Birth of a beer baron - new Steelback owner

[sstackho]

http://www.theglobeandmail.com/servlet/ ... Bmagazine/

Birth of a beer baron
Jon Sherman, the new owner of Steelback, would rather forget the brand's grim past

From Friday's Globe and Mail
Jennifer Wells
June 27, 2008 at 5:20 AM EDT

The scene: a Toronto Street trattoria just up the road from Conrad Black's former corporate digs. Observe the sun playing upon the ochre-washed walls. Observe the espresso martinis floating past (so vast and so deep). Observe the CEO with the cultivated stubble, the slightly gelled hair and the pierced ear. He extends a hand, says hello, orders a beer.

He is 25.

This is Jon Sherman's coming out, his corporate unveiling as the spanking new owner of Steelback Brewery Inc. He has just come from his lawyers' offices and is shaking his wrist in that tired-from-signing-all-those-papers kind of way. "As of this week," he says, "I am the sole owner of Steelback, and Mr. D'Angelo has no involvement at all."

Mr. D'Angelo would be Frank D'Angelo, the apple-juice-maker-turned-brewer-cum-wannabe-rock-star who racked up debts to Jon Sherman's father, Barry, to the tune of $100 million—more like $120 million if you tack on the interest. Last winter, a weary Sherman Sr., whose chief preoccupation is running generic pharmaceutical giant Apotex Inc., was granted court protection for D'Angelo Brands Ltd. (a juice company) and Steelback (brewer of Copperhead Pilsner, Steelback Thunder, etc.). The subsequent report from the court-appointed monitor itemized the chillers, the compressors, the 12 Steelback bikinis, the 29 pairs of Steelback sunglasses, the chronic cash deficiencies, and various and sundry beer-related trademarks.

Here's one: "No pain no Chain." What does that mean?

"You won't hear that any more," says Jon Sherman quickly. "Chain was a beer. It was a brand. It's no longer. You missed out."

"The beer that dances?"

"That was Tango. Again, you won't hear that any more."

Sherman doesn't want to dwell on D'Angelo, the P.T. Barnum of beer, who toured with his band, the Steelback 2-4, and bought time on Hockey Night in Canada for commercials featuring the likes of Phil Esposito and, oh yes, himself.

Instead, the story is about J.R. Sherman Inc., Jon Sherman's private holding company that now houses Steelback, for which he paid $8 million. How the holding company came to be funded he won't say, but he is, as he points out, only two years out of school, and it was Sherman Sr. who kept shovelling money into the brewery to keep it alive.

For $8 million, young Sherman has bought himself a 30,000-square-foot brewery in the backcountry locale of Tiverton, roughly a three-hour drive northwest of Toronto.

You may well wonder, what does he know about the beer business? The unsurprising but pleasing answer is that his experience comes from the consumption side. "As a beer drinker, I can make a very quick evaluation whether or not I like a beer," he says helpfully. But there's more going on here than you might think. Sherman has a degree in industrial engineering and operations research from Columbia University. Post-graduation, he took a job at Apotex, spending seven months overseeing the installation of

new technology to monitor the drug company's packaging line. Last spring, he threw it over to train for the 250-kilo-metre Gobi March foot race with his sister Alex—seven days of 50 C highs in the no-shade Taklamakan Desert, headed for Kashgar in China's far western reaches. Going in, he thought, How hard can this be? On day one, he thought, How much harder can this get? He took note of people older than himself, "marching through and, like, beating us."

His father, he says, supported the adventure. "He understands that for now, it's not the best fit for me," he says of Apotex. By drawing Jon into the brewery, the father gets to keep his son, if not close, then not much farther than arm's length. And Jon gets to develop an independent business persona, which he's just figuring out. On the day in May when the Steelback deal closed, he headed not to some chic restaurant for dinner, but rather, to softball practice (he plays outfield). All of which is to say that Sherman appears refreshingly down to earth.

