Steelback Expansion - Toronto Star Article

[Duct Tape]

Sigh.... I guess some people will never learn.....


http://www.thestar.com/NASApp/cs/Conten ... 9048863851
Steelback brews up ambitious expansion
Argos' official beer
Union bid sparks suit

EMILY CHUNG
BUSINESS REPORTER

Steelback Brewery's slogan says, "It is what it is." But to founder and chief executive officer Frank D'Angelo, the microbrewery from tiny Tiverton could be much more.

Steelback, owned by Brampton-based D'Angelo Brands Ltd., plans to launch Canada-wide in the next two to three months and up its capacity by expanding its packaging to another plant, says D'Angelo.

The Bruce County brewery unveiled its first three beer varieties on Super Bowl weekend in February 2004. They were sold only at a retail store at the Tiverton brewery until Labour Day when they hit Beer Store shelves. Almost a year later, it produces 10 varieties of beer totalling 10,000 two-fours per week, including Blue Lightning, with 8 per cent alcohol; and Tango, which has a "hint of lime."

"It's not a huge amount of business, but it's only one year old and we have huge goals," said D'Angelo, noting the plant has the capacity to brew 15 million cases a year.

But already, Steelback is suffering from growing pains. Several complaints concerning the brewery are currently before the Ontario Labour Relations Board, and yesterday the company launched a defamation suit against the Service Employees International Union (SEIU).

Steelback's 50 or so workers voted not to unionize on July 25. "However, since that vote the SEIU and Tom Galivan specifically have waged a slanderous and malicious campaign defaming the brewery, its products and its CEO and founder Frank D'Angelo personally," the company said in a release.

The union has taken its battle to the Internet.

Perhaps if D'Angelo had stuck to making apple juice — his original plan for the Tiverton plant — he wouldn't have to face these headaches. When D'Angelo Brands bought the brewery in 2002, it planned to sell the brewing equipment, but couldn't get a good price. Then it found moving apples back and forth to Tiverton wasn't economical. "So we said — you know what? We're going to try and make beer."

Like juice, Steelback beer is packaged in plastic, screw-capped bottles. "We're the first ones to come out with this type of packaging," D'Angelo said proudly, adding it costs 30 to 40 per cent more than glass bottles, and it drives the price above that of many competitors. But he said it was safer for plant workers and more hygienic.

As for the beer itself, D'Angelo didn't have a particular market in mind for it, he said. "I'd like to get every beer drinker — anybody."

The brewery's television ads aim each variety at a particular group, such as hockey fans or clubbers, including ones not often targeted by smaller brewers.

Mary MacIsaac, director of marketing for the Ontario Craft Brewers (OCB), said many of the 25 small brewers her group represents (Steelback isn't a member) do minimal advertising outside beer-centric events. "A lot of our members focus a majority of their energy on tastings."

Steelback, meanwhile, hasn't let its micro-output stop it from advertising like a mega-player. Since it started, Steelback has bought glam status as the official beer of the Toronto Argonauts football team and become the only Canadian sponsor of a Formula 1 racing team.

"The beer industry is very competitive," D'Angelo explained. "We're yelling like crazy in advertising and billboards to let everybody know that we're here."

[JerCraigs]

As Matt pointed out to me, Brick I believe had plastic bottles prior to Steelback. not that this is necessarily worth bragging about.

[Duct Tape]

As Matt pointed out to me, Brick I believe had plastic bottles prior to Steelback. not that this is necessarily worth bragging about.

I love google, finds so much good information, like yet more proof the Frank D wouldn't know what he's saying if he had a script or researched it, or probably cared for that matter....

For the Record, i think 2002 by Brick definitely Trumps 2004, not that either should be proud of the whole plastic bottle thing.



http://www.cbc.ca/story/news/national/2 ... 21002.html

Plastic beer bottle unveiled
Last Updated Fri, 04 Oct 2002 13:12:05 EDT
CBC News

WATERLOO, ONTARIO - An Ontario company has produced the country's first plastic bottle for beer.

Brick Brewing of Waterloo, Ont., unveiled its new light-weight alternative: PET or polyethylene terephthalate. The bottle had been in development for more than a year.

Brick will be selling its Yellow Label Lager in a four-bottle (each 473-ml or 16 oz) plastic pack.

Brick officials say plastic bottles have several benefits:

* chills quickly
* stays cold longer than glass and cans
* are re-sealable
* unbreakable

The bottles are also recyclable.

Plastic bottles have been used by European breweries with little success.

"This isn't your typical 'you-brew' plastic beer bottle," says Jim Brickman, founder and president of Brick Brewery. "This innovative and unique wide mouth plastic beer bottle has taken years to develop and test."

