Quebec
Hastings County Lennox & Addington County
Bancroft
MONTREAL
OTTAWA
Frontenac County Harrowsmith Prince Edward County
Ontario i C r a f t B r e w
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Napanee
Picton
TORONTO
Howe Island
Wolfe Island
New Y ork ork
Lake Ontario
Why the FAB Region? The FAB (Food & Beverage) Region is Region is a unique economic development partnership between the Counties of Hastings Hastings,, Lennox & Addington, Addington , Prince Edward and Edward and the Frontenac Community Futures Development Corporation. Corporation . The FAB Region oers Region oers artisanal entrepreneurs entrepreneu rs an ideal location to start a craft brewing operation, primarily for its low degree of competition, competition, its relatively untapped market and its close proximity to major centres within North America (Toronto, Ottawa, Montreal & the U.S. Border). The FAB Region also Region also oers entrepreneurs an array of locally-grown brewing ingredients and the possibility of joint ventures with local artisan food producers.
Location & Market In 2012, 6.7-million hectolitres of beer were sold in Ont ario making our province the largest market for beer in Canada1. Given the
strong market growth, as well as an increas ed interest in artisan products, the “100 mile diet” and other “buy-local” movements, there is certainly a market opportunity to open a craft brewery within the FAB Region. Region. In comparison to other regions , such as the Greater Toronto Area,, the FAB Region oers Area Region oers a much lower degree of competition and an under-penetrated market. There are currently only three breweries that are in operation within the region: Church-Key Brewing Co., Co. , Gateway Brewing Co. and Co. and Barley Days Brewery. Brewery. In addition to the three breweries mentioned, there are two other operations, including one near Bancroft and MacKinnon Brewing near Bath, that are currently in the launching stages.
Craft beer appeals to a wide demographic of people living within the FAB Region, from younger craft beer enthusiasts to an older generation of baby-boomers and recent retirees. The types of consumers that would be targeted within this region would be split into two broad categories: • Residents - A locally crafted beer would appeal to residents because they appreciate the idea of buying locally-produced goods and have a desire to support their local economy through “buy-local” type initiatives. • Tourists - A locally crafted beer would appeal to tourists as they tend to enjoy the experience of eating a nd drinking locally produced food and beverages to enhance their tourism experience. Tourists may also be more easily motivated by the perceived scarcity of the craft beer only being available within the FAB Region.
Local Ingredients & Joint Ventures The FAB Region is home to a number of dierent farmers who oer craft brewers a wide selection of fresh, locally-grown ingredients to choose from, including local hops, spring water and a variety of other harvest fruits, vegetables, spices and natural ingredients. To learn more about some of the locally grown ingredients available within the FAB Region, please visit: • Harvest Hastings • County Grown
The FAB Region is also home to a variety of dierent artisan food producers, such as cheese makers, charcuterie producers, artisan bakeries, wineries, cideries, distillery and many other specialty foods and beverages. Artisan foods have gone mainstream in recent years, now ranking within the top ve food trends. The trend speaks to t he consumers’ concerns about health and sustainability, to the chef’s preference to serve locally sourced foods and to specialty retailers interested in supporting local and regional artisan food producers. Artisan food producers oer many opportunities for craft brewers in terms of the possibility of a joint venture, such as a specialty beer and cheese that should be enjoyed together or a brew pub that serves up fresh local fare and craft beer that per fectly complement one another. To learn more about some of the FAB Region’s local artisan food producers please visit us online at www.fabregion.ca. If you require further assistance with sourcing locally-grown brewing ingredients or connecting with a local supplier, please feel free to contact the FAB Region. We’d be happy to help! Government Funding Federal, provincial and municipal levels of government all oer Ontario businesses many types of support programs and incentives to assist with successful business start-ups and to help grow Ontario’s economy.
• L&A County Harvest • Hands on Harvest • Ontario Hops Growers Association (Directory)
For a listing of funding programs, grants and other incentives available to entrepreneurs and Ontario businesses, please contact the FAB Region or download the app at www.startabrewery.ca .
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For Your Consideration Before you dene the details of your Getting Started craft brewery, such as its name, location Once you’ve completed your research and you are and confident enough to move forward, the next & the types of beer that will be brewed, comfortable step is to ask yourself and discover, “Do I have what it takes to it’s highly recommended that you spend be an entrepreneur?” some time researching & learning the This handbook has been created to assist you in starting your own basics of craft brewing, as well as the brewery and provides some of the information the FAB Region basic principles of business. has compiled to help you on your journey. For more detailed information or assistance, contact the FAB Region or download the app today at www.startabrewery.ca .
Here’s the Basics of beer, Brewing & the Industry What is beer? Beer is an alcoholic beverage produced by the saccharication of starch and fermentation of the resulting sugar. The starch and saccharication enzymes are often derived from malted cereal grains, most commonly malted barley and malted wheat. Most beer is also avoured with hops, which a dds bitterness and acts as a natural preservative, though other avourings such as herbs or fruit may also be included.
