True To Me Too: You originally worked for the Ontario government in business and financial planning?
Steve Beauchesne: That was my day job and at night I was running a record label and managing a couple bands.
Was the music the real passion and the government job a way to keep the lights on? With Beau’s have you found a balance of doing something you’re really passionate about but also making ends meet?
The way I got into the government to do business planning was actually also through my love of music. I went to Ryerson for business because I wanted to open up a record label and that was my dream at the time. It was one of those things where I figured the music I could learn by loving music and I didn’t really feel like I needed to go to school to learn about music. But I wanted to understand the business side of running a record label so after Ryerson I was starting up a label but I never really got to a point where I could be financially stable with it. What I was finding was I had better and better work options from from the business planning side and getting into the Ontario government was actually pretty sweet. The job side of it, I know there’s a lot of negativity towards working for the government, but it was actually a really cool job and I really enjoyed it. When the opportunity came to open a brewery, that just is so cool, no matter how much I liked my job it was still a pretty easy decision to say “I’m going to make beer.”
I read that it took two years of planning to get up and running. What went into those two years? Was your background in financial planning helpful at all?
A lot of the research involved drinking (laughs) which was quite wonderful, a lot of brewery tours, drank a lot of beer, spent two years talking to people and working on different concepts with beer. A lot of it was nuts and bolts planning as well, finding out what’s required to make beer, who manufactures equipment, what equipment do we need for certain scalability, then marketing and sales side. We literally spent months going restaurant to restaurant in the Ottawa area basically doing sales calls without actually having any beer.
A lot of research was business, market trends and all that, a big part of the first two years was raising the money to start the brewery, for that we needed to convince other people that they should put up the cash. There was a lot of typical stuff like trends in the industry, what’s out there, who the competitors are, all that kind of stuff. But a lot of it was the really fun side too, which was going to beer shows and breweries. One of the best things about craft beer is how open the industry is, so a lot brewers were super friendly and said this is how we do it and this is what you’ll need and we got a lot of good advice.
You picked your brewmaster really early. How’d you go about choosing someone that could not only make a quality beer but also shared your visions and values for the company?
We got really lucky and there was a real serendipity that brought us together with Matt O’Hara. We recognized early on that we didn’t have the skill set required to be the main brewmasters. It was really important for us to find the right person but also we were starting in a little town in the middle of nowhere so trying to convince someone to move out this way is not an easy task and it’s not like we had billions of dollars to persuade someone either. Friends of ours happened to be friends of Matt’s father and we mentioned we were starting up a brewery and they mentioned they happened to know a brewer who happened to be living in the area. The reason he happened to be living in the area was he had spent about seven years in the Toronto area and had mostly been the master brewer for Black Oak in Toronto. I guess he just got to a point where he decided that he had a young daughter and didn’t want to be raising her in the city and he moved back home to be where his parents and his family were, which happened to be a little town a couple towns over from our town. He had given up his brewing career and his brewing ambitions to raise his daughter and we got really lucky that we found a talented brewmaster right in our backyard.
The job interview was on the back patio at my dad’s place with a six pack of Durham Ale so he was the right fit for a lot of reasons. He is very meticulous and very quality conscious but he’s also very open minded. I think working with him for so long before the brewery actually got up and running really helped us understand each other. I count Matt as one of my best friends now on a personal level as well, we share a lot of values and ideals so the fit there personality wise was wonderful and he was exactly what we needed to start the brewery.
So when did you start production on your first batch? When did you realize you had something good?
We had our bank loan get turned down. After being approved by the bank manager the audit devision came back and said there is no way we are financing a start up brewery that will be out of business in no time. Our funding basically got cut pretty significantly just as we were about to launch. So we scrambled and were able to work out a deal with another local brewery called Church Key where we would install two fermentors at the Church Key location and rent it out from them a couple days a month so we could brew our beer and package it. For the first few months we were literally going back and forth to Campbellford, Ontario.
