Beer Boom

Economic diversification, one brewery at a time

By Jason Foster

Lacombe, just north of Red Deer, may not be the first place you think of when the conversation turns to craft beer. But these days some good brewing is definitely happening in town. In fall of 2015 six partners opened Blindman Brewing, named after a river in the region. For co-founder Hans Doef, a long-time Lacombe resident and part of the family that runs Doef’s Greenhouses, the location and the brewery name were no-brainers. For him the Blindman River is a Lacombe icon. “I love the way it meanders. It’s beautiful,” he says. “We picked that name because I value place.”

Blindman represents the changing face of Alberta brewing. Small and passionate, they are fiercely committed to creating interesting, quality beer that rivals what you can find in the best craft beer cities of the US. Before they had even burned off their brewery’s new-car smell, Doef and his partners were dabbling in barrel-aging, sour beer and eclectic styles. The Alberta beer scene is already abuzz about their offerings. Just a few months after opening, Blindman won two silver medals at the 2016 Canadian Brewing Awards. One was for their flagship River Session Ale, which has an enticing citrus aroma and a gentle, fresh flavour.

But Blindman symbolizes more than craft beer. They also demonstrate the economic potential in local beer production. Local breweries don’t just create frothy drinks for thirsty patrons, they spur local economic development by producing quality jobs. They are also remarkably efficient at creating spinoff jobs through their use of local tradespeople, hospitality workers and suppliers and by using (for the most part) locally grown ingredients.

Communities such as Lacombe have realized the economic value of a local brewery. “From a business standpoint Lacombe was right because the community was willing to work with us,” says Blindman co-owner and Edmonton beer aficionado Shane Groendahl. “The small businesses around us saw the value. The contractors. City council passed bylaws to give us a bit of help. They see it as helping rejuvenate their community.”

And Blindman is not alone. New breweries have been popping up all across Alberta; the number of operations has doubled since late 2013. Just a few short years ago all of these new breweries wouldn’t have been possible. Alberta government policy used to make opening a new brewery in the province a Herculean effort, which is why our beer industry lags behind those in BC, Ontario and other places. Then everything changed.

Provincial policy used to make opening a local brewery a Herculean effort. Then everything changed.

Alberta ONCE had a significant craft beer presence. Big Rock, opened in 1985, was one of the country’s first craft breweries and helped blaze the beer trail. After that, things got a little thin. Long-time mainstays such as Alley Kat in Edmonton and Wild Rose in Calgary stubbornly carved a space for themselves (in 1995 and 1996, respectively) but it would be another two decades before things really got going.

Many people know that the beer scenes in Vancouver, Toronto and Montreal leave Edmonton’s or Calgary’s in the dust. Those cities have a mature, well-developed ethos of consuming local—including beer. A pub in those cities cannot show its face without carrying at least a couple of local beers on tap. Dozens of breweries make a significant impact on each of those local economies.

That these cities are ahead of us may not surprise. But many might not expect that Nova Scotia and New Brunswick also best Alberta at producing craft beer. In the summer of 2016 Alberta had 37 separately owned breweries and brewpubs, which works out to 0.88 per 100,000 population. Nova Scotia had 30 (3.18 per 100,000), New Brunswick 20 (2.79). Even Saskatchewan trumps us with 15 breweries (1.32).

And Alberta’s small beer scene is mostly new. Twenty-five of Alberta’s breweries have opened since December 2013. At least 26 others are in various stages of planning. One of the most interesting aspects of this growth is its geographic diversity. Of the 51 new and planned breweries, only about 20 are or will be in Edmonton or Calgary. The rest are in mid-size centres, including Grande Prairie, Lethbridge, Red Deer, Lloydminster and Medicine Hat, and in even smaller places such as Cochrane, Edson, Turner Valley, Three Hills, Slave Lake and tiny Plamondon (near Lac la Biche) and Lundbreck (near Pincher Creek).

For years the Alberta government had a three-pronged strategy that hamstrung local brewers. First, the early-1990s privatization of liquor retailing opened the floodgates to imports, making it very difficult for smaller breweries to compete for shelf space. Compounding this problem was a laissez-faire policy around pricing. All governments add a markup to liquor—a form of tax. Most jurisdictions offer lower rates to small breweries than to large ones, to offset the former’s bad economies of scale and to give them some price competitiveness. The difference can be substantial: up to $1 per litre. Alberta, with its open-door policies, permitted breweries from around the world to access its lower rates, thus negating any competitive advantage local breweries might have gained had the rates applied only to them.

The final nail was a rigid licensing policy that required a new brewery opening in Alberta to guarantee up to 500,000 litres of production capacity immediately, which is a lot of beer for a new operation. The upfront capital commitments made opening a brewery in the province cost-prohibitive. As a result, few dared to venture into brewing in Alberta and the province fell behind in the craft beer revolution.

Mark Zemlak’s favourite date is December 6, 2013. On that day the Alberta government revoked its minimum-production requirement, opening the door to smaller-sized breweries. This was music to Zemlak’s ears. He is now the owner of Boiling Oar, a tiny Calgary brewery that opened in April 2016. A long-time home brewer, Zemlak had dreamed of opening a brewery, but as a working stiff without access to capital he couldn’t see a way forward. “There would be no Boiling Oar if they hadn’t changed that policy,” he says. “It’s almost embarrassing it took that long for Alberta to go down that route. The policy change is why there’s such an influx right now.”