What kinds of beer are there? With the wide variety of beer styles available today (approx. 65 established beer styles from around the world) beer shopping can be a bit confusing. Many retailers oer beers segmented by country, by brand and, then, by style — making it almost impossible to shop for a specic style of beer. The following information has been included to help you better identify the dierent beer styles: • Lager – A lager is pale, crisp, dr y and refreshing. Lager yeast is a cool, bottom-fermenting yeast and is fermented for a much longer period and at a lower temperature than ales. Pale lagers are the most commonly consumed beers in the world. • Pilsner – Pilsners have a familiar, golden colour and notable hop accent. Even though pilsners and lagers are both bottomfermented, you can rely on a dierence in tastes to help distinguish between the two. • Ale – In ales, you will nd much more avourful beer with strong , individual personalities. Many of them will have
fruity, herbal or spicy characteristics. Ales use top-fermenting yeasts that do not require the refrigeration that other yeasts do. • Pale Ale – Pale ale is a beer which uses top-fermenting yeast and, predominately, pale malt . Pale ales may range in colour from golden to deep amber and were named pale ales because they were much lighter in colour than the dark porters and stouts that preceded them. Pale ales are more highly-hopped, lightly-carbonated and robust. Pale ales pair perfectly with s trongly spiced foods and are one of the world’s major beer styles. • Porters & Stouts – Dry or sweet, avoured with roasted malt barley, oats or certain sugars, stouts and porters are characterized by darkness in colour and rich, roasted malt avour. Porter is ale brewed with a special combination of malts to create a heavier avour, aroma and colour. To complement this heavier avour, porters have a fuller body and a slightly sweeter taste. There are a number of variations of porters and stouts, including Baltic porter, dry stout and Imperial stout. • Wheat Beer – Wheat beer often has an unltered, pale and hazy appearance because of the type of yeasts used. Wheat beer is usually top-fermented and has a wide-range of avours as a number of spices are used in the brewing process. As the name indicates, a wheat beer is brewed with a large proportion of wheat and malted barley.
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What kinds of beer are there? (cont’d) • Light & Extra-Light Beer – Light and extra-light beer is brewed in a similar fashion to ale and lager but is lower in alcohol content and contains fewer calories. A light beer in Canada contains 2.6% – 4% alcohol-by-volume and an extra-light beer contains less than 2.5% alcohol-by-volume. • Fruit / Vegetable / Spice Beer – In recent years, brewers have revisited a past tradition of adding avour and, in many cases, real fruit or vegetables to the brewing process in order to create a wide-variety of new beer. While most fruit beer is ale, it does not carry much of the ale character. In order to allow for the fruit avour to come through nicely, the malt’s avour is not dominant and results in a low bitterness level to the beer.
• Near Beer – In most provinces, a beer with an alcohol content of less than 0.5% alcohol-by-volume is considered a nonalcoholic beverage. To brew this type of beverage, a brewer can either use a very short fermentation cycle or produce a regular strength beer and then remove some or all of the alcohol.
How is beer made? The key ingredients required to brew craft beer are simple: topquality malting barley, the purest water, special yeasts, hops and natural avouring to give the beer special character. Brewing is a natural process, allowing craft brewers to use their skill and knowledge to guide the process along.
How it’s Made Step 1: Choosing Malt Aside from fresh water, the main ingredient in beer is barley. Malting companies take the barley and soak, germinate (sprout), then, dry or roast it to create what’s called “brewers malt.” Craft brewers can choose from several varieties to give their beer a particular colour and avour. Step 2: Mashing Malt Once at the brewery, the malt is coarsely crushed or milled to expose its starchy core but keep its husks whole, to allow these husks to act as a lter bed later in the process. The crushed malt or grist is mixed with heated, puried water and through a carefully-controlled process, the natural malt enzymes in this “mash” break down the starch into sugar. Step 3: Lautering Mash The mash is transferred to a straining or lautering vessel. There, the liquid is separated from the husks as hot water is sparged or sprayed on top of the grains to rinse out as much of the sugary extract as possible. This sugar solution is called “wort.” Step 4: Boiling & Hopping The wort gets collected in a copper or stainless steel kettle and boiled. Hops are then added at various times during the boil. Hops are the pinecone-shaped, green-coloured, female owers of the hop vine that are harvested each Fall and dried for use in brewing. Craft brewers can select many dierent varieties of hops, each
one adding a characteris tic aroma, avour and bitterness to the nal product. Hops also act as a natural preservative in t he beer. Step 5: Hop Separation & Cooling After the wort has been boiled and infused with the aromatic avour of the hops, it proceeds to another vessel where the hops are then removed and the wort is claried. The clear, hopped wort is then cooled to room temperature or lowered in preparation for yeast addition. Step 6: Fermentation The cool wort is moved to the fermenting vessels and yeast is added. Yeast is a living, single-cell organism that converts the sugar in the wort to carbon-dioxide and alcohol. There are many kinds of yeasts, each imparting its own subtle avour characteristics to the beer. Fermentation lasts about 7–10 days and, in that time, the yeast may multiply sixfold. When the fermentation is complete, the yeast is removed. At this stage of its production, the liquid is now called beer. Step 7: Cellars Finally, this young beer is stored cold for 1–3 weeks (or more) and then ltered to achieve clarity before it’s ready for bottling or racking into kegs. For more detailed information or assistance, contact the FAB Region or download the app today at www.startabrewery.ca .
