Two of Eastern Ontario’s best-known craft breweries are joining forces in a bid to tap into new markets and expand their product offerings.
Calabogie Brewing Co. and Whitewater Brewing Co. announced Wednesday they are forming a new entity called Canada Beverage Marketplace.
Exact terms of the agreement, which was finalized this week, were not disclosed.
Whitewater Brewing co-founder and chief executive Chris Thompson said the current shareholders of both breweries, including Thompson and his brewery’s co-owner, James Innes, as well as Calabogie Brewing CEO Jeff Gibson and his business partners, will control ownership of the new company.
Calabogie Brewing, which is located in Calabogie, about 100 kilometres west of Ottawa, and Foresters Falls-based Whitewater Brewing will remain separate entities under the Canada Beverage Marketplace umbrella, said Thompson, who referred to the deal as a “collaboration” between the two companies rather than a merger.
“Both Whitewater and Calabogie have done very well to grow our brands over the last five to 10 years,” he told OBJ on Wednesday. “We both have amazing, loyal followers and customers. We don’t want that to change. Really, from a consumer standpoint, there’s not going to be any change, other than I think in the future we’ll be able to hopefully be more innovative and more creative.”
The deal, which has been in the works for months, will lead to greater economies of scale on the production side as well as cost savings in areas such as shipping and distribution, Thompson explained.
He said some of the breweries’ existing operations will likely be consolidated, but added there are no plans to cut jobs.
“We’re really going to be taking the next eight months to figure all of that out,” he said. “This is really a growth step.”
The new arrangement comes at a challenging time for Ontario craft brewers.
Changing consumer tastes and rising costs of ingredients such as hops have combined to put the squeeze on many microbreweries just as the industry was coming out of the pandemic.
A group of craft brewers recently urged the provincial government to revamp its beer tax system, arguing that the average Ontario beer-maker pays hundreds of thousands of dollars more in taxes each year than its counterparts elsewhere in Canada.
Still, Thompson said Calabogie and Whitewater are in a strong position to thrive under the new corporate structure.
The combined entity will have the equivalent of more than 100 full-time employees and is expected to generate annual revenues in excess of $11 million, with Whitewater accounting for about two-thirds of those totals.
Known for brews such as Whitewater Farmer’s Daughter Blonde Ale and Calabogie Portage Pilsner, the two companies churn out the equivalent of 3.5 million-plus cans of beer each year.
That number has continued to grow during the pandemic thanks to multiple sales channels that include the breweries’ own tap houses, the Beer Store, the Liquor Control Board of Ontario and bars and restaurants across Eastern Ontario.
“We did quite well through the pandemic,” Thompson said. “I wouldn’t say either company grew huge numbers, but we did well to adapt.”
Perhaps Whitewater’s biggest move during the COVID-19 crisis was launching a distillery in September 2020. Its flagship product, Paper Boat Artisanal Gin, will be joined next month by a blended whisky called Broken Paddle.
Thompson said the gin has been a “steady” seller since its debut. He said the company eventually plans to build a dedicated distillery with an eye toward branching out into other spirits as well as products such as canned cocktails.
“That will allow us to really invest in that side of the business,” Thompson said.
In addition, the breweries are “actively looking into” adding non-alcoholic drinks to their roster, he said.
“It’s on the radar, whether it’s non-alcoholic or other types of beverages,” Thompson said. “What we aim to do is really keep on top of consumer trends and provide customers with what they’re looking for.”