Contract brewing has proved to be a grueling, merciless, low margin, joyless and difficult way to make your way in the beer industry. Consider how hard it is to operate as a physical brewery in Ontario. You’ve got to fight for shelf space in the LCBO and grocery chains or pay for it in The Beer Store. You have the limited advantage of being able to make some margin selling beer out your front door. If you start small you can parlay that into growth with some good planning and the odd governmental grant.
If you’re a contract brewer in Ontario, you’re more or less a sales force. You’re paying a brewery to make beer for you, and it’s not like that’s a break even proposition for them. They’re profiting regardless and don’t even need to pay additional labour. You, on the other hand, now have all the problems a regular brewery has without the limited advantage of a door to sell from and with the significant disadvantage of a much thinner margin. If you’re a really competent sales force (see Trouble, Double) you can probably make some headway with that on an ongoing basis.
One of the only reasons that contract brewing is a good idea is if you’ve got a plan for a physical space and you want to get your branding in the market. If the endgame is to be able to move some locked in volume when you’ve got the capacity in a year or so, it’s not a bad idea. Left Field garnered a nice reputation with contract brewed Eephus before they had their Wagstaff location. Kensington seems to be nearing completion of a brewpub and All or Nothing bought Trafalgar, so there’s light at the end of the tunnel in both cases there.
What makes less sense to me are contract brewed lifestyle brands like Ace Hill and Lost Craft. These brands seem to have targeted higher end restaurants and depend entirely on their image for their appeal. I’ve tried both of them a couple of times now because outside of the branding, the appeal eludes me and I wondered if I’m missing something.
Ace Hill is a Pilsner in the latter day sense of the term in that it is a descendent of the golden lager style. It is extremely lightly hopped and to be honest what it reminds me of more than anything else is a slightly less stable version of Carlsberg or another Euro lager. Now, I should point out, to be fair, that the first can I acquired from the Summerhill Beer Store was a little old (three months and a touch oxidized and diacetyl-y) and when I mentioned the packaging date to the Ace Hill gang, they gamely rallied round with fresh product. Points to Ace Hill for the effort. They seem like a good bunch of guys.
Fresh, Ace Hill Pilsner is extremely light in body and colour and flavour. I’m sure that if you were to take the product and compare it blind to a range of light European lagers from the LCBO or indeed light Domestic lagers from the Beer Store, it’d fit into the lineup.
The delineating factor is price point and branding. Pabst isn’t getting a Holt Renfrew shoot. Is this Bud Light in a can wrap for people who don’t want to seem outside the current craft trend and are willing to pay a premium? Has the market progressed to the point where people are willing to pay extra for a trojan horse in order not to look a pariah on the town? Isn’t that good news for the future?
Lost Craft is possibly more confusing to me. It is recognizable as a Kolsch and I’ve tried it twice as well over the last couple of months just to get a handle on it. It has varied a little batch to batch (another quandary of contract brewing) and though the commonality has been a slightly sticky finish, the more recent version had pome fruit esters and a banana accent before some light floral hop character in the cereal sweet body and little residual bitterness.
As Kolsches in Ontario go, it sits in the middle of the pack, but with more contemporary branding compared to most offerings. The thing I don’t quite understand is the approach to the market. Lost Craft attempts to portray Kolsch as a rare bird. Beau’s Lug Tread just went national. There’s no shortage of Kolsch and if the idea is that you’re going to out PR Beau’s, you might have picked an easier fight. Like, say, Mike Tyson ca. 1987.
In both cases, these are beers that are apparently targeted at upscale eateries where it seems unlikely that people would drink more than a single beer and that as an aperitif. This confuses me. Targeting with laser precision a demographic that is unlikely to purchase more than one or two of something in what is really a volume business seems like suicide to me. As a contract brewer, you’ve already got a low margin and you’ve got a sales team to pay for. Beyond the initial push, you’re going to see consumption fall without constant support and for people who are only buying one of something anyway brand loyalty doesn’t even enter into the picture. It’s sort of the popped collar of the beer market. It’s eye grabbing, but then what?
I suppose that’s what I find baffling. What’s the endgame? Just selling contract brewed beer forever isn’t really a viable business model with this much competition around. It was easier in 2011 in a less robust market, but not by much.
Now, you might think that I’m against these kinds of products. That’s not really the case. I think the market has room for anyone who wants to be in it, although possibly less than they’d hope for. I also don’t object to breweries with extra capacity making some money off their empty tanks. What I can tell you though is that I talk to enough people to know that “group of friends gets together and decides to start their own contract brand” is a story that’s currently playing out in Ontario at varying levels of success, although the variation is less than you’d think. I know that there’s going to be someone out there reading this and thinking that they too have a great idea for a contract brewed beer and this time it’ll work for sure.
To that person I’m going to say this: Then what?
On the topic of “Targeting with laser precision a demographic that is unlikely to purchase more than one or two of something in what is really a volume business seems like suicide to me.”, I’ve often wondered about brewpubs I’ve seen in airports.
I think that’s right. You’ve got to give yourself enough exposure to make a go of it and I’m not sure that selling a contract brewed product into fine dining does that.
“Has the market progressed to the point where people are willing to pay extra for a trojan horse in order not to look a pariah on the town?” Regressed, actually. See NYC and Heineken, circa 1980s.
It’s sort of fascinating that there’s an unspoken social judgment. It’s really coming along.
Considering Triple Boagy is Horseshoe Lager and Hurry Hard is Red Leaf, why is there no venom being spat their way, yet the craft aficionados all have a hate on for AH?
Well, it’s a good question and one that I have thought about a bit. I’m not sure I’m being particularly venomous. I think the entire issue comes at a time when the general quality in the market has improved and a novelty is less frequently mistaken for quality.