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What Kinds of Brewing Companies are there? Brewing companies range widely in the volume and variety of beer produced, ranging from small breweries to massive, multi-national operations. Some commonly used descriptions of breweries are:
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• Craft Brewery / Microbrewery – The term craft brewery was chosen to replace microbrewery as the segment began to grow several years ago. A craft brewery is a brewery that produces less than 400,000 hectolitres, but more than 3,000 hectolitres of beer, annually. A craft brewery, generally, starts out with a few styles or types of beer. This is the most common brewery for new start-ups because the specic processes that go into the beer are already familiar to the brewer. Later, many brewers branch out into more experimental brews. • Nanobrewery – A nanobrewery (or picobrewery) is a brewery that produces less than 3,000 hectolitres of beer, annually. • Brew Pub – A brew pub is a restaurant-brewery that sells 25 per cent or more of its beer on-site. Brew pubs are a popular choice among start-up brewers. Sometimes, the owner of an existing restaurant or bar wants to add a unique feature to its existing business. A brew pub lets the owner create its signature beer avours and even build a menu around them. • Contract Brewer – A contract brewer doesn’t actually own the brewing facilities with which its beers are brewed. Instead, the brewery owner contracts its production out to an existing brewery.
• Estate Brewery – An estate brewery is a brewery primarily brewing its beer on a farm and using ingredients grown on the farm, such as barley, wheat or hops. An esta te brewery is similar in concept to a vineyard, which grows its own grapes and uses them to make wine. • Organic Brewery – An organic brewery is a brewery using certied, organic ingredients to craft its beer. Organic beer represents an emerging market that is showing potential for growth. Capitalizing on Canadian consumers’ growing desire for organic foods and beverages that are environmentallyfriendly, some Canadian breweries have extended the organic food movement to beer, which is marketed as a high-quality product and produced in a way that encourages sustainable agriculture. Certication to the Organic Production System Standards is mandatory for all organic products being used in inter-provincial and international trade and for products bearing the “Canada Organic” logo. • Brew-On-Premise – A brew-on-premise operation is a commercial establishment providing brewing equipment, raw materials and technical advice, where a person can brew and package beer for personal consumption or to be gi ven away without charge or for commercial use / sale.
Ontario’s Craft Brewing Industry Ontario’s craft brewing industry has experienced some signicant 2
growth in recent years : • Ontario Craft Brewers’ market share for premium priced brands has more than tripled since 2002, growing from less than 1 per cent to over 3 per cent of the beer volume sold in Ontario and continues to be the fastest growing segment within the LCBO’s beer category. • Current average growth rates across all retail channels are over 10 per cent per year. • Ontario consumers have a strong interest in local products of premium quality and are increasingly engaging themselves in the ever-growing Craft Beer Movement. Ontario is now home to well-over 100 craft breweries, representing each of the provinces’ nanobreweries, craft breweries, contract brewers and brew pubs, currently in operation or in the launching stages. The location of each operation can be viewed on the Ontario Brewers Directory Map, maintained by Mom ‘n’ Hops. In 2005, a big boost occurred with the formation of the Ontario Craft Brewers Association (OCB), a trade association that has allowed the industry to build critical mass, given craft brewers a collective voice and is imperative in continuing to move the industry for ward. The craft brewing industry has seen its share of support from the Ontario government, through funding programs such as the Ontario Craft Brewers Opportunity Fund (OCBOF) and the Ontario Microbrewery Strategy, as well as from the LCBO, through its promotional campaigns “I Love Canada” and “We’ve Got Your Beer.” But, the most important support the industry has been shown has been from Ontario consumers. According to John Hay, President of the OCB, people are eager for local alternatives to mainstream products. Hay believes this growing demand is not so much due to dierent consumers but a dierent mindset. Consumers are beginning to show more support for the “100 mile diet” and other “buy-local” initiatives. Just as some people prefer to shop at farmers’ markets because they like to know exactly where their food is coming from, some consumers want to know the brewery that crafts their favourite beer.
Preparing For Your Brewery Every year, thousands of people launch their own businesses and enter the challenging world of entrepreneurship. Many start-ups thrive, but unfortunately several will fail within the rst ve years. Most often, it’s due to the fact that the business owners weren’t well prepared, they didn’t have any business knowledge or experience and they didn’t conduct any initial research or planning to determine if their business idea was viable. During this stage of the start-up process, we will look at the steps that must be completed in order to successfully develop your business plan and determine if your craft brewery business idea is worth pursuing.
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Develop Your Craft Brewery Idea, Research & Evaluate Now that you have a good understanding of craft brewing, you’re now ready to develop your craft brewery business idea and research and evaluate its potential for success. Some questions you may consider asking yourself while developing your craft brewery business idea include: • What are my reasons / objectives for entering the craft brewing industry? • What type of craft brewing operation (i.e. brew pub, microbrewery)? • What form of ownership (i.e. sole proprietorship, partnership)? • What will I name my craft brewery? • Where do I want my brewery to be located? What size? • What types of beer do I want to craft? • What are my competitive advantages? • How will I promote my craft beer and brewery? • How do I want to package my beer? • Will people be willing to pay for my craft beer?
