SpotlightOctober2016

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

SPOTLIGHT ON BUSINESS • OCTOBER 2016

Webmaster Aaron Allen

Editor Lee Atwater

Content Director Rod Gregg

Advertising & Marketing Wayne Jacobs Nicole Rayner

Managing Director Stewart Gregg

Research Director Brent Brown

International Operations Director Nick Gregg

Research Sarah Lajoie Alia Morash Ashley Lindsay

Director of Creative & Graphic Design Carmen Fitzpatrick

Office Administrator Kyte Carter Operations Manager Samantha Ford

Publisher AIDACA Media

Editorial Katie Davis David MacDonald Charlene Boyce Jamie Barrie

P eople think that the Summer months are the months for beer in North America, but like the Germans we are very quick to hop on the beer wagon for Oktoberfest and tap into some good ole traditional fun that is brewing from coast to coast in October. While some are thinking of what they will wear to their neighbors Halloween party, an event that also usually involves the drinking of a few beer, others are heading off to beer gardens to celebrate one of North America’s oldest industries. But where did it come from, The Oktoberfest has its origins in the year 1810. However, it looked a bit different then, as the first Oktoberfest was a horse-race, held as a part of the wedding festivities of Bavarian King Ludwig I. and his wife Theresie. The people liked that horse-race so much, that it became an annual event, which then developed into what we know as Oktoberfest today, as the focus shifted more and more away from the horse-race and towards fun rides and drinking great beer. The beer economy itself is worth celebrating duringOktoberfest as in Canada it supports 1 out of every 100 jobs in Canada and generates $5.8 billion in government revenues in the form of product, income, and corporate taxes. The brewing industry is over three times larger than the wineries and distilleries industries combined. In the U.S. the Beer Economy generates 105.9 Billion in revenues with The Craft Brewing Industry contributing $55.7 Billion to the U.S. Economy and more than 424,000 jobs and these numbers are growing. The Beer Industry’s supply chain stretches across the country as beer consumption in one region supports jobs in many other regions along its supply chain. This has been the driving force behind the “Free the Beer” campaign by Canadian Member of Parliament Dan Albas as he looks to see interprovincial trade barriers removed so that we can have an open flow of beer traded coast to coast which will give regional and craft brewers more access to markets for their products and a better selec- tion of beer for consumers.

Companies like Spindrift Brewing Company could see their product openly available to the West coast and Marten Brewing Company could see theirs on the East Coast. When speaking with Jonathon Blum of Bad Martha Beer, Stefen Marten of Marten Brewing or Andy Armstrong of Spindrift it is very apparent the passion that they have for the industry and the pride that they have for their brandand their awardwinningproducts that they provide. We hope that you enjoy these features and the many others that are in this month’s issue from both within and outside of the brewing industry. We also hope that one day you have the chance to sample some these great brands and that you taste the same success that these companies have had in your own industry. Stay thirsty our friends as these guys are counting on it.

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OCTOBER 2016 • SPOTLIGHT ON BUSINESS

“Do you want to try some?” Usually when I conduct interviews for themagazine, it’s me asking the questions, but this was definitely an occasion where I was hoping to be asked that one question in particular. The man asking was Andy Armstrong, co-owner and managing partner of Spindrift Brewery in Dart- mouth, Nova Scotia. He was offering me samples of Spindrift Brewery’s four micro brewed lagers and after a tour of the 3,400 square feet state...

After 700 projects in 67 countries over a 25-year span, it’s not at all surprising that the President and CEO of DME Brewing Solutions in Charlottetown, Prince Edward Island, Peter Toombs, became nostalgic when pressed about his company’s silver jubilee. He beamed with pride as he recount- ed his “first grand project” with the Diversified Metal Engineering...

SPOTLIGHT ON BUSINESS • OCTOBER 2016

03 SPOTLIGHT ON OCTOBER 08 CURRENT INDUSTRY EVENTS 12 SPOTLIGHT ON INDUSTRY 12 PEI BREWING Tiny Province, Big Beer Taste 26 SPOTLIGHT ON BUSINESS 26 HUDEC WOODWORKING Nova Scotia’s Sweetest Treasures come from a Small Village on the North Shore 52 SPOTLIGHT ON INNOVATION 52 MULTIDEV TECHNOLOGIES INC. Tailored Beats OSFA Any Day 62 SPINDRIFT BREWING CO. Making Waves in the Microbrewery World 71 DME BREWING SOLUTIONS A New Beginning for Old Friends Automated Design Meets Intuitive Direction 32 APPLETON CHOCOLATES

Those guys behind the glass are used to it. You can point and talk about them amongst yourselves. Laugh – they won’t take it personally. If you wave – and their hands are free – they’ll wave back. Head Brewer, Joe Strickland and Braumeister, Stefan Buhl have been making beer for Marten Brewing Co. on 30th Avenue in Vernon, British Columbia for over two years now and the fact that they perform their craft – please excuse the beer pun – in the centre of a brewpub while customers empty their mugs and plates is just part of the job. And it’s a welcome part. These guys love when they look out from their glassed-in brewery at the centre of the Marten Brewpub & Grill and see tables of co-workers and guests or toasting a fresh-from-the-tap pint of one of their very own creations while they’re putting together those very same recipes...