Boiling Oar’s vision is to stay small and local. “I’ve brewed on a large system. Large-scale brewing takes the romance out of it. Small brings back the fun. I want to just do up a recipe and go for the gusto and hope it works out,” Zemlak says. “If we went big we’d be brewing for the wrong reasons—to pay bank loans. If it ever stopped being fun, we’d re-evaluate.” Zemlak’s first beer is a balanced pale ale with a light citrus hop character backed up by a soft, toffee-malt sweetness.

Boiling Oar is just one small-scale local brewery taking advantage of the new rules. Dandy Brewing (Calgary), Theoretically Brewing (Lethbridge), Bent Stick Brewing (Edmonton) and Grain Bin Brewing (Grande Prairie), among others, also wouldn’t have been feasible under the old regime.

The influx was an intentional goal of Alberta’s beer policy changes. Tatjana Laskovic, communications officer for the Alberta Gaming and Liquor Commission (AGLC), says the changes arose out of consultation with the industry and “were designed to respond to concerns raised by small, local breweries over a number of years.”

In 2015 Alberta shook the country by electing its first NDP government. The new regime, recognizing a need to diversify Alberta’s economy away from dependence on a single industry, further changed the landscape for local beer. Where previous governments took a hands-off approach and let markets do their thing, the NDP adopted a strategy of encouraging the local beer industry.

One of their first steps was to change the markup policy, creating a graduated system where small breweries (10,000 hectolitres or less produced annually) from Alberta, BC and Saskatchewan saw a lower rate applied to their beer—10¢ per litre—while other brewers, regardless of size, paid $1.25/litre. (BC and Saskatchewan were included due to Alberta’s participation in the New West Partnership.) The change sparked howls of outrage from importers and a lawsuit from Toronto’s Steam Whistle Brewing. Last July the government scrapped the graduated system, applying $1.25/litre to all beer sold in Alberta, regardless of origin or size of brewery.

The new flat rate was accompanied by a grant to Alberta breweries based on production volume, which is calculated to make up the difference between the old lower rate and the new flat rate. It allows local breweries to keep their beer at previous prices, giving them a price advantage over imported beer and, as a result, grow their market share.

The only local economic input of a beer made far away is the deposit on the bottle.

Blindman’s Groendahl sums up the policy effect from an Alberta brewery perspective. “It doesn’t directly make us more competitive, but it helps with price,” he says. “The indirect effect is that out-of-province beer is more expensive, meaning we’re being considered more seriously on draught accounts [bars and restaurants], making us an easier sell. Sales calls are easier.” He says bar owners are now “willing to take more of a risk rather than go with established brands.”

The policy signals a sea change in Alberta government policy around local beer. For the Notley government, it seems the emphasis is on growing a local beer industry to serve Albertans’ craft beer needs. The Alberta government lacks some of the policy tools available to provinces such as BC and Ontario, who can control which beer enters their market and can give preferential treatment to local breweries in government-owned stores. The markup is one of the few ways the Alberta government can assist Alberta breweries.

Laskovic agrees that the policy shift is aimed at strengthening local beer. “[It’s] about encouraging local production and making Alberta more attractive for production facilities while still maintaining the open[ness] of the marketplace,” she says. The NDP also has an eye on the beer drinker, she says. “Alberta consumers have more locally made product available to them.”

Our government could do still more to promote local craft beer. Ontario offers funding to craft brewers for market development and promotion, as well as economic development grants and loans. BC and Nova Scotia provide guaranteed shelf space in liquor stores to local breweries.

You might be forgiven for saying this is interesting, but really, it’s only beer. Except that it’s not just about beer. Beer is part of a growing movement toward more local food production. More and more consumers are purchasing their food from local sources, both for environmental and economic reasons. Buying local keeps money circulating locally, which is good for economic development.

This potential for local production is something governments are only just starting to recognize. Blindman currently employs roughly six people, which may seem like small beer. But the town of Lacombe can attribute a dozen or more other jobs to Blindman’s presence, and that will only grow. “By having our business in a smaller centre, we’re feeding the economy in a way that feeds employment in slower areas,” says Groendahl. “We’re providing cash flow for other businesses and jobs.” He’s talking about the myriad businesses the brewery works with, including equipment maintenance, delivery, pubs and restaurants and the workers all those concerns employ—even the rancher who uses Blindman’s spent grain to feed his bison.

And while new breweries are usually small to begin with, all of the money they generate stays in the local economy. When a local buys a Lacombe-brewed pint, they’re replacing a beer made far away whose only local economic input is the deposit on the bottle.

But for local breweries it’s about more than economics; they see themselves as part of a movement. As Hans Doef says: “Local food is a passion of mine, anything local. Building an identity and culture around it. People gather around local craft beer. You can create more than a business.”

Jason Foster is the beer columnist for CBC Radio One’s Edmonton show Radioactive as well as for Vue Weekly magazine.




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