• How does my craft beer t within the industry? What is the potential for growth? • What nancial resources are available? From who? How much? When? • How much will it cost to launch my craft brewery? • Where will I get my brewing equipment and supplies? • What government regulations is my craft brewery subject to? • What licenses and permits must I obtain? • What t ype of distribution system will I emply (i.e. direct, agents)? • What professional resources do I have (i.e. lawyer, accountant)? Still need? • Where can I nd missing skills (i.e. brewmaster, engineer, etc.)?
Analyze Your Market Performing market research will assist you in collecting accurate and specic information about your consumers and competitors, which is a critical part of the planning process. Consumer demands impact and direct all aspects of your business’ activities and can, ultimately, dictate the success or failure of your craft brewery. The tasks that should be completed when performing your market research include: • Market Analysis – The goal of a market analysis is to determine the attractiveness of a market, both now and in the future. Entrepreneurs can evaluate the future attractiveness of a market by gaining an understanding of evolving opportunities and threats as they relate to their business’ own strengths and weaknesses. Conducting a market analysis will also assist you in determining if there is enough of a need in your t arget marketplace for the product(s) you are oering, what your consumers want, how to best present your product(s) to them, etc. The following is an outline of a market analysis: • Market Size (Current & Future) • Industry Cost Structure • Market Trend
• Distribution Channels
• Market Growth Rate
• Key Success Factors
• Market Proftability • Competitive Analysis – A competitive analysis is a critical part of your craft brewery’s marketing plan. Conducting a competitive analysis will help you to establish what makes your craft brewery and beer unique and, therefore, what unique attributes you should promote in order to attract your target market. Some questions you may ask yourself when completing a competitive analysis include: • Who are your competitors? • What products do they sell?
• What types of media do they use to market their products?
• How much do your competitors charge for their products?
• What are each competitor’s strengths and weaknesses?
• What is each competitor’s market share?
• What potential threats do your competitors pose?
• What are their past & current strategies?
• What potential opportunities do they make available for you?
• Research Industry Trends – Conducting your own research on the latest industry trends is important, as it can help you better understand the industry you are entering and it can help you determine how the current position of the industry could impact your business, both positively and negatively. • Prepare Your Marketing Plan – Your marketing plan is an essential part of your overall business plan. Potential investors and lenders want to see how you plan on making money and without a solid business or marketing plan, your chances of receiving nancing is pretty slim. When you develop your marketing plan the information that you’ve collected during your market research should be used to reinforce any statements that are made. The purpose of your marketing plan is to help you: • Assess your consumer needs & develop a suitable product • Convey unique attributes to your target audience • Establish suitable distribution channels
• Determine the most eective ways to promote your business & products • Determine the best suited advertising / marketing tools & venues
If you’re having some trouble piecing together your market research or preparing your marketing plan, contact the FAB Region or download the app today at www.startabrewery.ca .
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Prepare Your Business Plan What is a business plan & do I need one? A business plan is a written document that describes your business objectives and strategies, your nancial forecasts and the market you are targeting. It’ll help you to set realistic and timely goals, secure external funding, measure your success, clarify operational requirements and establish reasonable nancial forecasts.
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A well-researched, well thought-out business plan is essential for several reasons. First, it increases your chances of success by forcing you to consider every aspect of your business and it serves as an on-going benchmark so that you’re able to gauge your success and plan for future growth. Secondly, it’s what investors, including banks, want to see in order to determine whether you and your business are good risks . To be considered for funding from investors, your business plan must successfully demonstrate that you understand every aspect of your business and its ability to generate prot. It’s important to understand that taking on the challenge of preparing your business plan isn’t something you’ll want to do all on your own. Working in partnership with an organization or consultant is a much better way to approach building such a crucial piece of your business. If you require assistance with preparing your business plan, please contact the FAB Region or download the app today at www.startabrewery.ca.
SETTING-UP YOUR BREWERY Financing • Personal Assets – You’ll need to use some of your own money for start-up, either from your savings or from personal property you can sell. Although, you can also access start-up money from your personal credit or your RRSP, you should
Business Plan Tips • Thoroughly review your business plan once it’s complete. • Try to avoid using jargon or industry terms — the person that reads your business plan may not understand your business as well as you do. • Ask friends, family, associates and mentors to review your business plan. • Don’t be afraid to seek advice from professionals. • Consider hiring a Certied General Accountant to review your pro forma nancial statements. • Remember, your business plan represents your craft brewing business, so you want it to be as professional as possible.
