The Coming BC Craft Beer Correction

With the number of craft breweries in BC expected to reach at least 130 by the end of 2016, competition is growing to the point where I expect we’ll see an increasing number of business failures. That’s not because there’s a lack of room for growth. BC has a population and GDP similar to Oregon, yet they have double the number of breweries we have. It’s because there’s a shrinking margin of error, especially in outrageously expensive Vancouver.

Growth of the BC craft beer market alone hasn’t floated all boats. (Remember Plan B, DIX, Taylor’s Crossing, and Surlie?) Yet, that’s what many of the startups seem to be counting on without a much deeper consideration of to whom and how they will sell their beer. In fact, there are breweries that don’t even have a working marketing plan (not the same as a promotion plan), never mind a marketing budget (not the same as ad hoc spending). We’ll see how much longer they’ll last on passion after the next 30 breweries open their doors.

Thanks to Beer Me BC, we have a better idea of whom the typical BC craft beer drinker is and their consumption habits. According to the most recent self-selecting survey, they are predominantly males between the ages of 27 and 42 living in the Lower Mainland and Greater Victoria. They drink, in ranking order of preference, India pale ale, stout, pale ale, sour ale, or saison from a bomber 3-5 days per week, mostly at home. Their beer is chosen foremost for its style, then by brewery and reputation.

Déjà Vu?

If the anticipated growth to buoy BC’s new breweries is, on the other hand, expected to come mostly from the 75% of British Columbians not drinking craft beer, the Beer Me BC statistics profiling a snapshot of the 25% who do, are of little help. Trying to appeal to that segment, consciously or not, just means competing for the same piece of the pie, but with shrinking profit margins from the downward pressure on prices. It’s already happening. Will that be enough to pay off your capital outlay? Fund new tanks? Install a bottling or canning line? It wasn’t for R&B and they weren’t newcomers, unknowns.

If you venture outside of Vancouver or Victoria, it’s easier to see that the reason the 75% are not drinking craft beer is because they haven’t adopted craft beer culture and embraced a broader beer palate. It takes education and time for that to happen. I saw this recently at a dinner theatre in Port Coquitlam. It was like stepping back to the time when beer was understood as something golden, light, and fizzy that you knocked back ice cold, bottle after bottle, for refreshment. Coffee was also uncomplicated back then. You just ordered “a coffee” in English, then added cream and sugar to your taste.

In domestic beer land, craft beer is seen as a trend appealing to those who are fussy or snobby. It provided the dinner theatre with material for one of their comedy skits, whereby the owner demonstrated how to be a craft brewer. He poured a bottle of Canadian into a dimpled mug, added a couple globs of maple syrup, then stirred. Suddenly, he grabbed the mug and downed the beer in one long draught. He paused for a moment. I then felt a slight queasiness, thinking it might come back up.

To their credit, the PoCo establishment did offer a handful of craft beers. They even took the trouble to include descriptions on the menu. Granville Island and Okanagan Spring, however, were erroneously listed in the craft section. There was also a notable lack of any dark beer, probably because their patrons consider them to be heavy and strong. If you want to drink like that, you order red wine, right? I chose their strongest beer, a Lighthouse Shipwreck IPA. It was served to me without a glass because why do you need one when the bottle fits in your hand just fine? Fortunately, there was already a wine glass at my place setting that helped avoid any hassle with the server.

How Big is the Pie?

I wonder how many of the breweries on Jan Zeschky’s New Breweries in 2015 list have made the basic calculation of how much beer they will need to sell in order to pay the bills and have some money left over for contingencies, possible expansion, and to sock away for retirement? For example, will Twin City be able to sell enough beer to Port Alberni’s 15,125 adults between the ages of 19 and 64 to reach this goal? If not, where will they make up the difference and how much more will it cost to make the sale?

On the opposite side of Vancouver Island, Surgenor failed at becoming the hometown beer brand in the Comox Valley and couldn’t make up the shortfall elsewhere to stay in the game. Since then, real estate refugees from the Lower Mainland and lifestyle migrants from beyond have flocked in, changing the demographics. Now its more than 32,000 people between 19 and 64 support three breweries – Cumberland, Forbidden, and Gladstone.

Has a critical mass now been reached in the Comox Valley that will naturally grow the number of craft beer drinkers to provide its three breweries with a stable foundation? Or will the new cohort of novelty-seeking thinking drinkers spread their beer budget to other breweries, attracting more serious attention from outside competitors, ending the honeymoon?

Getting a Slice

To sustain our growing number of craft breweries, it’s clear from the above discussion that we need to increase craft beer’s market share in BC. That means making a concerted investment in educating the 75%. Direct interaction with the non-craft-drinking public is an obvious component. The first PNE Craft Beer Fest was an ideal example because of whom the PNE attracts. It’s unfortunate the weather dampened a portion of that.

Training licensee employees is an investment with increasing returns. How can they sell your beer if they don’t understand it or even like it? As my PoCo example above illustrates, hospitality establishments will offer craft beer if they get enough people asking for it. Without training, however, they won’t actively sell it or even properly handle it. How many pubs have tried offering craft beer, but say it doesn’t sell? Were they taught how? If not, whose fault is that?

Beyond these generalizations, the survival of individual breweries in a crowded marketplace will depend on their having a distinct identity to differentiate themselves, clear business goals with necessary sales targets, and a detailed plan to meet those goals that the entire team understands and gets behind. Quirky beer names, vibrant beer labels, following trends, and broadcasting on social media won’t cut it when everyone else is doing it. How will one of the 75% choose your beer when standing in front of fridges full of bombers or faced with a menu of a dozen or more taps? I can help. Contact me to find out how.