78 BAD MARTHA BEER

Good Suds on the Vineyard

82 MARTEN BREWING CO. A Truly Canadian Story

Jonathan David Blum’s CV is impressive. Accord- ing to Bloomberg, he earned his undergraduate degree from George Washington University. Then he earned his JD (Juris Doctor or Doctor of Law degree) from Western New England College, School of Law. In March of this year he retired from YUM! Brands – which operates Taco Bell, KFC, Pizza Hut, and WingStreet around the globe – after serving as the Chief Public Affairs Officer and Senior Vice President for nearly nineteen years. He was also the Vice President of Public Affairs at Taco Bell for almost twenty- three years and the Global Nutrition Officer for four years. He’s currently serving as a Director of The Advertising Council, Inc. and as an Indepen- dent Director of Kindred Healthcare Inc. ...

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

A IDACAMEDIA understands that small and medium size busi- nesses (SMEs) are key to the successful growth of any economy and just as important as big businesses to the global economy as a whole. That is why AIDACA MEDIA is excited to offer Spotlight on Business Magazine, which offers an interactive experience for SME businesses to communicate with each through a mobile-optimized website and give a global viewof business today and what can be expected tomorrow at all levels. AIDACA MEDIA understands business moves at the speed of the web and today’s SME business leaders live in a technology based world of smart phones, tablets and information at your fingertips.

SPOTLIGHT ON BUSINESS • OCTOBER 2016

Google ‘Marco Pecota’ right now. If you only scanned that Toronto Star article and you simply glanced at that Globe and Mail piece and took a quick peek at the IMDb page, I’ll save you the trouble of asking and just give you a simple answer: Yes, that’s all about the same Marco Pecota. Marco is a man inspired. He’ll be the first to tell you that he has no formal education as an industrial designer, but there he is featured in the Life section of Canada’s largest online news feed as well as in the Home and Garden section of Canada’s most read newspaper. He’s also not a film school graduate, but he was nominated for a Genie Award – which recognize the best of Canadian Cinema and Television. Marco prescribes to, in his words, “the old adage that if you bake bread and everyone buys your bread, you’re a baker.”

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

5TH ANNUAL ONTARIO CRAFT BREWERS CONFERENCE 2016 Allstream Centre – Toronto, Ontario, Canada

October 13th 2016

TheOntarioCraft Brewing industry’s topbrewers, decision-makers, thought leaders and supporterswill gather in Toronto for a full day of education sessions, networking, breakouts, Suppliers Marketplace and craft beer & food with over 900 attendees including: craft brewery owners, operators, brewers, over 80 leading-edge suppliers to the brewing industry, investors, government, industry champions. Anyone currently involved, or wishing to be involved, in Ontario’s burgeoning craft brewing industry.

For more information visit http://www.ontariocraftbrewers.com/conference/

12TH ANNUAL AUSTRALIAN BEER FESTIVAL The Australian Heritage Hotel - The Rocks, New South Wales, Australia

October 14th-16th 2016

Cumberland and Gloucester streets will come alive with great Australian craft beer festivities from Friday 14th of October to Sunday 16th of October, showcasing more than 30 different Australian breweries, gourmet food stalls, meet the brewer sessions, blind tastings and live entertainment.

For more information visit https://www.eventbrite.com.au/e/12th-annual-australian-beer- festival-tickets-26047588037

THE BUSINESS OF CRAFT BEER 2016 CONFERENCE Vancouver Convention Centre - International Airport - Vancouver, British Columbia, Canada

October 14th 2016

The BC Craft Brewers Guild to provide you with even more information on how to create and grow your craft beer business. With everything from distribution to liquor laws to industry success stories, this is a must-attend event for brewers, craft-beer fans and industry suppliers such as manufacturers, lawyers, accountants, realtors and marketing/branding consultants. Hear expert panelson tourism, fundingopportunities, andexpandingsaleswhichwill provideyouwith information on how to grow your craft beer business. Plus learn about the most up to date safety and best practices, and the professional services that you need in order to make your craft beer business stand out from the rest.

For more information visit https://ablebc.ca/event/business-craft-beer-2016-conference/

OKTOBERFEAST TORONTO Airship 37 – Toronto, Ontario, Canada

October 14th 2016

OktoberFEAST is an indulgent evening inspired by the bounty of the fall harvest, showcasing the hottest food trends and coolest libations. With live music and a vibrant atmosphere it is sure to satisfy every craving. Transforming an ordinary night into something extraordinary, local vendors like craft brewers, wineries, the hottest restaurants, and even food trucks have joined forces to raise funds for the fight against cancer. the Canadian Cancer Society’s ground-breaking research and support services.

For more information visit http://convio.cancer.ca/site/PageNavigator/UFE_ON_Oktoberfeast_2016_homepage.html

SPOTLIGHT ON BUSINESS • OCTOBER 2016

3RD ANNUAL YUKON BEER FESTIVAL Kwanlin Dün Cultural Centre - Whitehorse, Yukon, Canada

October 14th-15th 2016

The Yukon Beer Festival Society was started in 2013 by (you guessed it) a bunch of northern-living beer lovers. Sure, we loved going outside of the territory to beer festivals, but we felt like there was a good time to be had in throwing our own hoppy shindig. So, we decided to do just that! The first annual event, in 2013, was a hit with Yukoners and visitors alike. Each year the festival has grown to include more tastes, more representatives from breweries and distributors across North America, and more patrons enjoying BEER! The society chooses a local charity for each festival and we donate profits from the event to benefit their cause.

