With dozens of craft breweries at risk of closure, the owners of two in the Lower Mainland are sounding alarm bells about the rising costs facing businesses like theirs.
Ben Coli, chief executive “beer” janitor at Burnaby’s Dageraad Brewing, told Global News that while many industries are facing tough financial times, there’s an additional hurdle for beer-makers.
“A big difference is that craft beer is a very space-intensive business and it’s also a very capital-intensive business,” he said.
“So a lot of these businesses had to borrow a lot of money to start the businesses, and then interest rates went up by nearly five per cent over the last two years, so we’re getting hit from all over the place.”
In November, the B.C. Craft Brewers Guild said up to 15 per cent of its members could face closure in 2024 unless extensions are granted on the repayment of federal pandemic loans.
After 10 years at his East Vancouver location, Chris Lay, co-founder and head brewer at Callister Brewing Co., confirmed his is among the breweries leaving its current space — hopefully, to reopen elsewhere.
“We’ve seen massive increases in a lot of our expenses, the largest of which are rent, property taxes, and of course cost of goods. Shipping those goods to us has become very difficult to deal with,” he said.
“Right now, we’re really looking at trying to find some new space … we really need to make our operations as efficient as possible, so we’re trying to find a space that is a bit more appropriate for our needs.”
Currently on a renewed lease from a few years ago, Coli said Dageraad has been fortunate not to have to deal with new market rental increases. He is, however, challenged by other increased costs — a squeeze his customers are feeling too.
“Interest rate increases are hitting consumers as well and people are broke,” he explained.
“I’ve heard it said before that beer is supposed to be recession proof, but craft beer isn’t necessarily, and people might just be switching to cheaper beer.”
Dageraad has tried hard, he added, not to pass increased costs onto the consumer, but even while the brewery is “eating a lot of the cost increases, still our prices are going up.”
Studio Brewing in Burnaby recently confirmed that it’s shutting down permanently on Dec. 22, citing “an undefeatable combination” of factors, including expensive delays to its opening, consumer preferences shifting away from craft beer, challenging economic times, and COVID-19.
“These challenging times have unfortunately been too much for our little business to survive, but we hold our heads high knowing we did everything we could,” it wrote in an Instagram post.
Lay said he hopes Callister doesn’t plan on following suit.
“The stressful part right now is finding that next space. We don’t quite have the appetite to do another year-and-a-half buildout as we did here,” he said.
“We’re really hoping to keep brewing but if we can’t find an appropriate space to brew beer, then it might just be focusing on sodas and non-(alcoholic) for now.”
The brewers advocated for less red tape when it comes to setting up a small business, while Ken Beattie of the B.C. Craft Brewers Guild pushed for a reduction in federal excise tax, based on volume, as well as general “compassion.”
He also asked B.C. consumers to shop local, “even if it’s just for one pint or Christmas gifts.”
“We’re hoping that people will, you know, show a little love back to us in this time of need.”
There are currently about 240 craft breweries in the province. Up to 40 could close in the next 12 months, Beattie said.
He also echoed the calls of restauranteurs and other businesses, asking for yet another extension on the federal government’s Canadian Emergency Business Account — a loan granted during pandemic lockdowns. The deadline for interest-free repayment, with a portion of loan forgiveness, is Jan. 18.
— with files from Elizabeth McSheffrey