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With the help of brewer Andrew Estabrooks, Northampton has expanded its annual production of Picaroons ales to 9,000 hectolitres from just 2,000. (ANDREW MEADE FOR THE GLOBE AND MAIL)
With the help of brewer Andrew Estabrooks, Northampton has expanded its annual production of Picaroons ales to 9,000 hectolitres from just 2,000. (ANDREW MEADE FOR THE GLOBE AND MAIL)

Small brewers craft a growing market Add to ...

Two years ago, Sean Dunbar had to issue an apology to the people of New Brunswick: He couldn’t make beer fast enough.

His Northampton Brewing Co. was brewing as much of its Picaroons Traditional Ales as it could, but provincial liquor stores were always short of product.

So the brewery had to grow. Fast. In the past five years alone, Fredericton-based Northampton has expanded its annual production to 9,000 hectolitres from just 2,000. While the province’s beer sales fell slightly last quarter, Mr. Dunbar saw a 23.1-per-cent jump in Picaroons sales over 2011.

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“It’s a really good time to do what we do,” he said.

Picaroons is not alone in its craft-brew success. Beer sales over all have been flat in Canada since 1995 – and have dropped 5 per cent in the United States – but craft beer sales have seen revenue growth at or near double digits in the past three years, according to a report released Wednesday by BMO Nesbitt Burns. Consumers don’t just want a Bud while they’re watching the game – they want to pair their brew with their food.

The beer market is undergoing a “structural shift” as craft beers approach 6 per cent of market share and 10 per cent of industry revenues, says economist Alex Koustas, who wrote the BMO report.

Big brewers are responding by buying up craft beer makers or introducing craft-like versions of their own brands, and these often become the companies’ best-performing units. “People’s tastes are evolving,” Mr. Koustas said. Beer drinkers “are becoming more educated in their choices.”

While beer is always a big seller in the summer, the way craft brews are eating into market share “is making the big guys pay attention,” said Alberta Liquor Store Association president Ivonne Martinez. In Ontario, local craft beer sales grew 45 per cent in the past fiscal year, leading all product segments, at LCBO locations.

For Mr. Dunbar, demand has only increased since what he calls “the great apology year.” Sales of Picaroons’ 14 beers – with year-long staples like Yippee IPA and seasonals like Winter Warmer – have increased steadily since the brewery first opened in 1995.

The variety, Mr. Dunbar said, means beer lovers sample more and get their friends into it. The brewery co-founder even opened up a “brewtique” in downtown Fredericton where locals meet to buy brews at their freshest. “There’s a sense of community that’s developed around local-brewed micros.”

Robert Sartor, chief executive officer of Calgary-based Big Rock Brewery Inc., said consumers’ palates have become more sophisticated. Consumers are realizing that beer “isn’t just something you drink when you’re watching sports,” he said. “It’s something you can have with meals and share with friends. People want to have better quality.” The brewer saw 4-per-cent sales growth in 2011, to 220,973 hectolitres of product sold, and year-to-date sales are up 7 per cent.

Beer isn’t the only drink people are turning to this summer. Bourbon is on the rise as consumers seek out finer flavours. Consumers are taking an interest in bourbon and its distillation in ways that parallel the preoccupation of wine aficionados.

“There’s an art to it,” said Chris Bauder, general manager of bourbon products at Beam Inc., which manufactures both Jim Beam and Maker’s Mark. “Bourbon has a particular set of rules. … There’s a personal touch.”

Bourbon has seen about 10 per cent growth across the board in North America; in Ontario, bourbon sales have grown by 44 per cent over the past year. The spirit has made headway with younger consumers and is appealing to more women through both sense appeal and by adding new flavours. With products like Jim Beam’s Red Stag dark-cherry-flavoured bourbon, “it’s not your father’s Jim Beam any more,” said beverage analyst Timothy Ramey.

Eddie Russell, an associate distiller with Wild Turkey bourbon, has been making the spirit for 31 years – and, thanks to his father Jimmy, the master distiller, he spent most of his childhood in a distillery, too. Mr. Russell loves showing customers “the true, old-fashioned process” involved in making Wild Turkey. He says that more people are genuinely interested in the technique – how a distiller controls the batch’s timing to pull out the right notes of vanilla, caramel, fruit and nuts.

“There’s such a rich history, a romance, about the bourbon industry.”

IT’S NICE ON ICE

There’s a scene in Kevin Smith’s 1994 cult classic film Clerks where the central characters – Dante and Randal – run through a list of terrible customers. The scene cuts to one of Dante’s favourites: “What do you mean there’s no ice?” the customer asks. “You mean I’ve gotta drink this coffee hot?”

The request was absurd in 1994, but 18 years has done much to shift perception. In Canada, iced-coffee sales at cafés and restaurants have grown 14 per cent over the past two years, with 172 million servings in the year ending in May, 2012.

About half of all cold-coffee beverage sales take place between June and August, says Joel Gregoire, a Toronto-based food and beverage analyst with NPD Group – but right now, he says, “it’s one of the hottest beverage categories we’ve ever seen.”

People are drinking iced coffee and their slushy counterparts for different reasons than hot coffee – it’s more of a treat than a morning ritual – so it’s not eating into hot coffee’s sales. Where hot coffee is seen as a pick-me-up, “iced coffee is about taking that break, about slowing down,” Mr. Gregoire says.

The category has seen growth across the board at Canadian retailers, including Starbucks and Tim Hortons. At Second Cup, iced-coffee sales have grown 130 per cent since last July. Iced coffee has long been a Second Cup staple, but CEO Stacey Mowbray says the company put an extra push on the product starting in April, focusing on how people could customize their drinks.

Iced coffees aren’t the only cool drinks experiencing strong growth in Canada. Smoothie sales rose 83 per cent in the 12 months ending in May, 2012, with 86 million sold that year.

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