For more information visit http://yukonbeerfestival.com/

CASK DAYS 2016 Evergreen Brick Works – Toronto, Ontario, Canada

October 21st-23rd 2016

Cask Days is a family run cask-conditioned beer festival that started on the patio of Bar Volo in 2005. The festival has evolved into one of the most exciting craft beer festivals in the country and one of the largest cask-conditioned beer festivals in North America. It encourages brewers to experiment and explore diverse beer styles, and offers the opportunity to showcase their nest brews. In many cases – one offs that are especially made for the event in cask-conditioned form. Our goal is to host a unique beer festival experience that celebrates local craft beer, food, art andmusic. Cask Days has recently opened an online Cask Shop that sells equipment and accessories for dispensing, serving and making cask-conditioned ale.cer Society’s ground-breaking research .

For more information visit http://www.caskdays.com/

BC BEER AWARDS AND FESTIVAL 2016 Croatian Cultural Centre - Vancouver, British Columbia, Canada The 7th Annual BC Beer Awards & Festival is set to return to Vancouver to celebrate the very best craft beer brewed in British Columbia. This one-day only event features both the BC Beer Awards ceremony hosted by CBC’s Stephen Quinn and a craft beer festival with over 65 breweries and cideries along community booths, and craft beer focused vendors. This year, awards will be presented for 30 categories, up from 20 last year. Awards include CBC People’s Choice Award, Richards Buell Sutton LLP Rookie of the Year Award and the Brewers Challenge.

3RD ANNUAL CELTIC OKTOBERFEST 2016 Port Hawkesbury Civic Centre - Port Hawkesbury, Nova Scotia, Canada

October 22nd 2016

October 15th 2016

We’re proud to be celebrating our 3rd year as Cape Breton’s first ever craft beer, local foods and Celtic music gathering, and we can’t wait to share the experience with you. What better way to celebrate than by a taste testing of our Island’s best food and Nova Scotian craft beer. As the Nova Scotian craft beer industry continues to enjoy steady growth and develop into a highly sought- after commodity, we took this as an opportunity to display our Province’s best craft beer, with 9 Nova Scotian microbreweries; Big Spruce Brewing, Garrison Brewing Co., Hell Bay Brewing, Uncle Leo’s Brewery, Boxing Rock Brewing Co., Tatamagouche Brewing Co., Breton Brewing Co., Authentic Seacoast Distillery & Brewery and Spindrift Brewing Co.; attending this year. and support services.

For more information visit http://celticoktoberfest.ca/

For more information visit http:// bcbeerawards.com/

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

5TH ANNUAL HARRISON BEER FESTIVAL St. Alice Hall - Harrison Hot Springs, British Columbia, Canada

October 28th-29th 2016

The Harrison Beer Festival has been created to showcase BC Craft Breweries and to celebrate craft beer month in beautiful British Columbia. The Harrison Hot Springs and the Agassiz Regions has a rich history in the beer industry. For 60 years hops, a basic ingredient in beer was the main industry in the Agassiz area of British Columbia. At the height of business, 300 acres were planted with hops. This annual event in addition to bringing great beer to the shores of Lake Harrison will also bring amazing food and entertainment and we celebrate our place in beer history.

For more information visit https://www.harrisonbeerfest.com

CASK DAYS 2016 Evergreen Brick Works – Toronto, Ontario, Canada

October 21st-23rd 2016

For more information visit http://www.caskdays.com/

8TH ANNUAL DETROIT FALL BEER FESTIVAL Eastern Market - Detroit, Michigan, USA

October 21st-22nd 2016

Join the Michigan Brewers Guild at Eastern Market in October for one of the largest all-Michigan beer tastings around. Attendees can enjoy some incredible food from Detroit area restaurants (available for purchase) and listen to a talented line-up of local musicians while sipping any of more than 700 craft beers from over 80 Michigan breweries.

For more information visit http://www.michiganbrewersguild.org/detroit-fall-festival

THE FESTIVAL 2016 Copper & Kings - Louisville, Kentucky, USA

October 28th-29th 2016

The world’s greatest and smallest artisanal beer, cider, and mead makers will join us to meet festival attendees and share their stories and knowledge. You’d have to spend months and countless dollars for a chance to meet this many world-class brewers. We’ve saved you the trouble and the expense — they’ll all be on hand personally to talk about their work and to pour for you. And many will be creating special brews specifically for the event — you won’t be able to find them anywhere else!

For more information visit http://www.sheltonbrothers.com/festival/

SPOTLIGHT ON BUSINESS • OCTOBER 2016

BITTER & TWISTED INTERNATIONAL BOUTIQUE BEER FESTIVAL East Maitland Gaol – East Maitland, New South Wales, Australia Join us as we celebrate 10 twisted years of beer, music and food. Enjoy over 80 craft beers, the best line up of brands and foods from across the globe with home brew masterclasses plus a few twisted surprises. It is sure to be a great time with lots on tap.