The first batch of beer was delayed, I don’t know how many times, there was delays getting the equipment installed, there was delays in terms of scheduling with Church Key as well, and then we got it all straightened out and the yeast shipment that we ordered got delayed at the boarder over the long weekend and it went bad because the boarder agent didn’t think to keep it chilled so we had to reorder more yeast and restart everything. The first batch was an adventure and because of all those delays we had already booked all these media launches and we figured we’d have just enough time if everything went perfect to keep those dates. It was right down to the wire. I think noon on the launch day we got the beer so the first three kegs from the batch went right into the van as fast as they could and the beer showed up just as the press conference was starting and we took our first sip of the beer in front of the people we had been telling everything about the beer to and it tasted absolutely nothing like what we’d been aiming for. We found out after that one of the lights had failed and we’d ended up freezing about two thirds of the beer which was super concentrated already.
The first taste of beer was actually really really delicious but we’d been marketing and talking about this crisp golden coloured beer and the first sip was a super strong, which tasted so different and gave us a real kind of dilemma to start with. Do we still serve this beer to people knowing that it’s not at all what we’d expected or do we dump this batch and do it again and get it right? We made the decision that the beer was too tasty to throw down the drain. There were a few critics in the beer community who felt like if it’s not perfect to how you wanted it to be you shouldn’t release it. Overall I think it really won people over, for us to say “hey we aren’t perfect, but this is a really tasty beer, it’s not what the next batch is going to taste like but you should try it.” We ended up on that first batch winning the award for best beer of the festival at the Golden Tap Award in Toronto that year, which really really helped us take off quickly. Suddenly we weren’t just this start up company we were this start up company where their first batch won an award and it’s funny how quickly people forgot we won an award on a beer that was dramatically different from what we had planned on. But having that out of the gate credential really helped sell beer and get some investors because the banks had already walked away from us at the last minute. So winning the award helped us get enough money to get our production facility built in Vankleek Hill. We made that decision to serve that beer and it ended up really help the brewery takeoff.
How did you acquire the equipment to produce larger batches? Once you had the equipment and were able to produce larger batches how did you start finding vendors and distributing it?
On the equipment side the biggest challenge was getting the money. We had a business plan that we were shopping out and I was lucky enough that I knew how to build a business plan and we did a few test batches, which really helped us a lot. When we first started we just had the business plan and people would look at me and my dad with zero brewing industry experience and just laugh us out the door. Once we showed up with the bottle of beer that Matt had brewed and they were able to taste it, and taste how good it was, it really changed the dynamic. Having the beer available really helps sell the business. I would definitely recommend anyone that is shopping a business plan for a brewery make sure that a beer goes in with the document because that more than anything will get people excited. Once their excited about the beer it’s a lot easier to tell them it’s going to be successful because it’s a really good beer and we’re going to do all these wonderful things.
Once we had the financing lined up we went with used equipment. I’m not sure I would recommend that for any brewers unless you’ve got an engineering background. We ended up buying the system for probably 70% of what we’d be paying for a new system but then the cost overruns and the time overruns that we occurred by getting used equipment certified in Canada and then installed were astronomical. With new equipment it would have been a 3-5 week process but it took about 4-5 months because we were literally sitting there with all this equipment, it felt like Lego, just this box full of pipes we had to piece together. The system wasn’t from North America so it didn’t have certification and the company that built it was out of business so we couldn’t get the documents to get it certified in Canada and it became a nightmare. If we had bought new it would have cost us a bit more for the system but if you factor in the time and everything else that went into installing it it probably would have worked out about the same and we would have been brewing beer about 4 months faster. That’s how we did it (laughs).
