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Steamwhistle

Discuss anything and everything about craft brewers from Ontario here.

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S. St. Jeb
Seasoned Drinker
Posts: 1044
Joined: Tue Mar 22, 2011 11:44 pm
Location: Burlington, ON

Steamwhistle

Post by S. St. Jeb »

Came across this really interesting article on Steamwhistle.

http://globe2go.newspaperdirect.com/epaper/viewer.aspx

Some past comments on a possible takeover of Steamwhistle.
Tapsucker wrote:
jrenihan wrote:
sprague11 wrote: Crazy prediction for 2017: Two of the big Ontario craft brewers sell out to the big guys.
Interesting. Who are your guesses? If there were to be 2, I guess I would pick Beau's and Muskoka, but I'd be curious to hear if you have a different two in mind....
Ren
Let's not forget Steamwhistle. Easy to plug into any portfolio and has brand recognition in a lot of Canada now. Would be a simple accountant to accountant conversation.

Somehow, I get the feeling Henderson is all about building a farm team to sell too, but I don't know enough about them to verify that.
matt7215 wrote:
Winter is Coming wrote:Who will be next? Steam Whistle?
thats who i thought would go first

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sstackho
Bar Fly
Posts: 501
Joined: Mon Jan 30, 2006 11:37 pm
Location: Riverdale

Post by sstackho »

Here is the article:

Report on Business
Pilsner and pot: Steam Whistle eyed for takeover
The Globe and Mail
By ANDREW WILLIS, CHRISTINA PELLEGRINI
28 July 2018,
©2018 The Globe and Mail Inc. All Rights Reserved.

As lunch hour approaches on a stupidly hot morning in downtown Toronto, the bar at Steam Whistle Brewing is filling up with 20-somethings sipping frosty glasses of pilsner. In an office perched above the crowd, executives at one of the country's largest independent beer makers are explaining the similarities between their business and the cannabis companies racing to prepare for legalization of recreational marijuana this fall.

“We have what cannabis companies need – a brand that's well-established with their target market, national sales and distribution, experience in licensing and working with governments," said Andy Burgess, president of Steam Whistle.

When asked if the brewer has fielded takeover offers from upstart marijuana firms, many of which are flush with cash and boast stock with sky-high valuations, Mr. Burgess said several potential buyers have come calling, including overtures from Aurora Cannabis Inc. this spring.

While Aurora declined to comment on their business discussions, spokesperson Heather MacGregor said the company is looking for opportunities within the beer market.

“Aurora Cannabis has expressed specific interest in the infused beverage space, and we intend to enter that market," Ms. MacGregor said in an e-mail. “There is tremendous innovation happening in this area right now and we think this area of the business has incredible potential."

To date, Aurora and other potential buyers have kicked Steam Whistle's tires, but no one has made a compelling offer for the private brewery, which is owned by its employees and some outside investors. In keeping with the company's marketing mantra, Mr. Burgess is focused trying to do one thing really, really well: sell more bright green cans and bottles of Steam Whistle beer. But like most players in the booze business, Mr. Burgess expects to see partnerships and takeovers shape the future of the alcohol and cannabis sectors.

The cross-sector deal-making has already begun, with American wine and beer maker Constellation Brands paying $245-million last November for a minority holding in Canopy Growth Corp., the biggest domestic cannabis company. Aurora followed up in February by dropping $138-million for a stake in Alcanna Inc., the country's largest publicly traded chain of liquor stores.

Steam Whistle is seen as a target because it sits in dangerous middle ground. The business is too small to match the scale of the two dominant beer makers, Molson Coors Brewing Co. and Anheuser-Busch InBev, which owns Labatt Brewing Co. Ltd. Steam Whistle produces the equivalent of 88,000 bottles of beer each day.

Labatt's daily capacity is a just under a million bottles.

Yet Steam Whistle, founded in 1998, is too big and too old to be your trendy neighbourhood craft beer. Mr. Burgess said that in revisiting the company's marketing strategy this year, “we realized we're no longer the new guys in craft beer, we no longer have that cachet."

If it feels like there is a new brand of beer on the shelf every time you go to the store, it's because that is the case. Industry group Beer Canada said 122 craft brewing facilities opened their doors in 2017. There are now 817 breweries in the country, a record number of competitors.

Yet Canadians are drinking less beer: We each pounded back an average of 75.5 litres of pilsner, ale and lager last year, down 2.1 per cent from the previous year, according to Beer Canada. Legal pot is expected to mean even less demand for a cold one: Alcohol sales have fallen in U.S. states that legalized recreational marijuana, such as Colorado and Oregon.

“Our extensive analysis on the impact that legal cannabis access can have on overall drinking patterns reinforces our conviction that cannabis and alcohol are substitute products," said analyst Vivien Azer at U.S. investment bank Cowen Inc. “We believe that lower-end beer is most exposed to this substitution risk."

Mr. Burgess said after Steam Whistle sales “plateaued" in recent years, the company made a series of moves aimed at winning over consumers who will soon be able to choose between beer, wine, liquor or a joint, or eventually enjoy a cannabis beverage. A management shakeup saw cofounder Cam Heaps named CEO, another co-founder depart and Mr. Burgess, an original investor in Steam Whistle, join the company in March.

Steam Whistle invested $15million in new brewing facilities in suburban Toronto over the past year. That opened up space for a beer hall and special events at the brewer's downtown location. In June, Steam Whistle became a truly national brand by winning a licence to sell in Quebec. Its beer is going to more than 1,000 grocery stores and dépanneurs (convenience stores) in the province.

Sponsorships are now a priority, and Steam Whistle elbowed aside Molson to become official beer of this weekend's Canadian Open golf championship. The event is part of a larger campaign that saw Steam Whistle stocked in fridges at 207 golf courses across the country.

And Steam Whistle is trying to capitalize on consumers' taste for fresh, craft beer by focusing attention on the quality of its offering.

Labels on cans and bottles were recently refreshed by adding the slogan “Pure Pilsner," to draw attention to a beer made entirely with natural ingredients.

“Canada is a country without a defining national beer, like Guinness or Heineken," said Tim McLaughlin, Steam Whistle's director of marketing, referring to brands that are akin to mother's milk in Ireland and the Netherlands, respectively. “Our goal is to make Steam Whistle the country's most respected premier beer."

In the past 15 years, evolution in the Canadian beer industry has been Darwinian: The strongest players snap up successful upstarts. Molson acquired Creemore Springs Brewery Ltd. and Granville Island Brewing Co. Rival Labatt bought discount beer maker Lakeport Brewing Co. and Mill Street Brewery. Steam Whistle is part of this corporate circle of life, as the trio of entrepreneurs that started the company all previously worked at Upper Canada Brewing Co., which was launched in the 1980s by Mr. Heaps's family, then sold to Sleeman Breweries Ltd. in 1998.

So while Steam Whistle is charting a course to remain a successful independent brewer, history and the company's own DNA dictate the owners will eventually say yes to a takeover. When the day comes, there's the enticing prospect of a frothy price from an auction that pits big breweries against cannabis companies.

The Globe and Mail Inc.

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