That’s what Calgary-based Big Rock Brewery’s newly appointed CEO Wayne Arsenault is banking on as the company celebrates the one-year anniversary of its brewing facility in Ontario, home to 40 per cent of the country’s brewery industry.
The 27-year-old company, he says, is taking a grassroots approach of “finding and introducing customers to Big Rock one taste palette at a time” as it expands into different markets across the country.
“We really have to compete on the authenticity of what we do. It’s really a case of David and Goliath and I think people like that challenge,” says Arsenault, who has previously held executive and management roles at Moosehead Breweries and Molson Coors.
“For us it’s about innovation and bringing great beers in the market place.”
Arsenault says Canadian-owned players like Big Rock can simply never match the reach and cheaper retail prices of international brewing companies like Molson Coors and Anheuser-Busch InBev SA/NV—which are expected to capture a combined 60 per cent of Canada’s $5.6 billion beer industry revenue this year, according to market research firm IBISWorld.
While the brewing industry in Canada has benefited from growth in the popularity of craft beer over the last five years—with the number of breweries surging from 310 in 2010 to 775 in 2016 _ one of the most important success factors for businesses will be what IBISWorld calls “economies of scope.”
In its latest Breweries in Canada industry report, the firm explains that brewers producing a variety of beer styles can achieve a marketing advantage on so-called economies of scope by appealing to a greater range of customer tastes as traditional premium brands like Molson Canadian continue to be negatively affected by the craft beer boom.
Diversification has helped Big Rock continue to grow this year, says Arsenault. In its latest quarterly earnings, the company reported that sales volumes increased year-over-year by nine per cent as net revenue increased by 11 per cent to $13.5 million—gains that are partially attributable to expansion into Ontario and the sale of limited-edition products such as its Canada 150 Variety Pack of different regional beer recipes.
Even Moosehead Breweries, the country’s largest Canadian-owned brewery with an estimated market share of 3.8 per cent and expected revenue of $216 million in 2017, understands the importance of delivering on heightened customer expectations in an increasingly crowded market space.
CEO Andrew Oland says his 150-year-old, family-owned brewery has a full portfolio of different brands under its flagship Moosehead Lager brand, as well as its craft-focused Hop City Brewing Co. that it established in 2009 in Ontario.
“The consumers are looking for such variety and by having a broad portfolio that helps us,” he says. “We’ve been able to grow our business in Canada outside the east, particularly in Ontario, which is very nice.”
At a time when Moosehead contemporaries like Molson, Labatt and Sleeman have been bought out by multinationals, Oland says he’s especially proud to remain resolutely Canadian—not that offers aren’t on the table.
“Oh yeah, the potential players have all had made sure that if there ever was any desire that we know they’re interested. It’s not something we think about.”
For Steve Beauchesne of Beau’s All Natural Brewing in Vankleek Hill, Ont., maintaining the 11-year-old company’s innovating spirit—which sees it produce dozens of craft beers styles—is so critical that last year he and his father started offering their 150 employees shares in the brewery as part of a legacy plan to keep it Canadian-owned and independent.
“Neither of us thought we’d be this successful,” he says. “But I can trust the employees to care the most about the legacy of this company. They’re the ones putting in the work to make us special.”
Since its inception in 2006, Beau’s has experienced rapid growth at a compounded rate of 45 per cent year-over-year—a pace that’s physically and mentally stressful to keep up, Beauchesne says.
“By making the conscious choice to be independent, we can’t just go out and sell off equity to get a couple of million dollars in here and make life easier for everyone. We’ve consciously decided to do things the hard way because it means that we keep the control.”
But he says the biggest obstacle facing independent craft brewers is the commoditization of the industry as large international brewers bring their own mass-marketed products into the space.
“If people stop seeing craft beer as special because it’s so ubiquitous it’s going to be a big challenge for the industry.”