Becoming a local beer maker

The paddle adorning the wall of 5 Paddles brewery in Whitby
The paddle adorning the wall of 5 Paddles brewery in Whitby

5 Paddles is a Durham based nano-brewery, owned by five people who have turned their love of beer into a business. This local brewery has been around for more than two years, and was started when one guy came up with a business plan that ensured they could open a brewery “without having to selling your house, or lose your wife,” says co-owner Spencer McCormack.

Spencer McCormack, Ian Mills, JP Tibensky, Mike Bray, and Ed Woods, the owners of 5 Paddles, consider themselves “beer psychopaths”. They met in a home brew club and fell in love with the idea of owning their own brewery. In a year, they opened a brew house and a storefront in Whitby.

It takes hard work, determination, and a lot of capital to make a brewing dream come true. But here in Ontario, the laws make it one of the most complicated places to start and run a craft brewery. 5 Paddles was able to open their brewery on a shoestring budget.

The equipment includes kegs, steam boilers, extensive piping setups, and even machinery you’ve never heard of like glycol chillers to make the beer. 5 Paddles managed to find themselves a quaint little spot in Whitby after moving from their first “hole in the wall” location a few streets back of their new brew house and store.

The brew house is in an industrial-esque section of Whitby. The front of the brewery is a store where the 5 Paddles crew interacts with customers and offers samples of what’s on tap. They make up to six different beers each week, yet almost never have enough stock to last.

5 Paddles doesn’t advertise but has a strong social media presence. This allows them to keep more money and invest it into making the brew house better. The success of 5 Paddles can be attributed to the fact that the craft brewing industry has tripled since 2002, according to iCraftBrew, an online handbook and website that helps young hopefuls start their brewery. The sales of craft beer has gone from one per cent to over three per cent in that timespan, and is the fastest growing segment in the LCBO for beer according to iCraftBrew.

The rise in craft beer can also be attributed to a shift in market interests, according to the Financial Post. The number of craft breweries in North America has multiplied tenfold since 1980, going from 38 to 520 as of 2014. From 2012 to 2014, the number of breweries in Canada also went up by at least 60 each year.

Even though the number of breweries has been rising, that doesn’t mean opening one is easy. According to Ben Johnson on BlogTO, it costs around $1-million to open a small brewery that serves a small number of beers, and the prices only go up from there.

“It’s definitely an expensive venture to undertake,” says Michael Gurr of the Kensington Brewing Company, a slightly bigger craft brewery located in Kensington Market in Toronto, that has been offering its beer to customers since 2011.

The brew house is usually the biggest expense. 5 Paddles, built everything on their own.

Putting aside the money, starting any type of business involving the creation or sale of alcohol means that you have to deal with the Alcohol and Gaming Commission of Ontario (AGCO), and other government agencies.

Getting a manufacturers’ license from the AGCO is probably the first step you should take, because with no license, that shiny new brewery will just go unused. The Canada Revenue Agency also has laws that come into play here that make the manufacturer get another license under the Excise Act which will allow someone to package and bottle their beer. In all, there are four licenses you need.

Our laws here can be kind of crazy, and Ontario has also been thought by some to be behind the times of selling beer, as our sales are controlled by a foreign “beer monopoly,” and a heavily regulated LCBO. We have what’s considered the “most complicated approach to beer sales” according to the CBC, and compared to a place like Quebec, where corner stores are allowed to sell it, we’re in a beer police state.

However, Ontarians are taking small steps to get out of this beer purchasing hell, as we are set to have new laws come into effect sometime this year. In April, Premier Kathleen Wynne announced that Ontario grocery stores will now be able to start selling beer in up to 450 stores starting this Christmas. With this new legislation comes an entirely different playing field for craft brewers, who now get 20 per cent of shelf space of the beer store and grocery stores to sell their product to the masses.

But getting beer out to the people is not always easy, and while having a store front like 5 Paddles is one way to go, there aren’t always easy paths to get into big chain stores and sell to crowds.

These laws give 20 per cent of shelf space to local brewers. This does not help small brewers like 5 Paddles because they produce less than 3000 hectolitres of beer per year. They can “barely keep the store fridge stocked,” according to McCormack. Getting into the Beer Store, “a privately owned chain of retail outlets selling beer and other malt beverages in the province of Ontario,” is also an issue for smaller breweries as the conglomerate charges you a fee to get your beer on the shelf. This current business model is what 5 Paddles co-owner McCormack thinks puts Ontario off from getting a wider selection of beer.

“I was in Belgium and I was talking to…the best brewery in the world, and I asked them why can’t we get anything in Canada, and he said I deal with one man who gets my beer all across America,” says McCormack, “I would have to deal with 10 men in a very convoluted system to get my beer into one province.”

So while Canada has one of the biggest growing craft beer sectors, we also have the worst set of laws. We are finally making changes to our laws but compared to America, or even our French neighbours, we’re still far behind.

5 Paddles has made strides to get themselves known in Durham Region, and their signature beer known as Home Sweet Home is a crisp and light ale that’s so full of flavour it sticks to your palate and leaves vanilla and honey on the brain. They have the right set up and an attitude toward the future, and they can be used as an example for all of those people who wish to start a brewery of their own.