BANFF CRAFT BEER FESTIVAL Cave and Basin National Historic Site - Banff, Alberta, Canada The Banff Craft Beer Festival will be taking place at the home of Canada’s first national park. The Cave and Basin is beautifully set in the heart of the Canadian Rockies, and is now home to the world’s most beautiful beer festival. For more information visit http:/albertabeer festivals.com/

November 25th-26th 2016

November 5th-6th 2016

For more information visit http://www.bitterandtwisted.com.au/

2ND ANNUAL BURNABY BEER FEST Spacekraft - Burnaby, British Columbia, Canada

November 12th 2016

A celebration of craft beer, delicious food, and of course com- munity! Join the excitement of finding a new favorite among the many local craft beers while sampling tasty food from local food vendors. We will be hosting 3 Tasting Sessions from 2:30pm to 9:30pm. This is a fundraising event for the various outreach programs and services of Burnaby Commu- nity Services, including the Burnaby Christmas Bureau. We operate programs year round to support low income families, individuals and seniors experiencing isolation. Featuring more than 30 delicious beers, tasty appetizers and live entertainment, make sure not to miss this year’s event!

For more information visit http://bbot.ca/burnaby-beer-fest/

CAPE BRETON BEER FEST Pittman Hall, Joan Harriss Cruise Pavilion - Sydney, Nova Scotia, Canada Welcome to the inaugural Cape Breton Beer Fest. This event will mark the largest celebration of craft beer on Cape Breton. Coming at the end of the Craft Beer Festival season, CB Beer Fest will attract quality craft beer pro- ducers from across Canada and the United States to our beautiful island. While the focus of Cape Breton Beer fest will be on the amazing craft beers and microbrews, we will also showcase many other aspects Cape Breton’s artisan community.

AUSTIN BEER WEEK Multiple Events and Venues - Austin, Texas, USA

November 19th 2016

Oct 28th - Nov 8th 2016

Austin Beer Week is a multi-day, multi-event, brewer- centric showcase of all things craft beer, now in its 7th year. Austin Beer Week’s nature as both marathon and sprint results in brewers racing from event to event all nine days, all over greater Austin, and all so they can personally connect with you. How cool is that? Yes, they’re hustling to grow, but anyone who’s been around craft beer knows that’s only a portion of their motivation. Appreciation and invest in the community is the other, and we are blessed for that. So Austin Beer Week is not only our way of cele- brating craft beer, but of giving back, through the exposure and direct economic impact the week generates for the craft beer community (brewers and venues, in particular), and by benefitting the Texas Craft Brewers Guild.

For more information visit https://www. capebretonbeerfest.com/

For more information visit http://austinbeerweek. com/2016/

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

Brewing is one of Canada’s oldest industries and Canadian brewers today hold an 89% share of the domestic beer market. Canada has many competitive advantages in making world class beers: such as proximity to high quality malt barley and large fresh water supply. So it should be no surprise that beer is the most popular adult alcoholic beverage in Canada, in terms of both volume and dollar value, but there has been a radical change in consumer taste preferences in the last 10 years that is affecting the way Canadians experience beer now. While we see that in the industry major brewer’s per capita beer consumption is dropping, the small and craft breweries have surged in popularity. The shift is marketing share is because of the brewing selections that are being offered and almost tailored to its

customers. While we see micro and craft breweries popping up almost everywhere today, it was in Canada’s tiniest province that a small brewery took on the odds and today is an award-winning brewery, celebrating 19 years in business and considered a pioneer in the industry.

SPOTLIGHT ON BUSINESS • OCTOBER 2016

By Charlene Boyce B etween 2009 and 2014 the number of small indepen- dently owned brew companies grew by 40 percent. In 2014, 350 of the 520 breweries existing in Canada were in the craft category type. However, in 1997 that was not the case. When the PEI Brewing Company was estab- lished by Kevin Murphy as “Murphy’s Brewing,” there were only 73 breweries in Canada and ‘craft beer’ was not on anyone’s topic of conversation let alone news worthy. In 2000, when the brewing business moved into Murphy’s newly-opened Gahan House restaurant, becoming Gahan Brewing, the number of breweries in Canada had risen to 83, a modest growth of 14 percent over 3 years. What followed from 2001 to 2005 was a period of slow positive growth, or what industry experts say was the fermentation period for the craft brewing industry because between 2006 and 2007 the number of breweries rocketed from 88 to 268. In 2008, Gahan Brewing opened an offsite location dedication to its beer production, and that was an award winning business decision that paid off. In June of 2011, Gahan Brewing received their first Gold Award from the Canadian Brewing Awards, for Sir John A’s Honey Wheat Ale proving once and for all that Prince Edward Island made beer products were not just for the

local islanders but that they could compete in the global marketplace with their products. It was shortly after this validation that Kevin Murphy and Jeff Squires, previously a principal, hockey coach and the owner of a communi- cations company, formed a partnership and rechristened the company, PEI Brewing Company. Jeff became the President and CEO and his first undertaking was the immediate development and expansion of a new brewery which was a new state-of-the-art facility featuring the latest technology available in the brewing industry, built by Diversified Metal Engineering and completed in May of 2013. But don’t think for a minute that Jeff’s eye ever left the brew, as he continued working with international beer experts, and during this time of expansion the PEI Brewing Company won Gold and Silver Medals at the 2012 Canadian Brewing Awards and a Silver Medal at the 2013 Canadian Brewing Awards.

