Both Ontario and Quebec have been producing beer for centuries – Jean Talon, the first Intendant of New France, commissioned Canada’s first commercial brewery in 1668. In the last thirty years, however, new breweries have been popping up swiftly and an entire craft brewery culture has sprung from the quiet industrial districts of Canada’s cities and into the mainstream. The last three years have seen unprecedented growth in the number of microbreweries in Ontario and Quebec, and today there are 286 of them operating across the two provinces. While the Ontario and Quebec brewing industries have developed in different ways, both are facing fresh challenges brought about by added competition and a changing marketplace, stoking some fears that the explosive growth could lead to a dramatic collapse.
Ontario: New Brewers, Old Problems
Microbrewing in Ontario is a relatively recent phenomenon; brands like Wellington Brewery, Brick Brewing Company, and Great Lakes Brewery began in the mid-1980s, laying the foundation of Ontario’s burgeoning craft brewing scene. The industry has recently turned on its head; of the 167 brewers open in Ontario today, just over half are less than two years old, while two-thirds have yet to see their fourth birthday. Last year especially proved to be a banner year in Ontario, with 47 breweries and brewpubs opening for business in places as far-reaching as Pembroke, Windsor, and Sault Ste. Marie.
While the nearly weekly grand openings may seem like a boon for beer lovers, old regulatory constraints continue to hamper the development of brewers’ supply chains, and frequently a new brewer’s products will only reach a handful of consumers.
Ontario brewers are beholden to complex distribution regulations; only three avenues exist for getting their suds into the hands of thirsty beer drinkers. They can choose to pay an expensive listing fee at The Beer Store, navigate a byzantine bureaucracy to reserve shelf space at the LCBO, or work on a person-to-person basis, selling beer directly to bars and restaurants. Most brewers, once they’ve developed a strong customer base and have ramped up production, will combine all three routes.
“Market saturation is a big problem,” beer historian and author Jordan St. John says. “In Ontario, the LCBO doesn’t have the shelf space to deal with beer, so it always comes down to the preference of the buyers at the LCBO. So, the people who understand bureaucracy have a working relationship with the LCBO.”
As it can be expensive and time-consuming to get a brewer’s earliest batches to market in Ontario, it has become common for brewers to turn to ‘contract brewing,’ a system where breweries opt not to set up a brick-and-mortar factory themselves, and instead pay other breweries to produce their beer for them. These breweries typically only produce one or two styles of beer, and primarily focus on sales directly within their immediate region to local restaurants or nearby LCBOs.
By our count, there are presently 42 contract breweries in Ontario, ranging from two-month old newcomer Bobcaygeon Brewery to the more established Kensington Brewery, which has been attempting to open its own Toronto facility for the past two years. Contract brewers usually do not stay contract brewers for long; the goal is that, once they present strong sales numbers, they begin to move into their own purpose-built brewery, as Toronto’s Left Field Brewery accomplished last year.
“[Contract brewing] has greatly increased the number of brewers that can call themselves brewers now,” Johnson says. “There’s just been kind of a bandwagon situation. I think we’re going to see a huge number of brewers disappearing in the next little while.”
On its own, contract brewing can only explain some of the tremendous growth in the number of Ontario breweries. Another major factor is the proliferation of small microbreweries outside of major cities. While Toronto, Kitchener and Ottawa have been involved with craft beer for decades, small towns are increasingly joining the trend. Some rural towns have become thickly populated by breweries – Collingwood, with a population of only 20,000, currently supports three production breweries, including Collingwood Brewery, which recently won two Canadian Brewing Awards.
“The reason why you have breweries starting up in smaller towns is because they are trying to sell to nearby bars, which is more practical,” St. John says. “You’ve got less ambitious strategies – people are looking to carve out smaller niches for themselves.”
As a result, many of these new breweries, stuck with the old regulations preventing their product from being sold on the open market, produce beer that may never make it into the hands of most Ontario beer drinkers. To date, 78 breweries (46% of the province’s total) are outside of Ontario’s 5 major population centres (Toronto, Hamilton, Ottawa, London, and Kitchener-Waterloo). With the exception of some breweries based in Guelph, Niagara, and parts of Eastern Ontario, many of these small-town breweries have very modest production capacities.
“The thing you’ve got to remember is that startup breweries are not making a lot of beer,” St. John says. “One of the predictors I use to see if these brewers are going to last another five years is if they talk about money. The people who talk about passion are screwed. The danger of craft beer evangelism is that it’s not what it’s about.”
St. John uses the example of Left Field’s new Toronto facility. Once it reaches its full production capacity, it will house a 26 hectolitre system, which is a drop in the bucket compared to the 19 million hectolitres of beer sold in Canada in 2013, according to Beer Canada, a trade organization that collects statistics on the industry.
