B.C. Beer Blog

The who, what, where, when, why, and how of B.C. craft beer

The Coming BC Craft Beer Correction

with 20 comments

IMG_20150720_205116With 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?

Surgenor2999On 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.

20 Responses

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  1. Since Giggledam does not understand theatre, comedy or food why would you expect them to understand beer? They simply deliver the lowest common denominator to a largely undiscriminating audience.

    Stephen Rees

    December 29, 2015 at 1:58 pm

    • Which is why they offer a suitable illustration of the 75%. That said, of the craft breweries whose products are sold there, at least one should have taken the time to educate the management and staff, rather than leaving the changing of culture to chance. It won’t happen overnight, but once it does…


      December 29, 2015 at 2:39 pm

      • But Rick do they even know their beer is sold there? More than they ordered it from BC Liquor as a craft option. I would venture to say they would only know if they read this post.


        December 30, 2015 at 7:54 pm

  2. The issue in British Columbia is cultural.

    I hate to be that guy, but it’s still a meat and potatoes province because the blue collar work force here is very entrenched in the attitude that anything better than the very basics is for “Snobs”. I live in Nanaimo which not long ago was basically the epicenter of that mentality, and it is definitely getting better. Still, if you go to a bar full of guys ordering lucky and try to order a local pale ale, you’re one step towards people giving you attitude.

    What can change the rates so BC Is more like Oregon? Time, and maybe a change in provincial governance that will give local guys the ability to compete with large foreign producers in pricing.

    I also think breweries need to stop trying to be Jack of All Trades. I go to only two porters on Vancouver Island for reliably good beer, and all of the rest frankly feel like afterthoughts – they’re not maximizing the potential of the style.

    If there are already four people in your city of 80k offering standard IPA and standard Stout, you need to be the “Seasonal Beer Done Well” guy or the “Esoteric/obscure style” guy in order to get noticed.


    December 29, 2015 at 9:17 pm

    • Thanks for being that guy, M.D. I grew up in Powell River and wondered if what you described about Nanaimo would also be what Townsite Brewing would face when they opened. As it turned out, like in the case with the Comox Valley, the demographics in PR had changed. Townsite thrived.

      On a side note, it was interesting that when I went to my high school reunion a couple of years ago, I bought an old friend of mine, whom I saw drinking Canadian, a Townsite Zunga. He politely drank it. When he bought me a Townsite, I later saw he had switched back to Canadian. He’s living in Nanaimo now.

      As for your remarks about breweries trying to be “Jack of All Trades”, I think it depends on where they are located and how many other breweries are in the same town. If you’re the only brewery and the population is large enough to sustain a decent business, you’ll want to brew enough styles to satisfy a sufficient number of people to stay profitable. You also need to do that if you are targeting Millennials who crave novelty and variety. That said, I do agree with you that there needs to be more differentiation. Are you really limiting yourself that much if you specialize in being a lager brewery or exclusively brewing wheat beer? There is still a lot of scope for variety in those two areas if you don’t limit yourself to the Reinheitsgebot.


      December 30, 2015 at 11:56 am

  3. Good to see you’re still the opinionated Beer Writer Rick! 🙂
    Having spent years away from Vancouver now, but do remember DIX fondly, I can agree with your sentiments that apply not only in Canada but in Australia.

    Small startup breweries are now competing here with “Small Craft” breweries like Stone flying their beers out here fresh. Yes they are expensive but all beer in AUS is expensive. Brewers here start off selling their ‘Pale Ale’ and don’t really move on from there. We get versions of differing hops, but finding a 7+% IPA is nigh impossible in Sydney a city of 6 Million. Brewers here are often contract brewers who still work their fulltime jobs, and brewpubs don’t exist unfortunately. Most small brewers pump on stock standard Pales, and contract brew their bottles cans at larger industrial facilities.

    Personally I think globally “craft” is going to rationalize, as AB takes their pick of breweries within profitable distribution models and well known names. If Fred & Bob want to setup their brewery in today’s economic climate they definitely need marketing and business strategy first. Gone are the days when you go from Home Brewer to brewery with no strategy.


    December 29, 2015 at 9:23 pm

    • Thanks for chiming in, Sol! I appreciate the comparative info on Oz. It sounds like the industry is a bit wobbly. For a city the size of Sydney, it should easily have the diversity of Vancouver. Fortunately, places like China and India offer lots of room for growth for the astute and intrepid. Talk to the craft brewers in China, they say the priority is the same thing I am saying about the 75% here — education!


      December 29, 2015 at 10:32 pm

  4. Nice headline but not very much depth here in your research for the rational for a correction. The market for Artisanal Beer is still up around 6% this year so Beer is still growing which is the category you are predicting a decline. The biggest gain this year was Growler sales at around 54% for less the 15,000HL breweries. If anything the consumer demand is growing. That said the guys building out this cold, old school boresville tasting rooms with no brand, aesthetic appeal or promotions are going to have a tough go.