“Craft beer is over 20 percent of the beer category now on the West coast”

“Gahan had a portfolio of beers,” notes Jeff. “Sir John

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

A’s Honey Wheat Ale, Island Red Premium Red Ale, Iron Horse Brown--now known as Iron Bridge Brown--and 1772 IPA.” “When we established PEI Brewing Company, part of the thinking was we would launch new beer brands. One of these was Beach Chair Lager, which has become synonymous with PEI Tourism.” “When we established PEI Brewing Company, part of the thinking was we would launch new beer brands. One of these was Beach Chair Lager, which has become synony- mous with PEI Tourism.” Both Jeff and Kevin take their role in PEI’s tourism industry to heart. Kevin Murphy is the principal with Murphy Hos- pitality Group, and Jeff leads the Cavendish Beach Music Festival, a record-setting event that has made the Island a destination of choice for country music fans who consid- ered the event to be one of the best in Canada. “The reality is,” says Jeff, “We have a wonderful tourism product here in PEI: the outdoors, the North Shore, our camping, cottages, water and attractions.” Award-win- ning food and drink are quickly ascending that list. The

SPOTLIGHT ON BUSINESS • OCTOBER 2016

PEI Brewing facility on Kensington Road is itself a state of the art facility that welcomes visitors to view how the all- natural and local ingredients are combined into the com- pany’s different varieties of Canada’s favourite alcoholic drink. “This beer is entirely new to me, and was quite the lovely introduction to this Maritime brewery. The malt profile and hop profiles are quite subtle, calling to mind traditional English ambers, and is made using what I assume are pale malt, Golding and/or Fuggles hops.” The awards have continued to rack up for PEI Brewing Company’s beers. In May of 2016, Jeff’s team took home four Golds at the Canadian Brewing Awards – for Rogue’s Roost IPA, Gahan Vic Park APA, Setting Day Saison and the classic Sir John A’s Honey Wheat Ale. Jeff is pleased to share credit with his VP of Operations, Bob Lawrence, and his brewmasters. Jeff Squires says, “These recognitions are certain to help elevate the stature and increase demand for all of the company’s products as it continues its strategy to produce outstanding beer, to program and promote a unique destination brewery in Charlottetown and to grow its presence at the retail level provincially, regionally in Atlantic Canada, and nationally.” Beer bloggers, another side effect of the growing pop- ularity of craft beer, have taken note of the company’s products. Chris MacDonald of acbeerblog.ca mentions Sir John A’s Honey Wheat in defense of his choice of Char- lottetown as a Canadian craft beer top 10 destination in an article in the Globe & Mail. PEIBeerGuy.com’s blogger reviewed the grand opening of the Kensington location in 2013. And “IAmTheBeerSnob.com” gave the Island Red a 9 /10 with these tasting notes: “This beer is entirely new to me, and was quite the lovely introduction to this Maritime brewery. The malt profile and hop profiles are quite subtle, calling to mind traditional English ambers, and is made using what I assume are pale malt, Golding and/or Fuggles hops.”

its popular brews which has proven to be a solid seller.

The Craft brewing industry continue to grow all across Canada and the U.S. producing strong sector numbers in both litres of consumption and revenue as beers drinkers start to look for more from their beer than just high test or watered down light version of their marco brews to wet their whistle. “Craft beer is over 20 percent of the beer category now on the West coast” concludes Jeff. “It’s just going to continue to grow.” Looking at the numbers this is very true, with the number of craft breweries in BC expected to reach at least 130 by the end of 2016. As British Columbia continues to grow its reputation as the craft beer capital of Canada, craft brewers in every corner of the province will now benefit from an additional $10 million a year in economic support thanks to a significant reduction in the mark-up rate for craft beer products. But something tells us that Jeff and his team at the PEI Brewing Company have a plan of their own brewing to tap into this and other growing markets and soon have cus- tomer’s hopping into local pubs, taverns and beers stores for a taste of what Prince Edward Island has to offer.

Jeff Squires neither confirms nor denies the presence of Fuggles hops, but encourages you to taste for yourself.

Gahan House opened a location in Halifax, Nova Scotia in 2014, providing a fresh local market for both its house- made beer and the PEI Brewing Company’s products. The nine beers listed now on the brewery’s website are almost all available through the provincial liquor stores as well. The brewery has a taster pack product containing four of

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

along with fatter margins as brewers sell non-alcoholic products at the same price or more than a regular beer, because or either lower of no excise tax applying to their product. Looking at the numbers, Anheuser-Busch, which will soon make almost 30 percent of the world’s beer, wants to serve more low and alcohol-free brews to drinkers trying to live a healthier lifestyle. They have also forecasted that lower and zero strength beer will grow from its small base of production now to more than 20 percent of its sales by the end of 2025. This is a lofty goal, but looking at the industry numbers for beer sale of brews with less than 3.0 percent alcohol by volume had less than 3.0 percent market share in 2014, but annual sector growth was 6 percent versus just one percent for traditional beer sector. Anheuser-Busch’s latest 0.0 percent brew, Budweiser Pro- hibition Beer, launched in Canada in May as a possible prelude to its sale in larger markets and can be seen on the shelves of Costco and major grocers like Sobeys. According to Charles Nouwen, Anheuser-Busch Global Director for Product Development, the real test is when we put Budweiser Prohibition Beer and its radically changed brewing process through a taste test with traditional beer consumers. Nouwen said, “For lots of consumers we tested with, and even colleagues not involved in tasting panels, we fooled many by mixing some Bud and Bud Pro- hibition, trying to get them to find which was which. It was not necessarily easy for them.” Now the only questions is can Anheuser-Busch and other major traditional brewers tap into additional market share with traditional beer drinkers looking for the great beer taste without the buzz and empty calories.

