Beer distributor Dave Esber isn’t looking in the U.S. for the next big craft brewery.
He’s scouring Canada instead.
Esber, who heads the family-run Esber Beverage in Canton, has launched Craft Beers of Canada, a specialty import division of the company.
His goal is to scoop up the highest-rated Canadian craft brewers and bring them into the U.S., starting with the Ohio, Michigan and New York markets.
The Canadian craft market, for the most part, is untapped by importers and an unknown for U.S. beer drinkers who are always craving something different and new.
“We’re not making any money from it at this point but it’s fun,” said Esber, who bears a striking resemblance to the “Most Interesting Man in the World” in the Dos Equis beer commercials. “We’ve hit on something that’s unique and interesting and distinguishes Esber Beverage from the rest of the [import] companies.”
Esber Beverage, which has been around since 1937 and handles brands as varied as Anchor, Labatt, Miller, Olde English and Foster’s, is finding a receptive audience so far in Ontario, where the craft beer industry is growing just as it is in the U.S.
While domestic beer sales — think Budweiser, Miller and Coors — have struggled in recent years, the craft beer segment continues to grow.
Lost in all the praise being heaped upon craft brewers is the fact that imported beer sales are climbing, too.
Import sales grew 7.8 percent to $4.5 billion over the last year in the U.S., according to IRI, a Chicago-based market research firm.
But it was Mexican brands such as Dos Equis, Corona and Modelo that led the surge. Well-known Canadian brands Labatt Blue, Labatt Blue Light and Molson Canadian have faltered, IRI says.
Many Canadian brewers are eager to take advantage of the exploding U.S. craft market and prove to Americans that Canadian beer isn’t all Labatt, Molson and Moosehead.
“We have some very, very creative brewers here that are brewing beautiful beers with tremendous flavors, tremendous recipes,” said Drew Knox, a former craft brewery owner and a consultant with Toronto-based Ontario Craft Brewers. “They are aggressively using dry hopping. They are doing creative things with flavors such as cedar, maple and chocolate.”
The group estimated that there are about 60 craft brewers in Ontario and 180 across Canada.
Ontario craft brewers in particular face significant distribution hurdles in the province because of the Liquor Control Board of Ontario and The Beer Store, which control the retail market and are more friendly to national brewers.
With an estimated 40 million people living in nearby Ohio, New York and Michigan, many Ontario craft brewers recognize the potential to grow their brands in the U.S.
“It’s a natural next step,” Darren Smith, owner of Lake of Bays Brewing Co., said during a recent visit to The Office in Cuyahoga Falls. “We’re at full distribution in Ontario now … The Northeast for us just makes sense. There’s so many people here. Craft beer is so popular down here. And the Northeast is the biggest talking market in the United States.”
His brewery, located in the resort town of Baysville north of Toronto, produces brands such as Top Shelf, Old North Mocha Porter and 10 Point India Pale Ale. It also has a tie-in to the National Hockey League.
Flying Monkeys Craft Brewery owner and brewer Peter Chiodo, who attended college in the U.S., has said it was always a goal to enter the U.S. market. His beers include Smashbomb Atomic IPA, StereoVision American Kristall Wheat and the Chocolate Manifesto.
“The U.S. craft beer consumer, they’ve embraced the [craft] market so much,” he said earlier this year during a visit to Lizardville in Copley Township. “Why would you not want to give somebody some liquid gold down here, really? We make some unusual beers that we think some people would dig.”
The Ontario government has been supportive of the exporting effort and has helped bring in wholesalers, sales representatives and retailers so they can meet with craft brewers.
“Those people get to try the beers and taste them,” Knox said. “The best thing you can do when you don’t have a lot of money is to use the beer to sell the beer. You have to get the beer in people’s mouths. Now that person has a much better understanding and confidence in selling it and recommending it to customers.”
Of course, importing from Canada can present challenges.
A brewer must hire an import agent and is likely looking at a lower profit margin in the U.S.
The two countries also have different rules on packaging. Brewers have to have one set of labels for Canada and another for the U.S.
In Canada, for example, any beer with more than 5.5 percent alcohol must be labeled as “strong.”
That’s a no-no in the U.S., so that word has to be scrubbed from labels and advertising.
Labels in the U.S., meanwhile, also must state the amount of ounces and a government warning about drinking.
“You’re held to a higher level of scrutiny,” Esber said about importing.
The beer industry is highly competitive today, with wholesalers aggressively courting new brewers and/or existing ones who are expanding into new territories, so the focus on Canada could work in Esber’s favor.
“It’s become pretty crazy,” said David Christman, senior director of state and industry affairs with the National Beer Wholesalers Association in Alexandria, Va. “I often say when one of these brands decides to enter a new state or new market they should do a reality show about it and eliminate distributors one by one or something.”
He noted that the Craft Brewers Conference in Denver this year attracted more than 1,000 distributors, all looking for face time with brewers. For the first time, the association set aside private rooms for those meetings.
There are about 3,300 beer distributors and nearly 3,000 craft breweries in the U.S.
Christman called Esber’s decision to target Canada unusual within the industry and one that could distinguish him from others.
“It seems like this might be a niche that works for them,” he said.