We started out with five of us, which I think for a start up brewery that is more than usual. I see a lot of startups where the brewer is also the salesman, is also the delivery guy, and does everything. That’s not a bad model for someone starting off because your overheads are super low. The building we started off in was quite large so we knew we had to grow pretty fast just to be able to cover the overhead of keeping the lights on in this big building. We wanted to come out of the gate a bit faster and that meant having more than just one or two of us at the controls. We had Matt brewing the beer, my friend Jamie and my brother Phil were the sales reps to start, and between me and my dad we kind of did everything else. In the early days we were really strapped for cash so Phil and Jamie had one cargo van to share between the two of them and they had to do all the sales calls and all of their deliveries using the one van. So they’d have to coordinate between the two of them, I have to get this beer to that account, but I have a sales call the same day, so people would have to ride their bikes out to sales calls while the other guy delivered the kegs. It was pretty chaotic to start with but we couldn’t afford more than one vehicle. What ended up happening was a lot of the trips were being made by us, my car got pretty used to being stuffed full of beer and anyone that had a vehicle it was “oh are you going somewhere? Can you drop off five accounts on your way?” The way that we did that has gone a long way to setting the culture that we have at the brewery, which is everyone pitches in for everybody else, no matter what your particular job title is.
As we grew the sales guys eventually got their own vehicles and then when we got to a certain level we hired another person to do all of the deliveries for the two of them. One of the nice things about the way we’ve grown is that it wasn’t a million dollar advertising push, there wasn’t a big chunk of money that created this big step up in demand, we’ve never really done advertising so basically each sales guy would gain about one new restaurant a week. Which makes it easier to scale up because you get to a certain point where you know we need this much for just this one cargo van, so we started borrowing our water suppliers truck one day a week and we could fit more beer in that. Then we were eventually able to get our own truck. It made it so we never had a big step up in production, we just got to a point where it was too much work to do it this way so we had to make a small change so we could continue doing it again.
You sold your first batches locally around Ottawa. Did you have a plan as to who you were going to approach? Did you find it difficult to get people to take a chance on your start up? What would you recommend to brewers trying to get into bars and restaurants?
When we started we decided we weren’t going to be discriminatory but what we found was there’s a certain type of restaurant that is way more excited about having craft beer than others and that is chef run restaurants. We’d go in for a sales meeting with a big chain account, number one when you’re small you won’t get a meeting with a large chain account, but even if you were lucky enough to get that sit down, they want to know what your marketing trend is, what your pull is, how much budget you’re going to throw their way. When you sit down with at a chef run restaurant you’re sitting down with the chef, you open up a bottle of beer, you try that beer you talk about that beer, most of our sales meetings with chef run restaurants they didn’t even ask us what the beer costs, they want to know if the beer is good and they’ll make the decision based on if it fits what their looking for.
Ottawa in particular has a tremendous number of chef run restaurants and we found that it was really wonderful for us. The ones that picked us up first tended to be the ones that everyone else aspired to be like. The first few restaurants that we got ended up being the place where a whole bunch of other places were trying to be like so when they found out we had our beer on tap at Beckta or Restaurant Eighteen or Domus they would say “oh well if your beer is there then I should have it at my place too.” The best meeting we ever did was with The Black Tomato and my brother called them up and told them we were starting a local craft brewery and hope to be ready to sell beer in a couple months and the owner said “great when can I get it” and that was the sales call. Quite a few places got excited about having a local craft beer available. Back in those days there wasn’t really much of a chose for local craft beer so the ones that were excited about it was an easier sale.
My advice for people starting up would be don’t start pitching beer to Kelsey’s or East Side Mario’s. Start off with high profile places that don’t necessarily sell high volume, a lot of these places seat 10-20 people, 30 at the most for a lot of them, and they’ll only go through 20 litres (5.3 gallons) a month maybe but those 20 litres go to a prestige clientele. What we found is that when people have their first pint of Beau’s at a restaurant that really really like and the staff is talking about how awesome our beer is and the person is trying it with this really wonderful meal, it goes so far to make that person feel better about our beer. So to first hear about it there as opposed to first trying it in a dimly lit tavern, well don’t get me wrong I have a real sweet spot in my heart for dimly lit taverns, but in terms of getting the right first taste, going for those prestige restaurants is a big win for a small brewery.