By Katie Davis T op brewers like Anheuser-Busch, best known for its Budweiser, Bud Light and Stella Artois brands and SABMiller, best known for brands like Miller, Miller Lite and Foster’s are facing a rising challenge as mil- lennials look to the smaller craft brewers demanding a more regionalized, flavorful and higher alcohol product to wet their whistle. Millenials are looking for a product that is customized to their likes and the big brewers are seeing this in the numbers with limited growth of mature markets for tra- ditional brands like Budweiser and Miller that appeal to the masses. Major brewers are putting their focus on the weak beer market sector in hopes that it will rapidly expand because it is saturated that traditional markets and more or less leave the higher alcohol sector alone which is largely covered by craft brewers. This change in focus from major brewers is not about their share of the market as it is about margin. It is very clear that major brewers are looking to cater their product offering to health-conscious consumers seeking lower calorie, made from natural ingredients refreshment alternatives to standard soft drinks, water, juices and energy drinks. This is a major market sector and shows that brewers are focus on the needs of cus- tomers, but the true call is the healthy growth potential

SPOTLIGHT ON BUSINESS • OCTOBER 2016

By Jamie Barrie W ith the successful explosion of craft breweries in coun- tries around the world it was inevitable the laws of supply and demand would ruin the party. These hard working independent brewers face a potentially serious shortage of a vital ingredient: hops. Crops of the sought after key ingredi- ent of craft beer and for all beer for that matter have been well below expectation after last summer’s hot and dry weather damaged the European harvest. Now add into the mix a rising demand by more brew makers in the market and what you have brewing is a price increase. Some hop varieties have seen prices go up by 50 percent, industry sources say, while industry insiders say the more sought after variants are nearly five times more expensive as demand increase or are completely unavail- able, not good news to brewer or drinkers alike. Most hops are sold under contract. The boom in craft brewing in the U.S. has made it a great time to be a hops

farmer with many investing their time and efforts perfecting their crops for decades and now enjoying the highest profit margins they have ever seen.

Most brewers have contracts with hop growers which help protect them from short term price shock however, their big worry is long term supply, as short- ages may get worse with strategy acquiring strategies from multinational breweries like Anheuser-Busch and SABMiller, two giants in the industry, buying up craft brands with the intent to ramp up production and tap in to the craft brew explosion. Bill Manley, who is a small batch product manager at Californian craft pioneer Sierra Nevada said, “It’s tough for brewers, especially brewers that don’t have hop contracts or who were a little late to the contracting game.” Manley added that unexpected sales can deplete your hops supply and “you have to go around and knock on doors like a neighbor trying to borrow a cup of sugar.” Germany and the United States are the two main hops suppliers with each contributing one third of the world production. Last summer hot and dry weather caused the German harvest to shrink 27% and other European nations also saw declines. Stephan Barth of German-based global hopmerchant the BarthHaas Group stated “There has been a considerable tightening of supplies on the European hopmarket after the major reduction in the 2015 harvest with a sharp increase in prices.” Barth said some suppliers have raised prices 35 to 50 percent already depend- ing on the type of hops they sell. Brewers have their eyes on Germany’s as they crops yields has become a “growing” concern for the industry. Barth said “Europe will need at least an average harvest in 2016 otherwise we could see serious supply shortages”. As for brewers they are hoping for an exceptional harvest to get prices to head in the right direction.

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

By Katie Davis T here is more to the Olympics than just the athletes, the games and the medals. The Olympics whether you like it or not is all about marketing, sponsor- ship and brand awareness. Ambev, a Brazilian brewing company formally known as Companhia de Bebidas das Américas , which translates in English to Americas’ Beverage Company, hence the name, took on a very costly sponsorship deal at this year’s Olympics, but it paid off as Ambev souvenir cups were almost more sought after by those attending the games than the medals themselves. The Brazilian beer company which is controlled by Anheus- er-Busch, was promoting its Skol brand with Olympic souvenir cups. Not just a single cup, but 42. Each of the 42 cups emblazoned with a different Olympic sport. This marketing strategy not only lead to athletes and specta- tors guzzling hundreds of reais worth of beer to collect all 42 cups, it also got the Skol brand name into thousands of homes, basement bars and man caves all over the world and that kind of exposure is priceless. This was marketing genius by the biggest brewery in Latin America and the fifth in the world as the 13 reais paid, about $4 USD, for the Skol beer and souvenir cups was a steal as T-shirts from the Rio Olympics 2016 megastore were costing between 80 to 100 reais or $32 USD, with

Olympic hats are going for about 60 reais or $20 USD and and keychains are 35 reais or $12 USD making the Skol Olympic souvenir cups a relative bargain and Skol’s beer stations to be bustling with activity as fans lined up 25 deep at some “cerveja” stands throughout the Rio games for cups and a refreshing beverage of course. Ambev after the huge investment sponsoring the games needed to deliver a strong result at the Rio Olympics and they did. Ambev was banking on this as Brazil is in the midst of a recession and the company has sold less beer by volume in the second quarter than it has in last seven years for the same period as Skol lost market share to less expensive rivals. The idea to pay homage to the different Olympic sports events by Skol was deserving of a Gold medal for market- ing as the cups have turned into a hot collector’s item and given global recognition to the brand. Skol’s Olympic strategy was not totally unique as Bud- weiser, which Ambev sells as a premium brand in Brazil, had a collectible cup at the FIFA World Cup in Brazil in 2014. Coca-Cola and Pepsi-Co have done some similar cups for different events; however the gimmick of building a collection of Skol cups sets Ambev’s strategy apart and puts them for the time being as Olympic Champions.

