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Craft breweries in Canada represent a growing trend in the beverage industry and a profitable one when managed well. With the sector gathering steam, MNP’s Stephen Shaw, Managing Director, Corporate Finance and Sean Fleming, Senior Business Advisor, Food and Beverage Processing, saw a gap in services for local and out-of-province craft breweries.
Because of their small size, many breweries lack the capacity to expand – their production, facilities, distribution and marketing. But what if a dedicated contract brewer came along, with the expertise, equipment and strategy to enable them to grow?
A contract brewer MNP’s Corporate Finance team would develop from the ground up - from creating a business plan, finding a management team, securing the location and regulatory licenses, equipment and installation, negotiating leases, supply, distribution and warehousing agreements, contracting customers and raising debt financing.
In Hollywood, the inception of a ground-breaking project involving financial advisors, industry experts and craft breweries would take place in a sun-drenched patio, over a couple of cold beers. In real life, the development of Brunswick Bierworks, Canada’s first contract brewer to be created by an accounting firm, was more mundane – in MNP’s Toronto offices – but with equally blockbuster results.
The craft brewing sector has been growing at a rate of 12 percent a year in Canada; that translates into an average of two new breweries a day popping up across the country. Stephen and Sean saw the opportunity to develop an end-to-end solution for brewers who were starting up or expanding. Another target was international brewers eager to expand into Canada but stymied on keeping the fresh taste and high-quality consumers want.
Through the firm’s combined entrepreneurial experience, industry knowledge and networks, they could offer top-notch support not only developing and producing the beer, but also warehousing, distributing and selling. They just needed to find an investor with the same vision.
It was an innovative, all-encompassing approach for the MNP team, which typically would respond to a request by a management team or a client to find a right-fitting investment. This time, they sought the right investor and structured the engagement with him as the primary sponsor.
By February 2015, Ontario food industry veteran Danny Rother bought in to the concept. He had been looking for an opportunity to keep his hand and family in the business. The ability to lead a start up that had an expert financing, transaction and beverage processing team meant investing in a lower-risk enterprise.
Engaged by the principal investor, MNP secured contracts with eight local breweries, raised additional capital and recruited key management team members. In September 2016 Brunswick Bierworks launched commercial production in Toronto.
Within a year it had doubled its volume and today, the facility produces for 25 local, European, Asian and U.S. craft breweries seeking the high quality and freshness Brunswick Bierworks offers.
Both Stephen and Sean attribute the facility’s success to detailed research and planning, understanding the market and their collective expertise and experience. Through their knowledge, they knew there was an appetite, both from small, cash-strapped breweries and international operations, for a dedicated ‘partner’ brewery.
The concept has proven successful and popular: MNP partnered in a similar venture in Alberta, the Last Spike Brewery, which is expected to be operational in late summer 2018.
For more information, contact Stephen Shaw, Managing Director, Corporate Finance, at 416.596.1711 or [email protected]
Related Topics:Small Business
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