• Love Money – While borrowing from family and friends is an option, and many entrepreneurs have done it. It’s an option you need to think about very carefully. Money often changes relationships and it may not be worth it to involve family and friends in your business venture, particularly, if they’ve not been entrepreneurs themselves. If you do borrow from family or friends, make sure you formalize any loans by way of a promissory note that sets out the amount of the loan, whether interest is payable and, if so, at what rate, how and when the loan is to be repaid and what security, if any, you’re oering for the loan. A promissory note claries the agreement for both parties. • Financial Institutions – Aside from your own personal resources, nancial institutions including banks, trust companies and credit unions are the most common source of nancing for small businesses. They can provide a number of options, including personal lines of credit, short-term loans, long-term mortgage loans and, in some cases, loans against inventory or accounts receivable. The Canadian Bankers Association (CBA) has links to all its member charter banks. Another possible source of nancing is the Business Development Bank of Canada (BDC). BDC bills itself as a leader in delivering nancial and consulting services to small businesses and, depending on your situation, BDC may be able to provide start-up nancing.
• Angel Investors – Angel investors are wealthy individuals or groups who invest t heir own money in promising new businesses, usually ones in the same f ield they come from. Typically, angels provide money, usually between $10,000 and $2,000,00 0, in the early stages of the business in return for a share in it. Your lawyer or accountant may be able to help you find an angel, you can ask around in your local business community or you can also try the National Angel Organization. • Venture Capitalists – Venture capitalists look for businesses with high growth and prot potential. They oer money, management expertise and connections for a share in the business. As a rule, venture capital companies won’t look at an opportunity that requires less than $500,000, and most prefer a deal size of at least $3 million. You can get a list of venture capitalists from the Canadian Venture Capital & Private Equity Association.
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• Barter Exchanges – You can get creative and barter with other companies, oering your products in exchange for anything from advertising to goods. • Government & Non-Profit Financing – There are a number of government and non-profit organization financing programs, some of them aimed at specific target groups, such as youth and Aboriginals. Many of them include valuable hands-on training, planning assistance and mentoring services. Some of the main financing programs include: • The Community Futures Development Corporation in Ontario provides repayable nancing of up to $250,000 on commercial terms through loans, loan guarantees or equity investments to help nance new or existing small businesses that help maintain or create jobs in rural and northern communities. Please contact the Frontenac CFDC, Trenval Business Development Corporation, PELA CFDC or the CFDC of North & Central Hastings and South Algonquin for more information. • The Canada Small Business Financing Program makes it easier for small businesses to get loans from nancial
The maximum loan size has increased to $500,000, of which no more than $350,000 c an be used for purchasing leasehold improvements or improving leased property and purchasing or improving new or used equipment. • The Canadian Youth Business Foundation (CYBF) Loan Program provides loans of up to $15,000 to young entrepreneurs between 18 and 34 to help cover start-up costs. • The Self Employment Assistance Program provides nancial support to unemployed people eligible for unemployment assistance to get their businesses up and running. There are also a number of other government assistance programs available, please feel free to contact the FAB Region for more information or download the app today at
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How do I prepare for nancing? • Make sure you have your business plan, personal asset statement, executive summary and pro forma nancial statements with you and that you know them inside out. • Know your credit rating and be able to show that it’s strong, if it is, or that you’re taking concrete steps to improve it. • Be condent about your craft brewery business idea and wellinformed about the brewing industry. • Be able to demonstrate your plans for the money you are requesting and why you can be trusted with it. • Finally, be persistent and stay positive. It’s quite possible you’ll be turned down by a number of potential lenders or investors before nding one that will take that all-important leap of faith. If you truly believe in what you are doing, you will nd a way to nance it.
Government Regulations Registering Your Business (Provincial) If you’ve incorporated your business, you’ve already registered your business name. If you’ve chosen not to incorporate, you’ll need to register your business name with the province of Ontario. Before registering your business name, check to see whether the name you’re planning on registering is already in use. If it is, choose a dierent one. You can do a name search at ServiceOntario at the same time as you do your business registration for an additional fee.
Registering Your Business (Federal) You may need to register with Canada Revenue Agency to get a Business Number. Registration is mandatory if your business
requires a GST / HST (depending on your total revenue), Payroll, Corporate income tax or Import / Export account. Businesses are able to register online, over the phone or by mail. For more information please contact the Canada Revenue Agency.
Incorporating Your Business • Provincial Incorporation – Incorporating your business, provincially, allows you to do business under a corporate name in Ontario. Corporate name protection applies in Ontario and you can open oces / stores within the province. • Federal Incorporation – If you incorporate your business federally, you can open locations within Ontario and in other provinces and territories across Canada. If you open oces / stores in dierent provinces, you will be required to register your business in those locations. Federal incorporation also provides corporate name protection across the country. Having an experienced lawyer or accountant look after your incorporation is helpful. They can make sure your incorporation forms are lled out properly, saving you possible problems down the road. Your lawyer or accountant can also tell you whether or not it’s advisable to incorporate federally.