Marketing experts say Brick is taking a chance on the plastic bottles. Most consumers still prefer glass which accounts for 70 per cent of all domestic beer sales in Canada. The rest is sold in cans or on tap.

Brick was also the first brewery to bring back the stubby bottle.

[inertiaboy]

i think 2002 by Brick definitely Trumps 2004

And if you want to go back even further, I remember Conners used to have 750ml or 1 litre plastic bottles around 1989-1990 when they were still in Toronto and I seem to remember getting either Wellington County or Sleeman in plastic in 1989 when I was at UW.

As for a Steelback expansion, I don't understand who is buying this product. I talked with some older relatives from Grey and Bruce counties who had nothing good to say about the product. You would think these would be a core market for them: local and used to drinking Ex, 50, Canadian, and Blue. Is there some secondary market that we don't know about that uses the "beer" as an input to some industrial process?

[PRMason]

At the TFOB I spoke to a senior guy from the Beer Store. He shook his head when Steelback was mentioned and said " Those guys are shipping beer to us like crazy and its not moving." The Beer Store pays weekly for all shipments received so all this beer that is sitting in their stores and warehouses has been paid for. This is fine for Steelback...until it goes stale code. Then it all goes back to the brewery and it must either be replaced with fresh stock or the money repaid. This method of creating cash flow sunk many a micro in the past, including KLB and Hart.
As for the plastic bottles, I spoke to someone at Brick. They are no longer using them. The only reason they got into the game in the first place is that they received the machine to produce the bottles from one of their contract producers. They decided to use it themselves as well to make better use of it. They have since abandoned it.

[JerCraigs]

The Beer Store pays weekly for all shipments received so all this beer that is sitting in their stores and warehouses has been paid for. This is fine for Steelback...until it goes stale code. Then it all goes back to the brewery and it must either be replaced with fresh stock or the money repaid. This method of creating cash flow sunk many a micro in the past, including KLB and Hart.

Its stuff like that which lends credence to the rumblings that the brewing operations might be some kind of elaborate tax loss scheme. Who knows, but a superficial examination of their spending strategies is odd.

Almost a year later, it produces 10 varieties of beer totalling 10,000 two-fours per week,

ok i was bored and did the math:
10000 cases /wk * (341 x 24) = 81840 L or 818.4 hectolitres per week
42,556 hectolitres per year.

Last I heard, Steamwhistle was putting out 22-30k hectolitres per year.
Brick I think is in the 60-75k ballpark. (I'm guessing, please don't quote me on these numbers.)

That's one HELL of a lot beer. Who is drinking it?

[PRMason]

Not to let Steelback off the hook, but brewers are notorious exagerators when it comes to production and sales numbers and the press often gets the numbers wrong too.

[Rob Creighton]

Not to let Steelback off the hook, but brewers are notorious exagerators when it comes to production and sales numbers and the press often gets the numbers wrong too.

This is in the category of pet peeve for me. In the early '90's, Jim Brickman was chronically in the press touting the number 50000 HL which was of course their capacity while actual production ranged from 10-15 thou. It was simple enough to figure out from their declared sales numbers (generate a yield/HL number by assumming a bottle/keg split) but the simulated reality presented was what held Brick back for years. Everything was a movie front and Jim was good at putting on a show.

In the States, brand volumes are declared and monitored. To be fair to the press, they only regurgatate what is fed to them. I rarely see any Canadian reporter actually watch trends and ask a hard question that may challenge management. John Sleeman consistently ducks volume questions during analyst sessions and uses that "I don't have to answer that - how dare you ask" tone. In reality, brewery operators don't like answering to their investors - go figure.

I am in TBS and LCBO stores on a regular basis and I make a point of asking about the Steelback products (I also monitor packaging trends). I have not received a positive response on sales of their brands from a single store! Thats almost impossible to do with the kind of media saturation they are attempting. They are truly an enigma but I'm sure a forensic accountant could make sense of it and maybe let us all know.

[Josh Oakes]

So basically, they want to send beer to other provinces in the hopes that people elsewhere will buy it? Or in the hopes of creating more accountant's cash flow?

Either way, if they have money to spend, all they really have to do is be less cheesy and clean up the production flaws that make their beer so legendary. I mean, with their level of promotion, they could put something totally bland out there and sell some sort of volume. But we've all tasted it, and it's not the sort of beer that engenders repeat business.

[pootz]

As for the beer itself, D'Angelo didn't have a particular market in mind for it, he said. "I'd like to get every beer drinker — anybody."

More accurately, Frank would like to get "any" beer drinkers.

The brewery's television ads aim each variety at a particular group, such as hockey fans or clubbers, including ones not often targeted by smaller brewers.

I suppose Blue Thunder will be marketed to the masochist niche'.

Seeing this no sales brewery want to expand production should tip off the tax auditors.