This sets him apart from D'Angelo, who grew the Steelback portfolio to 11 beer lines focused largely on bottled—not kegged—beer for which the Tiverton facility didn't have the appropriate packaging equipment. This explains the uncomely plastic sheaths, or "body sleeves," that encased Steelback's clear plastic bottles, which were shrink-wrapped on trays meant for apple juice cans. Other D'Angelo commercial endeavours included the Cheetah power surge drink, the marketing for which infamously cast D'Angelo himself opposite sprinter Ben Johnson offering the I-can't-believe-he-really-said-that tag line "I Cheetah all the time."

Back in beer land, the go-forward strategy for Steelback is being co-led by president Ian MacDonald, who has a deep history in the beer business, from his beginnings as a beer rep wooing kids on campus to drink a particular brand—"It's a touchy subject nowadays," says MacDonald—to executive stints at Labatt and Lakeport. So, how much beer did he have to sewer when he stepped in? There was, he says, "old core product that had to be dumped." Thousands of litres? He smiles: "Higher than normal."

Here's the plan: Cut back the beer portfolio from 11 to five. (RIP the rather dreadful Copperhead. "It didn't make the cut," says MacDonald.) Aggressively build the keg business by wooing licensed establishments with a price point that undercuts national competitors by as much as $30 a keg. (The Toronto Street restaurant in which we're sitting is the first to get on board.) And sign a packaging deal with an unnamed brewery to get the beer properly bottled and labelled until Steelback can justify an investment in capital expenditures at the existing facility.

The season's marketing push is to focus on small-batch, premium craft beer. "We're calling it 'value premium,'" says MacDonald. "We're offering an award-winning crafted beer at mainstream domestic pricing. I guess you could say we've developed a beer for people with champagne tastes and a beer-bottle pocketbook."

In order to give the five-beer lineup a true craft look, the new labels feature the landmark lighthouse in Kincardine, Ontario, and a sweet-looking cottage with smoke puffing from the chimney. Very crafty—but an incongruous pairing with the steel-toed Steelback logo. Sherman admits that some thought was given to changing the corporate name. But name recognition is all the company has to build on as it positions itself in the crowded craft beer category. Which means that Jon Sherman can't shed the D'Angelo legacy. At least not yet.

He sips on his Steelback Tiverton Dark. Is this a career? Is this a future? He says he likes the idea of commercial real estate very much.

So where does Jon Sherman see himself in five years' time?

"In five years? Jeez. Five years from now is a long time. God, I'll be 30."

[sstackho]

There also appears to be another article on beer in the Report on Business magazine - although it doesn't have much to do with business.

I don't think it warrants its own thread, so I'll tack it onto here.

http://www.theglobeandmail.com/servlet/ ... 4/TPStory/

goodlife: BEER
THE ARGUMENT
WE DESERVE A BEER FRIDGE

DENISE BALKISSOON

June 27, 2008

Be honest and admit that in every relationship, there's one partner who most often concedes in decor-related disputes: It's usually the one who cares less about the colour of the easy chair and more about the footrest; less about the pattern on the china, more about what's on the plate. Would it be typecasting to assume this lovable Neanderthal is also the one with a fondness for cold beer--especially if said beverage has a colourful history, an arcane brewing method and odd ingredients that make for a great swilling tale? (It would be stereotyping to assume it's always the guy.) Here's an object that both parties should agree on: the Northstar 1951 "beverage centre." Imagine how great it would look on a patio or in the garage. Hell, a beer fridge this pretty would look right at home within arm's reach of the sofa. And although it's a retro-beauty on the outside, the 1951 is fully 21st-century on the inside, with lots of space, adjustable shelving and an Energy Star rating, to boot. Relationships are about compromise. Let the design dummies have their way just once. We promise not to feign an opinion on the new backsplash.

Northstar Model 1951, $1,995;

elmirastoveworks.com

FYI: STRANGE BREWS
The Globe and Mail

You won't find these suds at your local beer store. Search for a good beer bar: the type of place where the tap list is longer than the menu.

MOST ILLICIT

Delirium Tremens

The LCBO imported this briefly until some complained about the name (delirium tremens are the tremors suffered by withdrawing alcoholics).

This beer is strong (8.5%) and delicious

BEST FOR PEOPLE WHO SAY THEY DON'T LIKE BEER

Lindemans Pecheresse

A yummy, sweet peach ale with only 2.5% alcohol.

