Big Rock Brewery CEO pleased with brand 'rehabilitation'
Alberta microbrewery still recovering from business overhaul
Your thirties are supposed to be the decade that you finally figure things out, and Big Rock Brewery is finding this is even true in the beer business. After a challenging few years, chief executive Bob Sartor says Big Rock is almost through its rough patch.
Sartor took the helm of the Calgary-based company in 2012, from founder Ed McNally, and pledged to overhaul one of Canada's original craft breweries.
Big Rock had floated away from its roots as a creative, all-natural microbrewery. When Sartor arrived, he embarked on an ambitious five year overhaul of the company that would include cutting some of its successful brands and abandoning some of its markets.
In his words, the brewery needed "rehabilitation."
The revamp remains a work in progress as Big Rock struggles financially. Big Rock's sales volumes decreased in 2013 and 2014. In the first quarter of 2015, the company reported a loss of $624,000. The company's stock has fallen from more than $18 a share at the start of 2014 to under $7 this month. The biggest reason for the decline was the company's decision to suspend its dividend.
"It was effectively consuming all of our free cash," Sartor said. "When you have no money to spend on your brand, in a highly competitive market, it's not a good thing."
Back to its roots
Three years into the overhaul and Sartor believes the brand's makeover is nearly complete as Big Rock celebrates its 30th anniversary this year.
The company ditched brands like Big Rock Lime and a low carbohydrate option called Jackrabbit. The lime beer was popular, but Sartor said it used artificial flavour and didn't fit with his priority to be all-natural.
Big Rock also stopped selling in the Maritimes, where it didn't have the staff in place to support its products. The quality of beer wasn't always ideal, having to transport an unpasteurized product thousands of kilometres down the highway.
Another major change was decentralizing its operations. Instead of brewing all the beer in Calgary and shipping across the country, the company decided to construct smaller facilities in Vancouver and Toronto in an attempt to be local to those markets. The decision was based on market research showing craft beer drinkers want a fresh and local product.
"I would say we are not quite finished. I would say we are about 80 per cent done. And that's a very subjective number," Sartor said. "When we hit that five year mark, we'll be firing on all cylinders."
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A part of the company's upheaval has been a strategy to improve its brewing for proprietary markets, namely making beer for other companies such as Co-op, President's Choice and Liquor Depot. In the last few years, Big Rock has turned the brews into craft beers, even though they are sold for a much lower price than most other craft beers. In most cases, the beers now promote the fact they are brewed by Big Rock, so customers know where the beverage was produced.
"What I saw was a lack of involvement on the part of Big Rock of really owning those prop brands," said Sartor, who noted most of the beers were being produced with artificial ingredients. "We're going to make them all-natural and batch brewed."
At the Calgary brewery, a third of the facility's capacity is used to produce beer for other companies and for restaurant chains such as Original Joe's and Hudsons. The remaining capacity is for Big Rock's own line of beers.
Big Rock sees other benefits to brewing beer for companies such as Co-op and Loblaws. It helps build a relationship and hopefully lead to better shelf space for the brewer's own beers. In addition, Big Rock hopes the proprietary beers will also open up the craft beer market to a wider customer base, since not everyone is willing to pay premium prices associated with craft beers, regularly around $20 for a 12-pack.
"Let's put it out there at a price that everyone can afford," Sartor said. "We take less margin on those beers, but it gives consumers an opportunity effectively to trade into craft beers."
Big Rock is using that base to expand its reach into other parts of the country. The plans to open new facilities in B.C. and Ontario are already underway. A brewery, store and pub location opened in downtown Vancouver this spring. A pair of similar setups are expected to open in Southern Ontario in early 2016.