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January 27, 2015

Growing the Craft Economy

At this point, you’ve almost certainly heard someone touting the benefits of craft beer. Or perhaps you`re the one bending ears about the latest little-known hoppy lager. With some estimates placing the growth micro brewing in Ontario in the range of 700 percent over the last decade, the craft beer craze has reached to the point where it is beginning to impact the profits of large traditional brewers like Molson Coors. At the same time, the Ontario Craft Brewers association reports that the industry has created thousands of direct and indirect jobs across the province.

The success of craft beer in disrupting the large established industry players is not only relevant to beer drinkers searching for an alternative to Canadian or Coors Light. More broadly, it raises the question of whether the craft model –based on a decentralized network of small producers rather than large vertically integrated multinationals – can continue to thrive and compete in the marketplace, despite stiff competition and regulatory structures that often privilege established players.

The next big test for the craft model lies in artisanal food production. Increasing concern among consumers about the health and environmental impact of the traditional North American diet – often marked by fast food, large-scale food processing, and high concentrations of some not-so-wholesome ingredients, such as high-fructose corn syrup – has prompted greater attention to food supply chains and local cuisine. Coupled with the rise of celebrity chefs like Gordon Ramsay and Jamie Oliver, this shift has generated a new movement towards small-scale artisanal food production. Across the United States, an increasing number of incubator kitchens are providing a platform for small-scale food entrepreneurs to develop, test, and scale their creations. While Canada also boasts some food production incubators – notably the Toronto Food Business Incubator – the model has not flourished with equal zeal north of the border. At least, not yet.

With consumers searching for new and healthier alternatives and emerging support mechanisms for entrepreneurs, we appear to be entering a golden age of craft brews and craft food. But challenges remain. On the one hand, craft food producers often struggle to branch out beyond their upscale or ultra-health conscious clientele into the more mainstream marketplace. And the difficulty of  financing incubator kitchens suggests that significant barriers still exist for innovators and small-scale producers.

As the craft beer example illustrates, government policy has the ability to both hobble and enable craft producers. In reality, it often does both simultaneously. In Ontario, for example, government support has helped to foster a growing and vibrant micro-brew industry as it previously did for for the domestic wine industry. At the same time, an unwillingness on the part of the provincial government to alter the private monopoly of large producers over  sales through the Beer Store has often made it difficult for small brewers to get their products to market. What is clear is that if the craft model is to survive and thrive across sub-sectors it will require not only persistence and innovation from entrepreneurs, but also clear and consistent support from the public sector.

 

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