giants.
In the year that ended September 30, retail sales for brewers that produced up to 1.5 million litres of packaged beer jumped 36.3% in B.C. compared with the previous year. B.C. sales for big brewers, companies that produce more than 16 million litres annually, dropped 4.6% during that period.
Frost follows in the footsteps of Mark Anthony Group (MAG) owner Anthony von Mandl by betting big on B.C.’s craft beer sector. Von Mandl said in a 2010 speech that he spent $20 million to build his Turning Point Brewing Co. on Annacis Island.
“This is the largest single investment ever in the history of North America in a startup brewery,” von Mandl said.
Turning Point produces brands such as Stanley Park and Hell’s Gate. The investment included a 110-foot windmill to power the brewery.
“We didn’t go for a windmill, but then we don’t have as deep pockets as Anthony has,” Frost said before adding that Central City’s new building achieves substantial energy savings compared with his previous site, which was 4,000 square feet or about one-16th the size.
Von Mandl has since sought top talent for Turning Point. On November 18, he hired Granville Island Brewing (GIB) general manager Jim Lister to be Turning Point’s general manager.
GIB director of communications Doug Devlin told BIV that Lister’s departure after 18 months at GIB’s helm was a “surprise” and that the rest of the management team remains in place.
It is unclear when GIB, which is owned by Molson-Coors Canada Inc., will select a new general manager.
Lister took the Turning Point job in part to join a faster-growing operation that operates a full brewery. GIB has a contract that allows it to brew most of its beer at the Molson brewery on Burrard Street.
Devlin said GIB’s annual sales growth is less than 5%.
Its B.C. sales were nearly $23.6 million in the year that ended March 31, according to the BCLDB.
Devlin estimated that more than 90% of GIB’s sales are in B.C. The company’s Alberta sales are rising much faster.
Central City Brewing’s North America-wide sales have been flat at about $5.4 million in annual sales because it had reached capacity at its old facility, Frost said.
The BCLDB did not break out sales for Turning Point, although it noted that MAG generated $87.4 million in sales in B.C. in the year that ended March 31.
Those sales include MAG’s Mission Hill Family Estate Winery and its other wineries such as Ganton & Larsen Prospect Winery.
Von Mandl might be best known for creating Mike’s Hard Lemonade, which continues to generate revenue. He launched his first beer venture decades ago when a complex series of events saddled him with more than 100,000 brown stubby beer bottles. In 1986, he signed a contract with Grupo Modelo to bring Corona beer to Canada. That lasted until 2007 when the Mexican brewer terminated von Mandl’s contract and entered into a partnership with Molson. •
