Clik here to view.
Most craft brewers are happy to share their story. It often starts with hard work, long hours, starting small and slowly building their business, one batch of beer at a time. Craft brewing has long been linked to artisanal production, with brewers making beer on a smaller-scale using traditional techniques. Recently, not just beer, but controversy is brewing surrounding the definition of craft brewing and whether contractors and ‘virtual beer’ makers can give themselves the title of ‘craft.’
In the U.S. since 2017, a new seal appears on authentic craft beer stating, ‘independent craft beer.’ It both certifies that the beer came from one of the nation’s independently owned and small-scale breweries and signals that these upstarts are fighting back against the corporations trying to co-opt their authenticity and craftiness. This labeling isn’t the practice in Canada…yet. Canadian craft brewers, passionate about making craft beer, are part of a growing rift with contract brewers and breweries that appear to be craft but are owned by multinational corporations. They want the public to know that craft beer credentials are not always what they seem.
Contract Brewing
Contract brewing is a rapidly growing branch of the Canadian brewing industry. The province of Ontario has seen the most substantial expansion of virtual beers, from just a few a decade ago to nearly 80 different virtual brands today, according to the Ontario Beverage Network.
The definition can vary by contract, but, commonly, contract brewers don’t own their facility and rent space and equipment from another brewery. The degree of control and autonomy over the beer varies. Sometimes the facility takes responsibility for all aspects of the process except the final selling of the beer. Other times the contractor handles brews under the supervision of the brewery staff. In some cases, the brewery will offer expertise and guidance on how to brew, while in other cases contract clients are brewmasters themselves that merely need a place to work. The final product is often referred to in the industry as virtual beer.
Many brewers take the contract route because it often provides the only option for getting a brewery started, or as a means to test the waters before making a more significant business investment. Others have no real brewing knowledge and contract brew as a hobby, vanity business or marketing venture. Some say the contract concept has flourished because more people see it as an opportunistic way to make a buck in a growing market.
Contract brewing is mostly unknown to the public, and some strong opponents call the practice a dupe to consumers that muddies the concept of craft brewing. Some worry that virtual beer floods an already saturated market, while also diluting the strength of the craft beer brand. Claiming a craft beer without an actual brewery where customers can tour, enjoy a sample or chat with the brewmaster call into question what makes a craft brewery.
Some craft brewers say that contract brewers are taking a short-cut, while the contractors respond that they aren’t eroding sales from the craft industry – they want to expand it, helping to motivate the shift from the big beer brands. These brewers add that a commitment to creating quality beer doesn’t require owning a bunch of expensive equipment.
Contracting Success
Shehan De Silva is the founder of Lost Craft Brewing, a company that has found success via the contract brewing model. De Silva has been very vocal about contract brewing and the absurdity of the notion that he is less passionate or committed to craft beer just because he pays someone to brew it for him. He said that the reason Lost Craft uses the contract model is that building a multi-million dollar facility isn’t possible. De Silva said that by not having a brewery that someone could visit, or even find on a map, he has had to do more work to get his product to the consumer. Contractors often must pound the pavement, personally visit bars and restaurants or hold sampling events, to get their product to have any brand recognition.
Some craft brewers don’t have any problems with contract brewers, in fact making beer for other brands can make up a big chunk (some up to 95 percent) of their businesses, helping with the bottom line. Some breweries will only contract for those clients that do have the knowledge and a passion for craft brewing. Contract batches are a chance to get a foothold in the marketplace without having to risk too much on capital investments up front. Often, these are the contractors that eventually move on to build their own brewery. A brewer who is contracting for a year or two while they develop their brewery is viewed very differently than a different brewer who has no intention of opening a brewery. However, the question remains, if the product is good, does the consumer care whether a contractor is honest about where or how their beer is brewed? Should they care? Does this matter?
Ben Johnson of the Globe and Mail did propose an interesting thought to ponder for the contract naysayers. “There is a difference between using a brewery but employing your own recipe, skill and staff and simply paying them to brew a beer for you that you have little connection with,” he said. “I know of a couple brewery owners who know little about beer. They hire staff to make beer for them. As it happens they also own the equipment, but how different is that from using someone else’s equipment?”