SPOTLIGHT ON BUSINESS • OCTOBER 2016

By Katie Davis I n the Summer months, all year round for some folks, it is time to head to the water for some recreational activities, whether it be fishing, boating or spending the day with your feet in the sand. If you are an adult it will also involve a beverage or two, and in most cases they will be of the adult variety. The plastic rings used to package what is perhaps the most popular of the Summer adult alcoholic beverage, beer, is a menace to the environment and extremely harmful to fish, birds, turtles and other sea creatures that get tangled in the rings or mistake them as food. The United Nations Educational, Scientific and Cultural Organization (UNESCO), which is a specialized agency of the United Nations (UN) that implements its activi- ties through the five program areas: education, natural sciences, social and human sciences, culture, and com- munication and information, experts say that more than one million sea birds and over one hundred thousand mammals die annually from plastic pollutions. Saltwater Brewery, a small craft beer company in Delray Beach, South Florida, is trying to make a big impact on oceanic pollution and reduce the threat to the environ- ment with the development of an edible packaging for

beer that will be biodegradable and eco-friendly to protect marine life.

Biodegradable packing is not a new idea as it has been used in many other industries, however applying the tech- nology to packaging in the beer industry is and to take it a step further these edible rings are made from wheat and barley used during the brewing process. The spent grains are treated and pressed to form the rings. With almost seventy billion cans of beer consumed annually and the pressure that is put on making packag- ing more environmentally friend we can understand why there is a lot of interest in the industry for the product with marco, micro and craft breweries all wanting to offer this packaging for their products. Saltwater Brewery has not disclosed which brands had already expressed interest in the eco-friendly pack- aging, but said “rest assured, the world’s players are catching on.” It should also be said that regarding if packaging is eco- friendly or not we should try to keep packaging out of our waters.

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

By Katie Davis W ell we have all been around the fire pit in someone’s backyard or campground with a few of our friends or fellow campers having some sociables and been attacked by blood thirsty mosquitoes. If you are getting more buzzed than your buddy it might be why you are also getting more bite than them also. Several international studies have linked the amount of beer that you consume to your likelihood of getting a mosquito bite when outdoors enjoying some time with your friends and it is not because those tiny vampires are itching for your boozy blood or is it? I was once told that mosquitoes bite you more when you’re drinking because your blood is thinner so they do not have to use as much effort to get it out of you. I have also been told that because of the spent grains, like barley and hops that are used in the brewing process, are also used to feed livestock and the mosquitoes are attracted to the smell. Well according to James Heal, a Researcher with the Univer- sity of Guelph’s School of Environmental Sciences, neither of those are correct and he says that, “Alcohol tends to warm

your skin and mosquitoes are very attracted to warmth.”

So throw a little extra heat on yourself with a fire and you have the perfect conditions for a mosquito swarming.

Heal states, “Warmth, that is how they find the landing spot where the blood is,” but that is not the only reason that they come after those that have been drinking. Heal also says, “Beer is putting out bubbles of carbon dioxide and that’s what attracts mosquitoes to us, because we breathe out carbon dioxide.” Research has shown that mosquitoes can detect carbon dioxide from up to fifty meters away. The additional social behaviors that come along with drinking by the fire such as singing and dancing also add to the chance of a mosquito bite as the little blood suckers are attracted to movement also. They are not going to get any blood from the logs around the fire, which will be giving off carbon dioxide and will be warm along with yourself so they find you by your movement. These three ingredients all brewed together make for the perfect night out for the mosquitoes and they will also have you scratching more than your head wonder- ing what happened last night.

SPOTLIGHT ON BUSINESS • OCTOBER 2016

happens in bottles, as you would expect, as cans are not affected by UV rays just the warmth of the sun, but that is a different story. However, I will take a warm beer over a skunked one any day of the week. Now the reason only bottled beer can be skunked or “lightstruck” is because UV rays can only reach the beer through glass bottles, which makes sense and now your questions may be does the color of the bottle make a dif- ference, which would be an excellent question and the answer would be, yes it does. Brown bottles do the best job at protecting the beer, about four times more protect- ed than other glass colors and likely why most brewers use them when bottling beer. The green bottles would be second to the brown glass, while the clear bottles would definitely be the most susceptible to skunking, which explains my first experience with Corona. Also remember that the UV rays affect the beer very quickly and it does not take a long time for a beer to get skunked. Now knowing this makes all the difference in the world, as I know now to keep green or clear glass bottled beer or any bottled beer for that matter out of the sun. Back to my Corona, I always thought that a beer that is promoted to be enjoyed on the beach should be better protected against the harmful rays of the sun, but then I remembered that once out of the cooler they do not tend to stay in the sun for too long, and the clear bottle makes it easy to see your lime floating around in there as a beer gauge for when you need another.

