Brewery takeovers, legal cannabis may threaten B.C.'s booming craft beer industry

Craft beer has become popular enough in B.C.that some small- to medium-sized breweries have become targetsfor acquisition by large multinational companies.

"There aretaps on the door," said Darryll Frost, president of Central City Brewers + Distillers, about interest in his company. It's beenin operation inSurrey, B.C., since 2003.

What he's talking about is a desire from large international brewing companies like Anheuser-Busch InBev or Japan's Sapporo to acquire smaller breweries in order to regain the market share they've lost.

Statistics Canada has, for the past five years, recorded lethargic domesticbeer sales overall, but growth attributed to craft beer due to how it caters to discerning drinkers' desire for quality and variety.

'Macro craft being crafty'

"Craft" beer is a difficult term to define, but is usually regarded as beer brewed by smaller-scale breweries using traditional techniques without any preservatives and with a high proportion of malted barley in each recipe.

Statistics Canada says smaller breweries in B.C. increased sales by 51.75 per centbetween 2014 and2015.

Big brewing companies have registered these success stories and are now actively buying craft breweries across Canada.

Here inB.C.,Granville Island Brewing is part of MolsonCoors, Okanagan Spring Brewery isthe property of Sapporoand in 2015, LabattBreweries of Canada, owned by AB InBev, acquired Stanley Park Brewing.

The latter company has sparked controversy as it moves to open a brewpub in Vancouver's Stanley Park.

Companies here that plan to stay small say they have mixed feelings about big beer's foray into craft beer.

"On one level that represents the strength of craft beer as a category," saidJason Meyer,co-founder of Driftwood Breweryin Victoria, which started up in 2008.

He says big multinational companies have been suffering at the expense of craft beer for several years and it's not surprising to him that they've taken notice.

"If you can't beat them, join them," he said.

The worry, though, is that as big beer forays into craft beer, its marketing budgets and larger scales of distribution will hurt continued growth for smaller players.

The B.C. Craft Brewers Guild says it currently has almost 110 member breweries. The total number of small breweries in the province is closer to 150 and more are in theworks.

Frost, who says Central City will stay independent, hopes discerning drinkers will be the ones whokeep craft beer in control of smaller breweries.

"The consumer, at least the educated consumer, will identify real craft from macro craft being crafty," he said.

Cannabis disruptive or complementary?

Frost says he's actually more worried what the legalization of cannabis will mean for craft beer.

"Once legalized, I think it will become more popular, and for sure it's going to be a disrupter.It's going to eat away at the market," he said.

Marijuana will be legalized for recreational use in Canada in July and Frost argues that current beer drinkers may choose to spend their beer money on pot instead.

Others though, like Meyer and SFU marketing professor Lindsay Meredith, aren't concerned. Meredith says if there is any threat, it will be to big beer.

"I think it willbe a hit for Budweiser, the mainstream, big, popular brand names that younger drinkers might drink," he said.

In Bellingham, Wash., where cannabis has already been legalized, craft brewery Boundary Bay Brewerysays pot has actually become complementary to craft beer.

General manager Janet Lightnersays a marijuana shop across the street has actually brought in new customers and wasn't the disrupter they had feared.

With files from Matthew McFarlane