SYWTOABP: Minimum Viable Market Size
The So You Want To Open A Brew Pub series ended many moons ago, but people still read it and it has become a valuable resource for entrepreneurs and beer aficionados. Sometimes folks leave comments and questions and sometimes they find my personal email address and write me directly. The most common question is, do I think [insert small Canadian town name] is a good spot to open a brew pub?
I don’t like to rain on people’s parades but the example I always give is Tofino. A know keeners amongst our readership will say, but Tofino has a brewery now. Yes but for years there was talk of Tofino having a brew pub. There was a location, there were supposedly investors, there were 200,000 tourists in the summer, but a brew pub was never opened in Tofino.
Tofino is a very small town, that just happens to be on the edge of a national park with a world famous beach and hiking trail. Most small towns in Canada do not have 100,000’s of extra visitors for a few short months. Yet even with this seasonal increase in market size, a brew pub never opened in Tofino despite the idea being popular with locals.
A small micro-brewery costs less money to open, less money to staff, and use all their start up capital towards the production of beer. They don’t need to buy a commercial kitchen, a bar, an audio video system, etc. etc. The biggest problem facing small breweries is distribution, getting their product on shelves and in restaurants and bars. If you can solve that problem, you can open a brewery anywhere within a few hours drive of Vancouver. That is why Tofino has a brewery. That is also why Powell River has a brewery. Duncan however does have a brew pub, but sadly Duncan has become basically a suburb of Victoria with a mountain in the way. It is a lot different than the town I remember growing up in.
Whistler does have a brew pub, but Whistler is a world famous resort, see a little thing called the 2010 Winter Olympics. I still remember John Montgomery enjoying some beer after winning his gold medal. That 15 second clip sold a lot of beer in BC that day. Far more than 200,000 tourists visit Whistler during ski season and all year round people visit Whistler to golf or mountain bike or hike. There are few towns the size of Whistler that have the corporate dollars and investment in real estate by the wealthy that Whistler has.
So if Tofino is too small and Duncan is large enough, what size of town do you need to support a brew pub? That requires some research and some math. I was able to find 25 brew pubs open in British Columbia in November of 2013, that is a good sample size. The city with the smallest population that supports a brew pub is Osoyoos with a population according to the 2011 Canadian census of just 4,845 people. It is another resort town like Tofino but I think the highway system in and out of Osoyoos is smoother and their proximity to the US border is also advantageous. According to the town’s website:
“Osoyoos is one of the fastest growing communities in British Columbia and is accessible to as many as 14 million consumers within a day’s drive.”
14 million is a considerably larger market than 4,845 people. The other smallest towns in BC supporting a brew pub are:
The average sized city supporting a brew pub in BC is 191,701, but realistically the average population number needed is closer to 80,943. The second number takes into account the fact larger cities in BC support multiple brew pubs. I’d be hesitant to open a brew pub in a town with less than 80,000 people unless it had a large number of seasonal visitors or the town itself was between or near larger population centres which is the case with Duncan and apparently Osoyoos. Tourists are seasonal customers, businesses that rely on summer tourism often have very lean winter months. The wealth of the local citizenry is also a factor. Whistlers attracts some very wealthy visitors and part time residents. Your ability to demand a premium for craft beer from loggers, fishermen, and miners is not a given, tourists have a higher willingness to pay than many local BC residents.
The retirement and relocation of wealthy boomers to the coast is a trend that probably helps BC’s craft beer industry. I still think the Comox Valley is a good place to open a brew pub in BC. Lots of people are retiring to the valley and it has an air force base, golf courses, mountain biking, and a ski resort. The Comox Valley is apparently Canada’s 59th largest metropolitan area, i.e. a lot bigger than Osoyoos.
So before you get too far into planning your brew pub grand opening, take a look at the local demographics both population size and disposable income. Bigger is better when it comes to market size.