By Jamie Barrie I always wondered why some beers taste skunky, if that is such a word. I remember many years ago when I was first introduced to Corona. My buddy and I were heading to the beach and he had brought a 6 pack with him to have a few sociables while soaking up the sun by the water as I was going to be doing the driving. It was a hot day on the beach and after pouring a few waters into me and several offers from my buddy to try one of these amazing Mexican beers, I took him up on the offer. Now I was not expecting it to taste like my Keith`s, the favorite of mine at the time, but my first taste was one that would stay with me for years and would be my first experience with what is known as a skunked beer. For those of you who have been fortunate enough not to experience this, “skunked beer” is a term we use when referring to beer that has been compromised by exposure to UV rays and a chemical reaction in the beer. Now I wanted everyone to know that the techni- cal industry term is “lightstruck.” This only

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

of the world’s population, as AB InBev and SABMiller have done, Boston Beer focused on driving existing drinkers toward more upmarket brews. Compared to the massive volume increases achieved by bigger competitors over the past decade, its output has barely moved but they have investors tapping into their keg for a unquenchable thirst for the results. That helps explain the interest China Resources Beer is said to be showing in SABMiller’s central and eastern European assets, which include labels such as Pilsner Urquell and Tyskie. China Resources Beer, whose Snow brand is the world’s biggest-selling beer by volume, is considering an offer for assets valued at as much as $6 billion. The key for China Resources Beer to take on this deal would be to treat the assets as import brands, rather than a foothold in a new country. Japan’s beer market is rela- tively mature, but China’s growing incomes are increasing their thirst for products from afar as consumers take on more cosmopolitan like tastes. Industry numbers in China show that beer imports have risen over 350 percent and show little to no sign of leveling off any time soon so there is money to be made in this taste for trendier foreign drinks in the market place. Premium brands make up about 6 percent of China’s beer volumes but 32.5 percent of profits; Super-premium ones have 27 percent of profits despite only having 3 percent of volumes, with domestic mainstream and discount brands with just 40.5 percent of profits from a 91 percent market share. China Resources Beer got SABMiller’s 49 percent stake in Snow for just $1.6 billion, and Asahi bought its Peroni and Grolsch brands in Western Europe for $2.9 billion. Sapporo,

By Jamie Barrie C hina’s brewers have a major problem and that is that consumers are losing their appetite for domestic beer. Since reaching its peak in 2013 the volume of beer has poured off 12 percent but with low prices and fierce competition brewers abroad it does not look good for the industry. It might not look good but it does not mean that the industry is dead as you only have to look at the U.S. beer industry where beer consumption levels have never recov- ered what it achieved back in 2002 and that industry is far from dead, in fact it is thriving. Look at Samuel Adams brewer Boston Beer whose shares have climbed more than 1,000 percent since the industry peak. Instead of broadening its market to encompass an ever larger share

Denmark’s Royal Unibrew and Boston Beer itself could all be had for far less than the $6 billion SABMiller wants for its European assets and simply going after distribution and licens- ing deals would cost even less and give greater results.

SPOTLIGHT ON BUSINESS • OCTOBER 2016

By Katie Davis I t seems like we have been talking about the Anheuser- Busch InBev and SABMiller deal for as long as we have been talking about beer. Well the wait is over, as AB nBev clinched its $103 billion takeover of SABMiller that unites the world’s two biggest beer makers making the world’s largest Mega-Brewer. Investors SABMiller approved the bid and voted over 95 percent in favor of the sale, clearing the 75 percent needed for the takeover to proceed. AB InBev will dominate the combined entity, making the Mega-Brewer responsible for producing one of every three beers sold worldwide. The deal brings brands like Stella Artois, Beck’s, Castle and Foster’s under one roof and provides AB InBev with its first foothold in Africa as the brewer is reliant on devel- oping new markets as sales in the U.S., Canada and Brazil come under pressure. The Mega-Brewer will generate revenue of about $55 billion, according to Jefferies International analyst Edward Mundy, who estimates AB InBev can deliver cost savings of $3 billion.

enlarged company’s workforce as it focuses on generat- ing $1.4 billion of annual savings almost immediately, this was seen in a big way with only one SABMiller executive being named to the new Mega-Brewer’s senior leader- ship team. “AB InBev are paying a full price; they can do with the company what they wish, they can call it what they wish,” SABMiller Chairman Jan du Plessis said on the sidelines of the shareholder meeting in London. “That’s the way life works and that’s fine. It is what it is.” The deals closing, concludes a yearlong process that saw the world two largest breweries haggle over price before spending months hammering out asset divestments to appease antitrust regulators worldwide. Shares of Molson Coors Brewing Co. rose as much as 3.5 percent to a record high in early New York trading as the company should benefit from taking full control over its joint venture with SABMiller, which was sold to help gain U.S. regulatory approval. News of the deals saw SABMiller shares rise 0.5 percent to $58.26, while AB InBev rose 0.6 percent to $132.71. Trading in SABMiller is scheduled to end on Oct. 4 and the deal will be completed on Oct. 10.

The Mega-Brewer plans to cut about 3 percent of the

OCTOBER 2016 • SPOTLIGHT ON BUSINESS

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