I really don’t like Triple Bogey or Hurry Hard either. That said, I’ve come around to the viewpoint that having a golf branded beer is a brilliant sales move. It’s a context in which people are going to buy a lot of beer either between holes or on the 19th. If you view contract brewers as essentially sales and marketing companies, then you’ve got to admit Triple Bogey is a pretty clever brand. Anyone can compete in a fine dining context and that segment will probably get more competitive as time goes along, but the first person to claim the golf brand pretty much owns that segment indefinitely. No one can come along and horn in on that market without seeming derivative. Same with Hurry Hard. There are a lot of curling clubs out there with viewing lounges that now have a curling specific beer.
I think it’s a better model.
You personally are not coming across as venomous, but you cannot deny there has been a lot of twitter hate towards AH in particular.
And while I agree with your points regarding Triple Bogey, I think it all falls apart when it’s just rebranding another company’s beer. If they were original recipes I would have no issue, but to sell a repackaged beer as if it was an original product is just plain deception. There are bars that have both these beers on tap! People make fun of places that have Coors Light and Bud Light on at the same time, but at least they are different beers.
If AH or LC are original recipes (I don’t know if they are) I would support them over Triple Bogey any time. TB should be the first target of any contract brewing discussion/article/twitter hate. It’s not even a “contract brewiery”, it’s a “rebranding brewery”.
I take your point regarding an original product, but that’s a fairly widespread problem. I’m not sure whether it’s public knowledge that Triple Bogey is Golden Horseshoe. I know it’s not talked about much. By the same token, there are black taps all across the city that are Amber or Great Lakes. Some brewpub house beers are rebrands, too.
I guess when you get outside a situation where the brewer is actually producing their own product, it’s not really about forthrightness any more regardless of who made the beer. I always like it when a contract brewer lists where their product is made on the packaging, but there’s not really any regulation saying that it’s necessary. Maybe there should be. I doubt however whether any stakeholders making money off the product are interested in having that happen.
I didn’t find it extremely light in body, colour and flavour at all. It has a definite European pilsner taste, more German than Czech. It’s all-malt, so I don’t see the connection to Carlsberg much less Bud Light. I thought the hops were quite evident in fact, good German ones.
I’m not sure what the target demographic is but this is a big beer market, lots of room for different consumers and tastes. People at costly restaurants (which I don’t go to by the way) are just as entitled to drink beer as anyone else. And what’s wrong with having one beer by the way (even if that’s true of their demographic, which I doubt)?
There are many beers in the market far less interesting than Ace Hill Pilsner IMO.
Gary
People are certainly entitled to drink whatever they wish and there’s nothing wrong with having one beer. I’m just questioning whether your single beer drinker in that context is enough to allow a brand to survive.
Edit: Let me put it this way. It is more expensive than better northern German style Pilsners that are already in the market. I am of the opinion that a more expensive product can’t survive on branding alone indefinitely.
I’ve tried the Ace Hill but once. It struck me as a perfectly respectable golden ale.
A smallish problem given the word “Pilsner” plastered across the can.
But whether or not something is a pilsner or a golden ale is due to definable mechanical factors as to how the beer is brewed, is it not? If Ace Hill is brewed with pilsner malts, and lagered (I would assume both of those things are true) then it would be deceptive to call it anything but a Pilsner.
This is true, although if it’s not immediately identifiable as one that’s a pretty significant problem.
Why is that a problem? If someone brews a great beer in the pilsner style, and it tastes great, why is it not tasting like every other beer of that style a problem? As an example, Pilsner Urquell, Steigl, and Amsterdam’s Starke all taste miles different from each other, but they can all be good beers in their own right.
Ah. You assume it tastes great. It does not. I can see how your argument would be valid if it were a ground breaking, world beating property that was burning down the status quo and redefining genres even as it invents them. It’s not. It’s a middling to fair Euro style lager.
look at: https://www.thedrinksbusiness.com/2016/07/entrepreneur-behind-house-beer-aims-to-disrupt-300bn-industry/
I think the goal of every contract brewing company is that they want to disrupt the marketplace, and apply funds spared in hardware into their plans. The actual cost of the contracted-out beer ay be 25% more than their own cost…if they had a brewery. Every brewery hopes to disrupt the marketpalce…so buena suerte.
Granted, if you make enough beer the margin becomes a smaller problem. If you’re unable to scale up beyond a certain point, the margin problem is going to persist indefinitely.
Yup, this is on point. I mean why wouldn’t it be? I will say that Ace Hill has definitely found a niche in the hipster market where it is pushed at Boxcar Social as the go to unassuming beer. Lost Craft is a bit of a puzzle for sure. Why go after Beau’s? I suppose there is some room for it by contrasting against the woodsy and everyperson’s appeal to a more “refined” and clean look to non craft beer drinkers. But is it sustainable? I think I have seen another beer out there by them and maybe they are the antidote to overly experimental styles and a more food friendly approach?
Remember, most high end restaurants still seem to have not gotten on the beer with food bandwagon yet. Or they are selling tshirts, hats and swag? So, maybe that’s the game but not a very good one.
I think I mentioned it on the Facebook discussion thread, but I really like the #4the6 branding. It’s a little odd because I think the secondary brand component for Lost Craft is actually a better, catchier, more conceptually solid tool. If I were them I’d be pushing that more. Maybe in big block letters up the side of the can. I think it looks pretty cool.
Not sure why I came across this article today but it’s interesting to see that Ace Hill and lost craft are still around and seem to be doing well?
Seem is a good word there. Ace Hill is mostly Seltzer at this point, with sales of that portion of their brand doing about five times better than their beer. Lost Craft is bogged down in trend chasing, cannibalizing its own market share. They both still exist.