As a result, though many new breweries have recently opened their doors, they haven’t flooded the market with beer, and some have struggled to grow the kind of customer base necessary to ensure long term success. Their sales, marketing, and overall quality will most dictate their survival in this brave new world. For example, Stock Pot Ales, a nanobrewery based in the renowned Wellington Gastropub in Ottawa, quietly ceased operations in February, despite putting out over 10 different beers and collaborating on beers with other, well-known local breweries.
“If you look at the numbers, it’s essentially a classic bubble pattern,” St. John adds. “I’m totally happy to see angel investors putting money in existing breweries, but the idea that you can walk in off the street and start doing it, it’s not true.”
Quebec: Old Brewers, New Problems
Although Ontario and Quebec are neighbours, stiff importation laws put in place by both provincial governments long prevented most beer from being shared across provincial lines, and as a result, the two industries have developed quite independently from one another. Quebec has became known as the home of some of the finest brewers of Belgian-style beer in North America. Quebecois brewers have used their francophone heritage to pore through Belgian textbooks on brewing and malting, and the result has been some very true-to-style Belgian ales, like Charlevoix’s Dominus Vobiscum line. But driven by fierce competition, the industry has recently become known just as much for its innovation and variety as for its respect for traditional Belgian brewing.
As in Ontario, Quebec’s craft brewing scene started modestly in the 1980s. But unlike Ontario, which has seen a huge brewery spike in the past several years, Quebec has experienced relatively constant growth over the past two decades. On average, about four breweries open every year in Quebec, while the most breweries to open in a single year was 14, in 2012. At present, 119 breweries are operating in the province, and virtually none of them are listed as contract brewers.
In Ontario, regulations only permit a few points of sale; but without a wholesaling board like The Beer Store or the LCBO in control, Quebec breweries are free to sell their beers in convenience and grocery stores across the province. Once the proper certifications and permits are in place, there are few regulations surrounding whom brewers can sell their wares to.
“There was a big development in [the success of the] specialized dépanneur,” says Alain Geoffroy, co-owner of Gatineau-based Les Brasseurs du Temps and long-time advocate for Quebec craft beer. “It’s a convenience store where you won’t find milk, but you will find 200 brands of beer!”
Furthermore, with entrenched distribution networks throughout Quebec, many microbreweries are able to sell their products easily across the province for little added cost. For example, Microbrasserie À l’Abri de la Tempête, located on the tiny Îles de la Madeleine archipelago off the coast of Prince Edward Island, is able to successfully sell its beer to customers as far away as Gatineau and Montréal.
But despite fewer total breweries and looser regulations than in Ontario, Quebec breweries face a much more heated competition for the thirsty masses, with 18% more breweries per capita than their neighbours to the west. And while Ontario breweries scramble for every square inch of shelf space at the province’s few points of sale, Quebec breweries must compete on the product itself, and often experiment with new beer styles to distinguish themselves. Unsurprisingly, it’s often the newer, scrappier breweries that are known to try their luck in this fierce market with less mainstream beer styles such as sour ales, wild yeast beers, and blended beers.
“The longstanding microbrewers, the big names like McAuslan and Charlevoix, they’re built on solid ground and these brands work well,” says Geoffroy. “The funkiness and the new things that will keep the consumers excited come from the newer breweries.”
Other breweries have made an effort to specialize in certain styles and build their brands that way, such as Microbrasserie Le Castor, a Rigaud brewery that made a name for itself almost exclusively on its IPA-style beers.
“People are really more interested in quality,” says Geoffroy. “It shows in the market right now that the strongest, fastest-growing microbreweries are focusing on just that.”
With brewers focusing on increasing the variety and quality of their offerings, consumers seem to be the biggest winners, while the innovation is creating exciting new directions for breweries to go.
“We’re in a bit of competition now,” adds Geoffroy, “but it’s not bad, and brewers are cool people, working by passion, and not to make money. At a certain point though, they have to make money. It’s a bit taboo right now, but eventually we’re going to have to talk about the competition.”
In this competition for the consumer’s tastes, some breweries start with much fanfare and then fizzle out, like Laval’s AMB Maître Brasseur in 2011.
“It’s always sad to hear of a brewery closing down,” says Geoffroy. “The first reaction is to find out what happened, and to see if we can avoid their errors.”
Even though Ontario and Quebec are both awash in more craft beer than ever before, the future remains quite uncertain for newly-christened microbrewers. Ontario is moving towards shedding some of its regulations, most notably allowing for beer sales in grocery stores. Meanwhile, momentum in Quebec is building to create a Quebec brewer’s quality alliance, with the goal of building more demand for the members’ beers while maintaining consistent standards for brewers throughout the province.
If these problems can be remedied, we could one day see Ontario and Quebec’s craft beer become as well-known and respected as American craft beer. If not, then all those cool new neighbourhood breweries you recently heard about just may not be around much longer.