It tastes more like a complex soda than a hoppy beer

BEST PALATE CLEANSER FOR A SMOG WARNING DAY

Lindemans Cuvée René

Lambic beers, like this one, are exposed to wild yeast during the brewing process. Every vintage is different. Cuvée René is tart, almost sour, and very refreshing

BEST REASON TO DRINK AMERICAN BEER AGAIN

Dogfish Head 120 Minute IPA

This India pale ale is brewed for a mere 120 minutes, with hops added continuously. So, very hoppy, and at 15% alcohol, it packs a punch

BEST FOR BBQ

Quelque Chose

A top-fermented cherry beer, this one's actually built for winter. But it makes a nice summer shandy or, better yet, sangria (see recipe, left)

BEST NIGHTCAP

Lost Abbey Angel's Share

Technically, this is a barley wine, aged for six months in a bourbon barrel.

It's dry and sweet, with notes of vanilla

THE RECIPE: BEER SANGRIA

Another reason to snub vino this season is this aromatic beer-based sangria. It works best with Quelque Chose, a rare, malty cherry beer from Quebec, but the more widely available cherry kriek by Mort Subite will work just fine.

1 750 ml bottle

Quelque Chose

or

2 375 ml bottles

Mort Subite Kriek (add cinnamon stick)

1 oz Cointreau

1 oz brandy

half orange, sliced

half lemon, sliced

half lime, sliced

ginger ale

soda water

Scoop a generous portion of ice into a pitcher. Add beer and liqueurs, followed by citrus slices (as well as your cinnamon stick, if using Mort Subite). Top with equal parts ginger ale and soda water. Stir lightly with a long spoon. Leave the spoon in the pitcher so that latecomers can muddle up the mix a bit before helping themselves.

[sstackho]

And another...

http://www.theglobeandmail.com/servlet/ ... /National/


Splurge
Deus Brut des Flandres beer, available at Toronto's Beerbistro; beerbistro.com

DENISE BALKISSOON

Globe and Mail Update

June 26, 2008 at 3:24 PM EDT
Deus Brut des Flandres beer

Deus Brut des Flandres beer (Peter Schafrick)
The Globe and Mail

$50
Certain warm-weather accomplishments—lowering one's golf score, say, or eliminating unsightly tan lines—deserve a bottle of bubbly. A grand cru would be a bit much, and Miller High Life a total letdown. But Deus (the Latin word for deity or god) is truly a beer of heavenly distinction. At Toronto's Beerbistro, Brian Morin serves the Belgian ale in a flute. It's no gimmick: Deus, with its complex citrus scents and nutty, barley flavour, is deserving of the pageantry. After an initial dose of yeast and nine months of beauty rest at the 200-year-old Bosteels Brewery in tiny Buggenhout, Belgium, the beer undergoes a second fermentation in that most special of French cities. That's right, Deus is, certifiably, the Champagne of Beers. Once you taste it, you'll find yourself looking for more occasions to celebrate—even if it's just the end of another workday.

[crawler]

I would have re-named the brewery from Steelback (possibly to Tiverton?) to minimize any association and negative goodwill that may have arisen from the previous owner.

[sstackho]

Someone else mentioned that the reason for not changing the name was because listing fees would have to be paid if the product names changed. Isn't it something like $50k to get a province-wide TBS listing?

[Gedge]

I wish my daddy would buy me a brewery to play with til I get bored and go into commercial real estate.

[Bytowner]

I guess you could say we've developed a beer for people with champagne tastes and a beer-bottle pocketbook.

People are looking at me at work because of the bark I just let out.

[Pub Style]

I have met Jon a number of times and he is a really nice guy and down to earth, despite all the money.

I will go on record and say that I enjoy the Tiverton Dark, easily comparable to a number of OCB stuff. However, I don’t like the line in the article from Ian MacDonald about his stance to “Aggressively build the keg business by wooing licensed establishments with a price point that undercuts national competitors by as much as $30 a keg.” And there other beers are, well, you know.....brewed for a specific reason and geared to a specific demographic.