    The correction you are more likely talking about is the Breweries that are not appealing to Millennial which have an insatiable alcohol consumption. Whether they are drinking trendy craft beers, boxed wines or scotch straight up, they are doing so in a way that no other generation has before.

    You touched briefly on marketing and promotion but I would say that the target market in beer is shifting.

    Still lots of revenue to be earned. We see sells growing every week.

    Huxley (@HuxleySupplyCo)

    December 29, 2015 at 9:38 pm

    • I’m not predicting the BC craft beer market will decline soon. If you recall the first paragraph, I said, “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…”

      I’m predicting more brewery failures because of a lack of attention to marketing. The growing competition demands a more sophisticated approach and, therefore, larger marketing budgets. Just because craft beer sales are growing, doesn’t mean they will be evenly spread to all in the industry. Those breweries on top of their game will garner a larger market share. Some breweries will do well enough staying small and serving a loyal local customer base. The ones in between will struggle.


      December 29, 2015 at 9:58 pm

  5. So basically this entire article is to promote your marketing services?


    December 29, 2015 at 11:22 pm

    • I doubt I would have needed to go through that much trouble writing this piece up if it were.


      December 30, 2015 at 12:00 am

  6. I get where your headed now. Semantics. A correction typically is used as a decline in price or commodity value. You are using it as the commodity of a Brewery success will be in decline. 🙂 Agreed on the mid market hustle will be tough and so will growth but when brands see the return on attention to detail and lifestyle marketing they wont hesitate to dig in and get to work.

    There is several Breweries that have come onto the scene a little to late and with not enough depth in their plan to really capture jumping up into the bigger production levels. And the fight for shelf space once they get there is so hard to maintain without a solid pull through that the light at the end of the tunnel will be a stretch.

    Huxley (@HuxleySupplyCo)

    December 29, 2015 at 11:23 pm

  7. Taking craft beer into new market territories is a kind of chicken or egg problem, ie demand vs availability. Will public demand create availability or does availability create demand in the consumer’s mind? Either way there’s a time lag and someone has to take a risk on the business side of things by pioneering a new market, and, as a couple of bankers have told me “we don’t like pioneers they get the arrows, we like settlers they get the land!”.


    December 30, 2015 at 4:27 pm

    • Certainly when entering undeveloped markets, bankers are not the best source for financing. They want guaranteed profits that come from a track record. But if you evaluate the market’s economic fundamentals, demographics, its culture, and the sales of comparable products, you can get a fair sense as to whether or not you have a decent chance for success. I see craft beer becoming a global phenomenon, which makes it more of a question of how much money and time can you invest in developing demand in your target market.


      December 31, 2015 at 12:06 pm

  8. […] recently read a great article on “The Coming BC Craft Beer Correction” by Rick Green. The piece is well researched and written and I suggest taking a read before […]

  9. Hey Rick, Carnell wrote a great rebuttle post and I wanted to make sure you saw it as I see good points to both.



    December 30, 2015 at 7:52 pm

  10. Thanks for the article. I’m a somewhat regular reader and first time poster. Anyway, I think M.D. made a great point about culture being a hindrance to growth. In my experience though, a major hurdle of growth seems to be the fear of the unknown rather than the snob label. Education can definitely dispel this fear. I moved from the Lower Mainland up to Williams Lake in 2011 for work. The craft beer scene in town was non-existent. Instead of complaining about it, a group of my friends and I started a craft beer club that meets monthly and features eight unique brews from around the world. So far we’ve showcased 248 beers and had 97 guys come to at least one event. Each beer is presented with a brief history of the brewery, style, and tasting notes. The ‘regulars’ have become pseudo-craft beer ambassadors within the community. Back in February many of them were key volunteers for our first annual Williams Lake Craft Beer Fundraiser for our hospital. We sold all of the 280 tickets in three days and had 12 breweries from around the province support the cause. February 2016 will be our second fundraiser and we moved to a bigger venue to handle most guests and breweries. We had another sellout of 425 tickets in only seven hours. This isn’t meant to be a “brag post”, but I want to write that educating people on craft beer has been key to seeing the market grow up in Williams Lake. Since we started our beer club, Barkerville Brewing has opened in Quesnel (1:15 north) and Broke ‘N Rode Brewing, located in 100 Mile House (1 hour south) will be opening in 2016. We’re very excited about having “local” places to fill our growlers. I’m sure one of these days a brewery will open in Williams Lake, but until that time my friends and I will continue to do our part spreading the gospel of craft beer. Keep on posting these informative articles!

    Joel Martin

    December 31, 2015 at 11:04 am

    • Thanks for joining the conversation, Joel, and sharing developments in Williams Lake. This is exactly how the ground work is laid for developing a craft beer culture in a place where none exists. In Vancouver, it started with CAMRA and their supporters gathering at DIX. Vancouver Craft Beer Week was born from a group of DIX barstool warmers.

      Keep up the good work! And if you are interested in contributing to the blog, documenting the evolution of the Williams Lake craft beer scene, you are most welcome to.


      December 31, 2015 at 11:57 am

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