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Regulations, Licences & Permits In order to successfully and legally operate your craft brewery business, you will be required to adhere to certain regulations and obtain certain licences and permits from the federal, provincial and municipal levels of government. The Alcohol and Gaming Commission of Ontario (AGCO) is responsible for administering the Liquor Licence Act (LLA) that covers most aspects of Ontario’s beverage alcohol laws. These laws provide the regulatory requirements for the responsible sale and service of beverage alcohol in the province. The following is a list of liquor licences issued by the Registrar of Alcohol and Gaming that you must obtain (as of July 1, 2013): • Liquor Sales Licence – A sales licence for on-premise sale, service and consumption of beverage alcohol. Please also see Endorsements to a Liquor Sales Licence. • Manufacturer’s Licence – A manufacturer’s licence gives
authority to a manufacturer to sell its wine, beer or spirits to the Liquor Control Board of Ontario. • Excise Duty Licence (Brewery) – To operate a brewery, you need an Excise Duty Licence. The licence authorizes the person or business entity to carry on specic activities at one or more locations. Contact your nearest Regional Excise Duty Office for more information. • Excise Warehouse Licence – This license authorizes a person to possess, in their excise warehouse, non-duty-paid packaged alcohol or manufactured tobacco and cigars that are not stamped. Alcohol retailers are not eligible. The FAB Region can assist you with determining and obtaining the applicable permits and licences in order to legally operate your craft brewery business. For more detailed information download the app today at www.startabrewery.ca .
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Finding a Location / Building The next step is to nd commercial land to build your craft brewery on, if you’re choosing to start from the ground up, otherwise you’ll need to nd a suitable building to rent or purchase. There are several things that should be taken into consideration when searching for a location or building for your craft brewery, including: • The kind of space you’re looking for • The location — its proximity to potential customers and clients, and the zoning for your type of business • Availability of parking & supplier access • Cost to purchase, if you choose to buy. • The amount of rent you’re able to pay and whether it includes utilities and services.
• The amount you’re willing to pay for improvement s, if necessar y. • If it’s a rural location, does it have the necessary infrastruc ture (i.e. water supply, septic system, etc.)? If you decide to rent, you’ll need to sign a lease with the owner. Make sure your lawyer goes over it carefully and explains it to you before you sign it so that you understand the commitments to which you are agreeing. Commercial tenancies aren’t covered by the same landlord-tenant legislation as residential ones and you need to be much more careful when renting commercial space. If you decide to purchase commercial land or a facility, get help from a real estate agent who specializes in commercial properties and have your lawyer review your oer before you buy.
It’s important to understand just exactly how much money and work is involved with building a craft brewery from the ground up. It’s highly recommended that during the early stages of development you choose to rent a facility, allowing you to have a better exit strategy if the business were to fail (i.e. you aren’t stuck with a building in your possession). It can also be extremely dicult to nance a start-up business venture and a building at the same time, unless you are investing a large amount of your own money. Once your business is o the ground, has achieved some growth and has proven to be a success, then, explore the possibility of purchasing your own building or building your own brewery from the ground up. Breweries must be zoned properly and conform to municipal, provincial and federal regulations. Generally, light industrial-zoned buildings are good candidates but craft breweries have also been seen in some more unique locations, including old stable buildings, century-old churches and old dairy farms. When searching for a building for your brewery, there are also certain requirements that the building must meet. The following are just a few requirements and recommendations to keep in mind when searching for a building: Water • The main water supply to the brewery is recommended to be 60 psi @ 25 GPM. Uniform water ow to the brewhouse is critical and should not be aected by water demand elsewhere in the building. • Hot and cold hose bibs are required in all brewery spaces and lab areas. • If kegging or bottling will be done, a water supply will be needed in these areas. • Filtration may be required for municipal water. It is recommended a water analysis be completed to determine if a lter is required. Drainage • Floor drainage systems that are acceptable for food production operations are required in the brewhouse, fermentation, walkin cooler (if applicable), boiler room and any other areas where water and spillage may occur (i.e. kegging / bottling). • Floors should have a recommended pitch of 1/8 – 1/4-inch per foot toward drains.
• It’s recommended that 4” channel drains with stainless steel or berglass grating are installed. All drains should be sized adequately to handle 4–6 barrels of euent for every 1 barrel of beer produced. • Check on what types of drainage systems are required in your area before renting or purchasing a building. Electrical • The building must have commercial wiring. • A 200 Amp service is recommended for the brewery area, this would include such things as a boiler and glycol condensing unit. Finish • Brewery oors should be sealed and resistant to both mild acids and strong alkalines, making concrete oors mandatory. • Due to the nature of the brewing process, walls and ceilings should be washable and made of materials that will withstand a wet environment and not harbour bacteria growth. • All oor penetrations for transfer lines, steam lines, ex auger, etc., should be curbed to prevent overow. Square Footage • It’s recommended the total space for a craft brewery should be at least 5,000 square-feet and no less than 2,500 square-feet. Ceiling Height • It’s recommended to have 20-foot ceilings in the brewhouse area. Ventilation • There should be good ventilation throughout to remove condensation and provide fresh air. • Remember to always use adequate screens to exclude pests. • Consider protecting the bottling room from dust and impurities by including a ltered air system in this area. • Air conditioning is recommended in all brewery spaces. FAB Region Property Search For more information on available properties please contact the FAB Region or download the app today at www.startabrewery.ca.
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Brewing Equipment & Supplies So, now that you’ve found the perfect location / building for your craft brewery, it’s time to source the brewing equipment and supplies you’ll need to actually brew your beer. Let’s start o with some of the equipment you’ll need. Please note that this is not a complete list but is meant to cover the major equipment requirements: • Malt Mill – A machine that crushes malt into grist. • Hot Water Tank – The container where the brewing water is heated to mash temperature. • Mash Tun – a vessel in which mashing takes place and where wort is separated from the spent grains. • Lauter Tun – A large vessel with a perforated false bottom. It is used to strain the sweet wort o the spent grains after mashing.
