SPOTLIGHT ON BUSINESS MAGAZINE
OCTOBER 2017
There’s a revolution happening out there. You’ve probably noticed. Small pubs and large restaurants alike are jumping on the ‘craft’ bandwagon. Beers, wines and spirits being produced in small industrial-warehouse operations, spreading across North America like wildfire. And while all these micro-breweries, distilleries and wineries profess to be different, unique, and the next greatest thing, they all have one thing in common — packaging. They all need to find a vessel to distribute their products out to the thirsty masses. Enter Canada Kegs & Packaging. The four-and- a-half- year-old Burlington, Ontario, Canada- based company provides the craft-brewing revolution with the solutions required to get their unique concoctions out to the people. Spotlight on Business spoke with Canada Kegs & Packaging co-owner and founder, Steve Mason about trends in the industry and the quality products he offers to keep the craft beers marching on up to the front lines.
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SPOTLIGHT ON BUSINESS MAGAZINE • OCTOBER 2017
By John Allaire I ’ve been in the brewing industry for about 25 years,” Mason explains. “You can get a little sick of working for someone else all your life.” It’s the battle-cry of just about every newly-minted entre- preneur. Work to put money into your own pocket, not someone else’s. So Mason embarked upon a little research and discovered that there was really only one Canadian keg supplier, and a whole whack of new ‘craft’ customers entering the market every day. The lightbulb clicked on.
“I thought the other distributor could use some competition. So I started up, and about two years into it, the other company —my competitor — folded. And I kind of have the marketplace to myself now.” Inherent in most business success stories is an element to fortuitous timing. Mason’s company suddenly found themselves in a rapid- ly-growing industry with virtually no competition in Canada. “Lucky, I guess. But within four-and- a-half short years, we are the largest keg supplier in Canada, supplying breweries as large as Moosehead and Beau’s, right down to the little guy who’s brewing in his garage at home.”
Mason was quick to point out that providing his products and services to the ‘little guy’ makes good business sense because, in this expanding ‘craft’ market, anyone could be tomor- row’s ‘big guy.’ “We make a point of not having minimum orders. And we really go to lengths to help out the
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OCTOBER 2017 • SPOTLIGHT ON BUSINESS MAGAZINE
always enjoyed being in the brewing industry. So this was another way to stay involved and stay in contact with the great people in the industry, and enjoy all the relationships I have made over the last 25 years.” Canada Kegs & Packaging is Canada’s only supplier of “Franke” kegs, a German manufacturer of high-quali- ty kegs, complete with the best warranty in the business. Mason explains that Franke kegs represent by far the bulk of his business. “Probably 80% of our business comes from Franke kegs. That’s our bread and butter and our big mon- ey-maker. And they do something that nobody else does. They put a 30-year warranty on their products. And they have no representation in Canada whatsoever. So I saw this as a great opportunity. They have a great reputation in the industry. We’re happy to be able to bring their kegs in for the brewers in Canada.” Mason points out that it wasn’t as easy as just signing on the dotted line with Franke. It took some convincing for the Germany-based company to enter into uncharted waters. But in the end, Mason allayed their fears with pretty con- vincing profit estimations. “They took a look at it at first and said ‘no, we don’t need a distributor.’ And I asked ‘well what are your sales in Canada?’ and they said ‘basically zero.’ So I came back with ‘how would you like to make $3-$4 million?’ That kind of got their attention.” Canada Kegs & Packag- ing just recently re-signed a five-year open-ended contract extension with Franke.
start-up breweries because you just never know which one of them is going to take off and hit the big time.”
