Brewing the bottom line

Brewing the bottom line

Picking up a case of beer was once a simple, routine task. But if you’ve stepped into a liquor store lately, you’ll notice something different. You have choices now. Endless choices. And if you’re an indecisive beer lover, choosing that winning brew is no easy feat. The shelves, once only blue and red, are now coloured with hundreds of well-designed labels that tell the story of the brewers who pour their hearts into making their beer. It’s the art of craft brewing—and business is hopping.

Hopping might be an understatement. According to Beer Canada’s Annual Statistics Bulletin, the number of licensed breweries in Canada has risen almost 70% over the past five years, to 520. While the majority of these breweries are in Ontario and Quebec, Alberta has seen a significant jump in numbers since the Alberta Liquor & Gaming Commission removed the restriction on the minimum brewing capacity required to enter production.

Prior to December 2013, manufacturers were required to produce a minimum capacity of 5,000 hectolitres a year. The removal of this liquor law has opened the doors for increased competition and created more choices for consumers.

As a result, there’s more than just competition brewing in Wild Rose Country. There’s a community of beer drinkers with an unquenchable thirst, eager to get their hands on the right combination of malt and hops.

“Coming out with a good beer is critical to the start of a brewery,” said Charlie Bredo CPA, CA, President of Troubled Monk Brewery in Red Deer. “If you come out as a business with bad beer you’re not going to last.”

Running a brewery may not be the typical career path for a professional accountant, but for Charlie and the recently opened Troubled Monk Brewery, the skillset is just another ingredient in their line of crafty brews.

“Craft brewing is a really natural process. A lot of people are interested in buying locally grown foods and knowing where it comes from and how it’s processed. It’s a unique culture and community.” —Charlie Bredo CPA, CA

“Having that accounting background provides so much insight into the backbone of the business,” said Charlie. “It’s really helpful when starting out to understand profitability and budgeting.”

Craft breweries are defined as small, independent and traditional; certainly Troubled Monk embodies all of these characteristics. Everything from their quaint taproom to the use of locally grown ingredients to the stories behind their beers fosters the essence of craft brewing. Take their Pesky Pig Ale, for example, named after a famous Red Deer pig who escaped the slaughterhouse.

Troubled Monk’s Pesky Pig Pale Ale is named after Francis the Pig, who stole the hearts of carnivores and vegetarians alike in the summer of 1990. This 220 pound porker evaded his fate by jumping a wall, navigating the slaughterhouse and escaping into Red Deer’s parkland. It was five months before this feral fugitive was finally captured. Raise a glass to the little piggy that never went to market. Rejoice that he left these pastures on his own terms, proving you can’t tame a free spirit.

With both supply and demand on the rise, CPAs working in the beer industry are continuously required to adapt the changing environment and take on varying levels of responsibility. For Charlie, it’s more than just accounting and finance. His role as president can involve anything from sourcing ingredients and managing staff to marketing and overseeing the brewing process. In larger brewing operations, CPAs can often be found in roles such as CFO, Controller or Analyst positions.

Dominique Lagloire-Galipeau CPA, CMA, CFO at Canmore’s Grizzly Paw Brewing Company, is responsible for everything from day to day bookkeeping to calculating ROIs and seeking financing for the brewery.

“I am a part of the decision-making process every step of the way, providing financial data to support my opinion,” said Dominique. “It is a small private business, so I take on pretty much everything resembling finance and accounting.”

Dominique’s role as CFO might sound like a more traditional finance position, but the culture at smaller breweries, like many small businesses, can be quite the opposite. It does have its perks, according to Dominique.

“Due to our size, we’re capable of more creativity and flexibility. To me, the vibe of a small brewery located in the middle of the Canadian Rockies was a lot more attractive than an office tower in a traffic ridden city.” —Dominique Lagloire-Galipeau CPA, CMA

The Grizzly Paw Brewing Company opened its doors in 1996. It was the first brewpub in Canada and the second in North America to bottle its beers, and now its soda. Having been in business for nearly 20 years, Grizzly Paw has had a front row seat to the increased popularity in craft brewing.

“With the opening of the second brewery location in 2013 it has been a steep growth curve for us, doubling our volumes in two years,” said Dominique. “This came with growing pains: setting up stricter processes, acquir­ing equipment, securing suppliers, hiring, training staff and going from an entirely manual process to a brewery management software.”

But the reward of producing an exceptional beer doesn’t come without challenges. Brewing process aside, costs such as location, packaging, shipping and freight can all play a factor in the success of a brewery.

“Craft beer is a tough market in general; craft beer in the rural market is even tougher,” said Ryan Moncrieff of Ribstone Creek Brewery in Edgerton, Alberta. “Shipping costs are a challenge that we have to deal with. Being off the beaten path makes planning for freight costs a never ending job.”

Thankfully, these are the types of challenges CPAs are trained to handle. And as the popularity of craft beer grows and new breweries open their doors, so do jobs that require the skills of a professional accountant. A 2013 report from the Conference Board of Canada said the beer economy supports 163,200 jobs across the country, or 1 out of every 100 jobs in Canada.

“We see that the industry is just starting to pick up speed here in Alberta,” said Ryan. “Over the next five years there will be more brew­eries opening up every year. This creates a lot of awareness about craft beer and will create more competition within the market.”

So why is there such an interest in craft beer now, considering inde­pendent breweries have been around for decades? Charlie believes it boils down to people realizing how different beer can taste. “It’s totally different than what they’re used to.”

“Craft brewing is a really natural process,” said Charlie. “A lot of people are interested in buying locally grown foods and knowing where it comes from and how it’s processed. It’s a unique culture and community.”

But above all, behind all the business of brewing and mastering the craft, it’s the consumer that reaps the benefits. “With so many different flavors and styles being developed, it is a great time to be a beer drinker!” says Dominique. Which also makes it a great time to be a CPA involved in this booming industry.

 

This article appeared in the Fall Issue of Dividends, CPA Alberta’s member magazine.

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