You mentioned it before but your business grew fairly quickly and I was wondering if there was something you didn’t anticipate that you wish you had?
Tons (laughs). The amount of work that was required to keep up with the growth was really intense. The first couple years I would work through the night and would start my day at about 5 in the morning, work through the day and night and entire next day and go to bed at 11 o’clock the following day. I’d do that about twice a week, sometimes more. A lot of it for us was that we didn’t start the business with deep pockets we scrapped together just enough to get by, I didn’t take paycheque for the first year, Dad went a few months without getting paid. The family was being supported by my Moms part time job selling shoes for the first year. It was incredibly difficult financially and physically and I don’t think you should ever underestimate the amount of work that is required. The more money you can start off with for the first year operational stuff the better. It’s much easier to get financing for your equipment but the first year operating money is a lot tougher to get your hands on, the more you can start with there the easier the first year is going to be.
I’d say the things that we’ve regretted most in terms of decisions related to equipment purchases. Again it was trying to save a buck buying something used or something not as good to save a dollar upfront has quite often ended up costing up costing us in the long run. We’re still fairly thrifty and value minded and we do still buy used but we’ve come to understand that buying the less expensive piece of equipment is quite often the more expensive decision cause your operating and maintenance costs go through the roof with poorly made equipment.
From a marketing standpoint we’ve been really lucky. Most of the things we’ve done have really landed the way we wanted them to. The support that we’ve got from the community has been pretty phenomenal but I think one of the reasons that’s worked out for us is because we try to do things in a very small scale to start with. We try and test things out and the ramp it up from there. I’d really caution breweries, and I’ve seen so many breweries do this, where they have some extra money that they raised at the beginning and dropped it all on a quarter million dollar advertising campaign at the start of their business and it’s such a waste of money. Until you’ve got your beer distributed in a few hundred places, people might see the advertisement is really well done, I’m kind of skeptical about advertising in general, but even if people saw it there would be nowhere for them to go to buy it. I think to many breweries waste a lot of money on advertising when they should be spending their time and effort on having places available for people to try the beer before even considering big spends on marketing or advertising. Other than the basics, you need tap handles, glassware, and coasters, I personally think that for any new brewery anything more than that is a waste of money and time.
The craft beer scene is doing great these days, you’ve been able to see it grow and grow with it. Are there any areas you’ve visited that have really embraced craft beer and came out to support their local scene.
There’s a few places in particular, Portland is like craft beer mecca. In the United States I think craft beer is around 7% market share but in Portland I think it’s around 20%, it’s through the roof there. Also in terms of per capita Vermont is the best place per capita for craft beer. I think the key for both of those places is they both have a motto or culture like “keep Portland weird.” Those two areas really have a local pride about being different and that’s really what you’re trying to tap into when you open a craft brewery because if people didn’t want something different they’d all be drinking Coors Light. So trying to find like minded people that will get excited about something made locally and will take it as a point of pride that they have a unique taste goes a long way.
Another neat story is Denmark, which 20 years ago I think had 5 operating breweries and today has about 150 and is now per capita the best place in the world for craft beer. I’m not really aware of what makes Denmark such a great place to sell beer but I think there is something insular to the market there and I think that’s similar to what we have in Ottawa. Ottawa’s place in Ontario is somewhat isolated, Toronto is scene as the big city where a lot of brewers focus their efforts, Ottawa is a great city to sell beer in but because it’s that far removed from Toronto and there are no real major cities between the two, a lot of breweries ignore it entirely or they’re waiting to feel like they’ve saturated Toronto before really looking at expansion. But I think across the board this is a good time for beer drinkers and it’s a good time to be selling beer. Almost every town should be able to support a craft brewery and I think that if it can work in Vankleek Hill it can work anywhere, we’re 15,000 people on the far edge of the province and somehow we’ve been able to make it work here.