Restrictions
The practice of contract brewing is restricted in some provinces. Nova Scotia law prohibits breweries from producing another company’s beer and allowing them to put their label on it, meaning the brewing must stay in-house. There are pros and cons to strict regulations, but as mentioned, some brewers appreciate having the flexibility to rent out extra space or make some extra money.
Alternatively, in the province of British Columbia, Factory Brewing is the first facility dedicated solely to brewing beer for other companies. CEO Andrew Harris has stated in an interview with the Globe and Mail, “Up until five years ago, no one here would even consider brewing their beer in another facility,” he said, noting people demanded full ownership of their beer. “But now, the market is such that people realize the realities of having to brew with a large capacity, and brewers realize the capital costs of expansion.”
Big Beer Masquerade
Craft brewers and contract brewers can agree on one thing – Big Beer’s attempts to get on the craft beer train by masquerading as craft beer steps into some shady territory. These craft imposters tend to leave their big corporate parents off the label in favor of stressing local and unique origins. The most well-known example is Blue Moon Brewing Company, the top-selling U.S. “craft” brand in 2017. Their packaging prominently notes that it is made in Golden, Colorado and omits its connection to the multibillion-dollar MillerCoors. Duped consumers have filed lawsuits, and prevailed, such as after discovering Kirin, highly marketed as an import from Japan, was an Anheuser-Busch Product. Misled consumers don’t always conquer Big Beer, however. When confronted about the misrepresentation of Blue Moon, MillerCoors responded that “any definition of what makes a beer ‘craft beer’ is meaningless.”
Canadian craft brewers are not immune to this, small- to medium-sized breweries have become targets for acquisition by large multinational companies. In an interview with CBC, Darryll Frost, president of Central City Brewers + Distillers, operating in Surrey, British Columbia, said, “There are taps on the door,” from larger corporations interested in his brewery. He said Central City would stay independent, and he hopes discerning drinkers will be the ones who keep craft beer in control of smaller breweries. “The consumer, at least the educated consumer, will identify real craft from macro-craft being crafty.”
Over the past five years, Statistics Canada has reported a slowing in domestic beer sales overall, but growth attributed to craft beer due to how it caters to discerning drinkers’ desire for quality and variety. They found smaller breweries in British Columbia increased sales by 51.75 percent between 2014 and 2015. Big Beer has registered these success stories and is now actively buying craft breweries across Canada. These corporations are looking to acquire smaller breweries to regain the market share they’ve lost to the rise in the craft brewing segment.
Not highly publicized to the Canadian consumer, Granville Island Brewing is part of Molson Coors, Okanagan Spring Brewery and Quebec’s Unibroue are the property of Sapporo (who also owns Sleeman), and Labatt Breweries of Canada acquired Toronto’s Mill Street, Quebec’s Microbrasserie Archibald and Stanley Park Brewing. The conglomerates portray these beers as if they come from small companies when in fact they are owned and operated by large macro-breweries.
Big Beer often quietly acquires small labels or even homebrewing supply companies and once the ownership changes, the labels usually remain the same. It is difficult for small brewers to match the marketing budgets and larger scales of distribution that come with a juggernaut parent company. Independent craft brewers say multinational conglomerates are making it harder to tell what’s ‘true’ craft beer. Craft beer enthusiasts consider this a loss of well-loved craft brewers, appearing to be made independently, but swallowed up and made “soulless” by big labels. Others say its just good business and if the recipe and taste don’t change, what difference does it make who owns the company?
Organizers of Toronto’s Summer Beer Fest feature local craft brewed beers, but the line up also includes microbreweries that have been acquired by large companies like Labatt’s and Molson Coors. Some were shocked and offended by the inclusion of the big players, but organizers defended the decision, stating to CBC, “A multinational corporation may own a craft beer brand, but that doesn’t mean the beer has changed. They are still making the same beer.” Craft brewers say it’s not the same.
The debate continues, as brewers walking the fine line between business and artistry, control and autonomy. Can you legitimately call yourself ‘craft’ if you don’t make your own beer?