It will be interesting to follow this brewery very closely over the next number of years to see where it will eventually stand.

[Tapsucker]

BEST FOR PEOPLE WHO SAY THEY DON'T LIKE BEER

Wouldn't that be Coors Light?

[Belgian]

Money, vision and cultural relevance are so rarely entwined.

That's why I am happy for Duvel-Moortgat buying Liefmans, and also for Unibroue remaining much as it was pre-Sleeman or Sapporo buyout.

On that note I wish Jon luck and I hope he enjoys real beer as much as dreaming up sneaky sales leveraging strategies. And I will miss the comical "Dr. Evil of Beer" that he is now (bravely) following by commanding the decks of the Steelback ship.

"Muah ha hah! I Cheetah all the time!" Extends baby finger next to chin...

[Rob Creighton]

Someone else mentioned that the reason for not changing the name was because listing fees would have to be paid if the product names changed. Isn't it something like $50k to get a province-wide TBS listing?

The beer was never delisted during the closure and thus keeps its rights but if you're going to spend $8 mill to get back something you already lost $121 mill on, what's another 50 grand to start up without the brand stigma and negative perception as the worst beer in the world? And...if I had $8 mill to spend on a brewery, I could build one hell of a magnificent plant that isn't 2 hours from the 401 and 3 hours from Toronto. Remember, beer is weight. Trucking is a huge cost factor, let alone being on the same property as 4 nuclear reactors.

[Belgian]

The beer was never delisted during the closure and thus keeps its rights but if you're going to spend $8 mill to get back something you already lost $121 mill on, what's another 50 grand to start up without the brand stigma and negative perception as the worst beer in the world? And...if I had $8 mill to spend on a brewery, I could build one hell of a magnificent plant that isn't 2 hours from the 401 and 3 hours from Toronto. Remember, beer is weight. Trucking is a huge cost factor, let alone being on the same property as 4 nuclear reactors.

Yeah and gas is real expensive.

Maybe they are either secretly hoping the SB brand has some limited recognition that is better than starting from scratch... or else the whole deal is a way to write off losses in some convoluted accounting scheme I would never understand (in which case a beleaguered brand like Steelback is perfect for justifying ongoing financial woes.)

And anyway nuclear reactors add that certain 'sparkle' to a brew, don't they?

The way it plays out (brand success) should indicate how serious they are about making and selling good beer.

[Jon Walker]

I'm sure Jon is a really nice guy. Good for him. Most guys with a massive trust fund tend to at least be fairly laid back. Sadly most of what he said didn't feel me with enthusiasm.

I agree that keeping the name Steelback only maintains a public perception that they make crap. Even Glenora Springs changed their name under new ownership to escape the terrible stigma the old name held. The location is a terrible mistake unless they mostly plan to service bars and restaurants in cottage country. How can you undercut other breweries who all make their product proximate to the GTA? The only way is to make cheap beer. I'm sorry but the whole quote about people with "champagne tastes" wanting to drink value branded beer is horribly naive. It's all well and good to say you're going to make high quality beer but the whole business model described in that first article completely cuts against that.

No, sadly, I fear this will be a Lakeport clone brewery going after the buck a beer market. Sadly the dumped marketing slogan of "No pain, no Chain" should be replaced by "No Chain, More Pain". Or "Steelback: New Owners, Same Standards".

I'll personally miss the Titanic dog and pony show that was Frank D'Angelo. Despite disliking the beer a great deal I loved watching him spin the world around his ego. Perhaps my best memory was standing in the sparse and disinterested crowd at the last Beerfest looking on in muffled disbelief as Frank and his band stumbled through "We're here for a good time, not a long time". That's right Frank, it wasn't long, or particularly good but it sure was fun to watch it all spiral so massively out of control.

[tupalev]

I met this chap briefly earlier this year at the Canadian brewing awards. Seemed like a nice guy. Not much else to add.

A little beer fairy though has delivered to me all of the reformulated new look Steelback beers. They are in my fridge right now. Once I get through the 18 Southern Tier IPA and 6 Rogue Dead Guy that I currently have this weekend, I'll give them a shot

[icemachine]

good thing its a long weekend