It seems like you have a very firm idea of what you will and won’t do and I was wondering how early on you established these fundamentals of giving back to the community, becoming certified organic, refusing to produce light beer. How challenging has it been to stick to these values and still grow your business?
The funny thing is that sticking to our values is why we’ve grown our business. I have a philosophy that tomorrow’s sale is more important than today’s sale. By that I mean there are way to many breweries that give up their integrity to make a sale today not thinking about what the consequences of that decision are in the longterm. It goes to the really big decisions, like being organic and some of the charitable work that we do, but it’s also a lot of the operational decisions. Craft beer, particularly in the United States has a great reputation for avoiding the usual commodity type marketing practices, the most common being keg deals an discounts, unfortunately in Ontario a lot of craft breweries have bowed to the pressure of that and have started doing a lot of under the table deals, which on top of being illegal, it really does a lot of damage to not only their company but the craft beer movement as a whole because it devalues it. It makes it very hard to tell the difference between a craft beer and a mass produced one.
There have been a few times where we’ve had to walk away from a few deals that sound pretty wonderful, we were recently offered 250 restaurants through a major chain so long as we gave a keg deal. We walked away from it. 250 new restaurants to sell beer in would be great but to me it’s not worth it because there are 700 restaurants that we’re selling to that would all turn around and say “what the hell we supported you for the last 7 years without that keg deal.” To me integrity is the most important thing. If someone can’t trust that what you’re telling them is the same as what you’re telling someone else then you lose that integrity quickly. In the restaurant industry everybody talks, I’m sure it’s like every industry, but there is certainly no exception. I’ve seen so many breweries that start giving out these deals and they just end up with no margin left for them after they finish giving out the keg deal to everyone that heard their neighbour got.
On the big stuff a lot of that comes back to my old punk rock days. Sort of having that D.I.Y. attitude and the feeling that typical corporate businesses are not a good thing. I’ve got absolutely no love for the stock market system or a lot of the general business principles where maximizing shareholder value is supposed to be the only goal for a business. I really believe that running a business is an opportunity to have an impact on the world and it’s your chose if you want to make that a positive one or a negative one. A lot of that is just deeply engrained in my own philosophies. My Dad had been an entrepreneur for most of his life and while he never really embraced the charitable giving and some of those things he always treated his employees really fairly and had a really ethical way of doing business with his customers and his suppliers and that was impressed upon me at a really early age. Starting this business with my Dad at the brewery we never had any time when we had to argue about whether or not we should do this, we always both felt like it was the right way to do things. What’s funny is that most of the decisions we’ve made we made because we feel strongly about them and that’s the kind of business we want to run. It seems like every time we make the hard decision to keep our integrity we end up getting rewarded for it, so it’s been fun to kind of watch that happen. I think the standard view is that you don’t do the kind of things that we do because it’s bad for business but our brewery has never grown by less than 50% in a year and I think we’re still the fastest growing brewery in Ontario 7 years in. That’s the reason we are growing is because we have kept our integrity throughout the whole 7 years.
How important is it to have an alternative to the mass produced beer the multinational corporations are producing? And to create that alternative within a community that supports you and you support them?
It’s dramatically important to have support within the community. It’s one of those things where the more the money stays in your community, the more businesses within the community support it, the better those businesses do. Everybody thrives if the money stays in the community, there’s more jobs, which means there’s more people out there buying not just beer but produce, gas, everything. The more that everyone is concerned with producing local products the more good everyone achieves.