Being in the brewing industry for a quarter century before starting up Canada Kegs & Packaging gave Mason a first- hand view of where he wanted to end up once he jumped ship and sailed on his own. One thing became clear — he wasn’t going to end up as a brewmaster. “To be honest, at 56 years old, I didn’t want to go back to school and become a brewer.” But that doesn’t mean he didn’t explore his options. “Back in my earlier days, I had done three different business plans to open up a brewery with a couple of partners who were in the brewing industry as well. But we could never really quite get it off the ground, whether it be financing or something else. It was usually money. I always seemed to be the one who had the money to put into it, and the others weren’t willing to risk a dime.” “Within four-and- a-half short years, we are the largest keg supplier in Canada.” However, love for the brewing industry runs deep. Once bitten, there’s virtually no turning back. Just ask any craft brewer how difficult it is to walk away from the barley and hops. Mason was no different. He merely re-positioned himself and looked at the industry from another angle. “I’ve
Becoming Canada’s biggest distributors of the Franke keg line pushed the company into a hyper-growth situation. Mason explains that there were a few tensemoments shared between him and his silent partner, Helen Knowles during business expansion. But the experience on the whole has been a rewarding journey. “It has caused some growing pains, of course, which always happens with a fast-growing business, but we’ve been able to keep up and keep every- body happy. Along the way, we’ve been able to move into bigger offices and added employees, and secured a larger warehouse and added a bunch of new product lines.” These new product lines include their second-largest seller, the PakTech Can Carriers. These simple-yet- revolutionary products are recognized as the way things are heading in the beer canning market. Essentially, they replace the “bird killer” plastic rings that are often used to hold six packs of cans together on the retail shelf. Mason points out that many craft breweries are drawn to the product’s environmental sensibilities. “These are manufactured in Eugene, Oregon, and are made of 100% post-consumer waste. And all that post-consumer waste is sourced from British Columbia. So this is Canadian plastic, which is great. And the reason they source it from BC is because the sorting of all the different kinds of plastic is incredibly specific and accurate in BC. So what they get for their dollar is a pure plastic base product to use in their manufacturing process.” Mason goes on to explain that many of the plastic suppliers in the US mix their recycled plastics, making the end products weaker and less substantial. The recycled plastic coming from British Columbia tends to be less composite and diluted. The company also provides the standards, like smaller kegs for cask-conditioned ales as well as keg caps. But perhaps the most whimsical items they sell are ‘Keg Urinals!’ Resist- ing the urge to point out that this product closes the circle on the life of a pint of beer, Mason laughs that there was obviously a humorous story behind the keg urinal’s incep- tion. “I got a call from London, Ontario from a guy who said he had a contract to install keg urinals into a bunch of chain restaurants. So he bought some new kegs from me and cut and fit them up into urinals. When he came to pick up the kegs, I chatted with him and asked ‘Would you make these for me?’ I figured I could put these up on the website, and every time a brewery is going to expand or a new brew pub opens, or even guys wanting them for their man-cave at home, we’ll sell some… We’ve shipped them all over the country! We’re backlogged on them at the moment. I’ve got four coming in this week and they’re all sold!” Ahem. OK, backing away from the potty humour, Mason points out that, while there are other keg suppliers inCanada now, it remains a question of quality and service. Along with the 30- year warranty on the Franke kegs, Canada Kegs & Packaging has a keg reconditioning facility in Nashville. So for very minimal cost, a keg can be reconditioned back to almost new. He stresses that the higher-quality European kegs don’t require this service often.
na-manufactured kegs on the market.
He warns that the ‘you-get- what-you- pay-for’ theory applies ten-fold when it comes to new kegs. “That is the biggest thorn in our side. The China-manufactured kegs make the beer taste like iron, and that’s been proven by testing at two major breweries. And I spoke to a person in the Northwest Territories, which is a helluva distance to ship to, and he brought 100 of them in. 20% of them leaked. But they’re 20% cheaper than ours and the uneducated brewer will go out and buy them, thinking there’s no difference. They spend all this money on a half-a- million- dollar brew- house, get their beer tasting just the way they want it, then stick it in a poorly made keg and ruin it.” The company is also open to forging partnerships with other small businesses to help increase their service base. In fact, they have taken up with North Kegs, a keg leasing company, based in Oakville, Ontario. “The biggest problem with start-up breweries is, you’ve soaked all this money into the brewery and built it from the ground up, you’re brewing beer and it’s selling like crazy… now you need a couple hundred kegs and you haven’t got any money left. The leasing option becomes viable for those guys. They aren’t tying up capital that they can use for bigger tanks and so forth.” Mason assures that Canada Kegs & Packaging aren’t going to let the grass grow under their feet. In the next couple of years, they are looking at opening a facility in Canada that is able to emboss, silk-screen and brand the kegs. Currently, the US has the monopoly on branding the kegs. Mason feels that, if he can provide this service up in Canada, it’ll cut down on freight and eventually lower the pricing to his custo mers. He also predicts that there is a good eight years left of “boom” in the Canadian craft brewing market. “We tend to be about eight years behind the US trends, and they’re just flattening out now.” That’s a lot of kegs heading out the door (and probably quite a few keg urinals too)! And if the revolu- tion has just under a decade left to go, you can be assured that Canada Kegs & Packaging will be fuelling the charge!
But Mason’s voice drops slightly as he talks about the Chi-
CANADA KEGS & PACKAGING jennifer@canadakegs.com steve@canadakegs.com (905) 220-2311
OFFICE 3600 Billings Court Suite 100 Burlington, ON L7N 3N6
WAREHOUSE 35 Cooper Drive, Unit #1 Guelph ON N1C 0A4
www.canadakegs.com
as spotlighted in the OCTOBER 2017 issue of SPOTLIGHT ON BUSINESS MAGAZINE
www.spotlightonbusinessmagazine.com
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