• Kettle – A large vessel, similar in shape to a mash tun, usually made of copper or stainless steel in which the wort is heated. Also called a brew kettle. • Filter – Removes solid particles from the beer. • Fermenter – A generic term for any open or closed vessel in which primary / secondary fermentation t ake place. • Bright Beer Tank – Storage tanks for the claried nal beer. • Packaging System – A system that puts the beer into the containers in which it will leave the brewery. Typically, this means putting the beer into bottles, aluminium cans and kegs / casks.
New vs. Used Equipment When sourcing equipment for your craft brewery you have the option of purchasing new equipment from a manufacturer that
specializes in brewery systems and works with you to develop a system based on your requirements and operation or you may consider purchasing used equipment. When considering used equipment, it’s crucial to source equipment that has been originally designed for ot her food processing operations, such as dairies, soft drink plants, etc. Alternatively, pieces of used brewing equipment, from dierent sources, can, collectively, be made into a brewing system. Unless you are extremely lucky, purchasing a mish-mash of used equipment can leave you with some pieces t hat are oversized and require repairs, modications or adaptations and sanitization to be performed. While you may end up sa ving more money by purchasing the used equipment, keep in mind you still have to piece it together and install it. By the time you are nished, you could very well end up with a used brewing system that may have cost almost as much as a brand new, turn-key system.
Equipment Tips • The equipment used should be made of safe, approved materials such as stainless steel. Copper is an acceptable material for use in breweries and wort can come into contact with it, although there may be some restrictions in terms of fermented beer coming into contact with copper. • Avoid brass because it, generally, contains lead. Brass ttings can be treated by “pickling” the parts in a vinegar and hydrogen peroxide mixture, which removes the surface lead. • Food-grade plastics and rubber, such as polyethylene plastic, hightemp polysulfone plastic, neoprene rubber and high-temp silicone rubber, are perfectly acceptable. • Always be sure not to exceed the temperature ratings of all materials and components. • When using PVC or vinyl tubing, look for the “FDA approved” st amp printed on them.
Until you have all of your money in place and are ready to act ually buy, it’s recommended you research both options to determine which best suits your requirements and budget.
Brewing Ingredients & Suppliers
Several resources, including a list of used equipment websites and brewing system manufacturers, have been included within the app, download it today at www.startabrewery.ca .
• Malting barley • Water
As previously mentioned, there are four key ingredients required to brew beer: • Yeasts • Hops
When searching for ingredient suppliers it’s crucial to remember the quality of your beer is only as good as the quality of your ingredients. There are many excellent sources for quality brewing ingredients, including local suppliers, growing your own or sourcing your ingredients from places like New Zealand and Germany. Typically, where you decide to purchase / source your ingredients comes down to your budget, the styles of beer you are brewing and your own personal preference. The FAB Region is home to several local suppliers to consider utilizing for your brewing ingredients, including locally grown hops and barley. For more information on the local suppliers, within the FAB Region, please contact us or download the app at www.startabrewery.ca .
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Running Your Brewery Bottling, Kegging & Labelling The most important thing about the bottling and kegging process is to keep the beer from being contaminated by stray yeasts and to keep oxygen away from the beer — the two main things that reduce the shelf-life of beer.
Bottling The rst step in bottling begins with loading the empty bottles on the conveyor that feeds into the unscrambling table either from a pre-pack or bulk-pack bottles. Pre-Pack Craft brewers often buy what is known as a “pre-pack,” which includes printed six-pack carriers inserted in a printed case along
with the bottles. For craft brewers, this is the most convenient and cost-eective way to go, even though it is a relatively expensive way to buy bottles. In craft breweries, loading with pre-packed bottles is usually done manually at a rate of 80 to 100 bottles per minute (BPM). The table funnels the wide mass of bottles into a single stream. Several types of mechanisms prevent the bottles from bridging as they are funneled to a single line. These include mechanical joggers, reversing chains and good inherent design. Bulk-Pack Another method, common with larger breweries and some craft breweries, automatically feeds bottles onto the conveyor from a palletized bulk pack. Bulk-pack bottles are full pallets of bottles
with no cartons. Ra ther, the bottles are separated by cardboard sheets and wrapped in plastic shrink. A de-palletizer removes the bottles from the pallet, usually a layer at a time, and places them on the unscrambling table.
