The other day, I got a haircut.
This is not news in and of itself, even though I’m relatively pleased with the haircut.
During the smalltalk that goes along with a haircut, I mentioned that I write about beer. It turns out that the stylist had intended at some point last year to open a craft brewery in the city of Toronto. It turns out that he had the funding all ready to go and even had a brewer lined up. There’s always money to open a craft brewery in Toronto, he said. In the states, it’s the only growth industry, he said. The secret is opening with one good brand, he said.
I realize that an anecdote isn’t data, but this is where we are now. There’s money going begging and a guy who cuts hair for a living could open a craft brewery.
Now, as it turns out, the guy was fairly knowledgeable about beer and knew some Toronto contract brewers. I don’t mean to denigrate the guy’s willingness to start a new career but five years ago, this would not have been enough to get investors on board. Venture capitalists would have been leery of entrusting funds to any startup brewery.
Five years ago, the brewing industry landscape in Ontario was a great deal different.
In 2008, there were 38 breweries in Ontario. One off brews were a thing reserved for cask festivals like Cask Days at Bar Volo. Creemore was still independent, Amsterdam was still downtown, IPA was a gleam in the beard of Mike Lackey and nanobrewing sounded like something out of a Michael Crichton novel.
As you can see here, we have actually just this week hit 100 operational breweries and brewpubs. Number 100, near as I can reckon it, was probably Lake Of The Woods in Kenora, Ontario who poured their first beer yesterday. There were three others this week.
For the purposes of full disclosure, I should point out that I have used the Mom and Hops directory and then combed through the websites of these companies in order to find their first year of operation. I have included contract breweries as breweries. Also, the data does not include breweries which fall under the same umbrella. Brick and Waterloo are counted separately as are Creemore, Six Pints and Mad and Noisy.
This is a graph showing the number of Ontario breweries added each year. You’ll notice that last year we had 22 and that we have 22 so far this year with six months to go. There are 25 additional breweries in some form of planning stage that are not yet operational. We might actually double the number of openings this year because I can guarantee that there are breweries slated to open that aren’t on the Mom and Hops radar yet. It’s possible that within two years the number of breweries in Ontario will have doubled.
It’s not just in Ontario, either. The Brewer’s Association claims 2,360 operating members as of March 2013 and 1250 breweries in planning as of April 1, 2013. That means that in 2012 they added about 360 breweries or about a fifth as many as they already had. If you want to see where they’re laid out, the New Yorker has a pretty nifty map.
The growth in the case of Ontario specifically and in North America generally is parabolic in nature and there are some problems with that. I sincerely doubt that there’s a brewery out there whose future business planning is not predicated upon the idea that they will grow and flourish. Confidence is the key to Capitalism, after all. The problems are that customers are a finite resource and the amount of beer consumer is dropping annually in both Canada and the U.S. If you look at the craft beer market segment, it is booming. There’s more reportage on the subject than ever before and experts are getting interviewed left and right.
The thing about parabolic growth is that we’ve seen it as recently as 2007 and it usually doesn’t end well.
I suppose I could use just about any example from Tulips to the South Sea Company to Housing to Bitcoin – everybody want to know how to trade bitcoin, but it’s probably easiest just to post the explanatory graph.
Coincidentally, I don’t know if you know this, but there’s a movie coming out called Drinking Buddies. It stars Olivia Wilde and Ron Livingston and is set partially in a craft brewery. It is a romantic comedy. If the heavily tattooed brewers that you know seem all PUNK RAWK and a little bit edgy, it’s worth pointing out that a romantic comedy isn’t.
I’m worried, you see, that movies are the death knell for popularity. They get released at the height of a trend. Look at the popularity of break dancing following the release of Breakin’ 2: Electric Boogaloo. Similarly, the popularity of skateboarding (although resurgent in the mid 90’s) took a real hit after being featured in Police Academy 4: Citizens on Patrol. Movies cash in on trends. The cash in part makes me think that we might be hitting the greed portion of the mania phase of the above bubble graph.
When you add to this the fact that the LCBO doesn’t have shelves for all of this stuff and that privatization in Ontario is pretty much a pipe dream for the time being (I still haven’t seen a serious study on that, by the way), it becomes pretty clear that (and I wish I could do a Sean Bean impression here) Winter Is Coming.
So, if you’re an existing brewery, you’re going to want some cash on hand. If you have an onsite store at your brewery, promote the hell out of it. If you’re a start-up brewery and you’re already brewing, for God’s sake do something interesting to differentiate yourself a little (bamboo beer doesn’t seem so silly now, does it?)
And, if you gave me a haircut about a week ago, you might want to wait a couple of years and see how the market shakes out before launching a new brewery in Toronto. Also, thanks for the nifty haircut.