In terms of what it means to have an alternative and have a strong sector of competitive beers, I think it’s so obvious it’s hard to even put into words. If you look at what beer was like in Canada in the 1980s and that’s why it’s bad to have only two companies selling beer because that’s when everything starts to taste the same. Back in the 80s there was probably 300 different labels of beer you could buy but they all tasted exactly the same. 30-40 years later you’re finally seeing what can happen when you’ve got a lot of breweries out there and from a consumers point of view so much different beer to try. It’s exciting and it’s vibrant and it’s transformed beer from being that thing that you drank to get drunk into something that really elevates your day. I think it’s good for society to be drinking less and drinking better and I think it’s good for the individual beer drinker to have all that extra choice in flavour. It was a pretty mundane beer world before craft beer had its resurgence.
You mentioned everyone being very open when you started doing your research and taking tours. It seems like you have continued that tradition and there is a lot of support and encouragement within the craft beer community. You’re doing collaborations, you run a pro-am series where you produce amateur beer. How important is it for you to share the knowledge you have and also continue to work with and learn from other people in order to grow the craft beer community?
It’s important for a lot of different reasons. I think for the craft beer movement it’s important because it’s what makes us different. The Coke and Pepsi rivalry is the same as the Molson and Labatt rivalry. Craft beer is a wonderful example of the amount of excitement people have when they find out the companies that they’re buying from aren’t cutthroat competitors but are compatriots all working towards creating something better. The collaboration side is all about learning and getting to spend time with people that we respect and admire. The Pro-Am and support we’ve given to startups in the province is paying it forward. When we started out if Church Key hadn’t allowed us to brew in their place a few days a month we probably would have been out of business pretty quick. There were a lot of breweries that really opened up to us when we were getting started and to me if we were to turn around and not do the same for someone else it would really speak poorly about us. It’s just about operating with integrity, doing for others what someone did for us when we were at our smallest. We have a pretty good track record of helping out breweries, we helped HogsBack guys when they were getting started, Broadhead ran out of growlers and we shipped them a skid of growlers to get them through Christmas.
The funny thing for me is that I really don’t see it as helping a competitor get off the ground what I see it as is a way to make sure that the competitors that are going to be getting off the ground, no matter what, will have the same kind of attitude we had when we were launching. Being helped by someone else can instil hopefully the feeling that you should do that, it’s a way that we can try to keep integrity in the craft beer movement. The fact of the matter is that not every company we’ve helped out has gone on to really embrace the same model we had, some people are more traditional competitive style breweries, which is unfortunate. But that doesn’t, as far as I’m concerned, give us an excuse to stop helping breweries, hopefully overtime they’ll change their ways (laughs). I don’t want to be forcing people into operating in a particular way, I just want to lead by example.
Do you have any final advice for people looking to start their own breweries? And even people just trying to go into business to help them stick with their morals and not change for profit.
For craft breweries, I’m hearing more and more from so called experts in the industry that the bubble is going to burst for craft beer and there will be a market correction as they like to say, I personally don’t believe it. I still think it’s a great time to get into craft beer and I would encourage them to follow their dreams if that’s what they’re looking to do. There is no room left for mediocre beer without character. I wouldn’t bother starting a brewery if I was going to make the same beer that someone else has or use the same marketing campaign as someone else. The excitement in craft beer is really about it’s uniqueness and it really needs to be there. There’s definitely more room for craft beer and craft breweries so I would definitely encourage the people that have the passion to do it to follow that dream.
For business in general I really think that if you want to have the opportunity to actually have a really big impact in the world that you live in starting a business is one of the best ways to do that. You get much more time with political people, you have much more of a way voice your view of the world, you really get to have an impact, you get to leave a bigger footprint than you would as just an individual. The downside is that from day one everyone from your accountant to your customers to your employees are going to be coming up with millions and millions of reasons why you should abandon your ideals and start to behave like every other business. Again I really find that once you start making those decisions to be like every other business you start walking down the road of mediocrity. If you don’t have the most money in the world to push your products you better have something that’s outstanding. Having a business model that cares about the community and cares about the environment, having a business that runs with ethical principles, is a really really great way to be outstanding. You also get to sleep really well at night.