Kegging Kegging is another option in packaging beer. Kegging involves lling carbonated pasteurized beer into sterile aluminum or st ainless steel kegs of various sizes. Aluminum kegs are generally more popular than stainless steel kegs because they are lighter and more resistant to minor damage. Kegging ts into the cost st ructure for craft brewers with limited startup capital for bottling lines and low product output. Open-Keg Systems Open-keg systems are characterized by their barrel shape and bunghole on the side by which the interior can be readily accessed without extracting the valve body or spear. Closed-Keg Systems Closed-keg systems are identied by their typically straight sides with a rim c alled a chime on each side. The top chime has integrated handles for easy handling. The top also contains a concentric valve tting in the center allowing for easy cleaning and lling by automated systems. Draught accounts prefer closed-keg systems over open-keg systems for several reasons, including ease of tapping, ease of storage and handling and the improved prot margin due to the reduction of beer loss, commonly associated with older keg styles. Sankey-Style Valve The newer, more common single-valve keg (SVK), or “Sankey” keg, has a valve arrangement that consists of a stainless steel rod housing called a combination tting that is permanently installed into the top center of the keg and sealed with a spring-loaded check ball. The tapping device, or tavern head, ts into the lug housing of the valve.
Pressure-Sensitive Labeler These units are used in the wine industry and food industry but are used more often in the cosmetic, pharmaceutical and soap industries. Pressure-sensitive or self-adhesive labels are also used in the craft brewing industry though not as much as paper labels. Pressure-sensitive labels are applied from a coiled strip of waxed carrier (also called “backing”) paper. Rotary Labeler Rotary labelers are machines for which the bottles must be transferred from the bottle conveyor into the labeler carousel. Rotary labelers operate at higher speeds than pressure-sensitive and tandem labelers and are equipped to apply front, back, full wrap and neck labels. Tandem Labeler An in-line labeler is a type of machine for which the bottle travels in a straightforward motion and the label or labels are applied while the bottle is moving along the bottle conveyor. Tandem labelers cannot do front and back labels at the same time and are not very wellsuited for applying neck labels.
Label Standards Any beverage containing 1.1% or more alcohol by volume is considered an alcoholic beverage. These products must meet the labelling and compositional requirements found in Division 2 of the Food and Drug Regulations (FDR). (Note: It’s also highly advised that you verify provincial legislation as it may dier from the federal requirements). The FDR requires all bevera ge alcohol labels to include the following information: • Common name • Company name and address • Net quantities in metric units • Alcohol content by volume • Country of origin
Labelling Bottle labeling is completed after bottle lling once the bottles have been dried. The principal types of labelers used in the brewing industry are pressure-sensitive, rotary and tandem.
• Ingredients (required only for “unstandardized ” alcoholic beverages) • Durable life date (if shelf life is 90 days or less)
For more detailed information on the FDR and other labelling requirements for alcoholic beverages, please visit the Canadian Food Inspection Agency, the Canada Business Network or the LCBO website or download the app at www.startabrewery.ca .
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SElling YOUR
Craft beer Marketing & Promotion While marketing is critical to the success of your craft brewery, during the start-up stages the cost of marketing can be an issue. It’s entirely possibly to eectively market your craft brewery business without spending a fortune on traditional advertising, which tends to be the most expensive and often not the best choice for small businesses. The most important thing to keep in mind about marketing is that it is communication. The following ideas have been included to assist you with planning your marketing, without breaking the bank: i C r a f t B r e w | S e l l i n g Y o u r C r a f t B e e r
Brand your business. First thing, establish a concrete identity. You may even consider using a tagline that reects your business philosophy to reinforce who you are as a business. It’s highly recommended that you invest in having a professional logo designed by a graphic designer, as your brand will appear on your labels, packaging, website and other promotional materials you plan to use. Being a do-it-yourself designer won’t save you any money in the long run. Remember, you’re busy with r unning your craft brewery and your specialty is not design, leave it to the professionals. There are many excellent small design rms and freelancers to consider over the big-box agencies. Network, network, network. Networking is an extremely powerful and inexpensive (and in some cases free) way to generate awareness of your craft brewery and beer. Attend industry events, join an industry association or local chamber or even consider volunteering for a board or committee. Eective networking is all about building relationships that can lead to business down the road. Know your goals and what you can give in return. Follow up in a timely fashion and stay in touch to reinforce the relationship. Use a website. Having a website is essential in today’s business world. Unlike printed materials, a website can be a dynamic source of two-way
communication between you and your consumers. You can even sell your beer through your website! You don’t need to spend a fortune developing a huge website. The quality of the content and professional of appearance of your website is paramount, not the number of pages or the expensive “bells and whistles.” As suggested with your logo, you should invest in having a professional website designed by a web developer. Having your nephew develop your site will not save you any money in the long-run. Work with experts who understand your goals and objectives and will help you build a site tailored to your business and needs. A more extensive guide and links to tools and resources can be found by downloading the iCraft Brew app, which can be found at www.startabrewery.ca .
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YOUR VERY OW N CRAFT BREWERY! We are a group of economic development specialists in eastern Ontario who want to help you open your brewery in our region. Our four Counties are situated exactly halfway between Toronto & Ottawa, along the 401 corridor & stretching up as far North as Algonquin Park. To help you get started, our free app, for the iPad & other tablets, will guide brewing enthusiasts through the necessary steps of opening a small-scale craft brewery.
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Get Something Brewing
In Eastern Ontario Anne Prichard, Executive Director
Andrew Redden,
Stephen Paul,
Neil Carbone,
Economic Development Manager
Economic Development Manager
Frontenac Community Futures Development
Hastings County
Lennox & Addington County
Director of Community Development
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Prince Edward County
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