Small as it is, EARI has an ambitious plan to consolidate a swath of Ontario’s congested craft beer sector, with Mr. Born out of the shell of a failed video-game developer last year, EARI trades as a penny stock on the over-the-counter (OTC) market, considered the sub-basement of the public equities realm. The company that bought Bell City, EARI Group, is a world apart from the international beer giants that have stalked large and mid-sized Canadian breweries in the past. Allan Bradley, CFO of EARI Group, left, with Bell City's Mr. While his brewery has changed hands, he isn’t going anywhere. It all sets the stage for what industry observers believe will be, at best, an extremely difficult period ahead, and at worst, an era marked by closures and bankruptcies. Brewers must grapple not only with the immediate financial damage caused by the pandemic, but surging costs that threaten to wipe out what meagre profits exist in an industry where the majority of brewers were already losing money even before COVID-19 came along. Some entrepreneurs even saw an opportunity in the crisis, with scores of new breweries opening their doors last year. While the pandemic threw the industry into turmoil, many craft brewers managed to hold on by pivoting to deliveries and relying heavily on government largesse. In the five years before the pandemic hit, the number of breweries in Canada more than doubled to around 1,100, with small craft breweries accounting for all of that increase and defying repeated warnings that the craft market was long past tapped out. For years the craft brewery market grew at explosive rates, with new breweries pouring into the sector at a furious pace. Sakthivel’s experience is a microcosm of an industry that to insiders and outsiders alike can seem like an inexplicable black box, in which heavy debt loads and financial red ink are the norm yet few breweries show outward signs of trouble and there is no shortage of new entrants keen to join the fray. “Things couldn’t continue the way they were,” he said. Sakthivel accepted a deal to sell control of the brewery to a tiny upstart beverage company from North Carolina. So in December, with Bell City falling behind on its rent, on payments to suppliers and on its tax bill, – “The government is sleeping now but we accumulated a lot of beer tax and HST that’s going to attack like a lion charging,” he said – Mr. Sakthivel, a 30-year veteran of the brewery industries in India and Canada, had mortgaged his house to launch Bell City with a partner in 2014 and the thought of losing his home weighed heavily on him. So did having an understanding landlord and forgiving vendors, up to a point. Government wage subsidies helped blunt the impact of the revolving door of COVID-19 rules – open, close, open, close. Bell City, tucked into a corner unit of a strip mall, saw its sales plunge by more than half during the pandemic, even as the brewery scrambled to meet delivery orders from customers locked down at home. in Brantford, Ont., the last two years have mostly brought pain and frustration instead. For Muthu Sakthivel, co-founder of Bell City Brewing Co. Owning a craft brewery is supposed to be about passion and fun. in Brantford, Ont.Tara Walton/The Globe and Mail Muthu Sakthivel, owner and Master Brewer at Bell City Brewing Co. Hobbled by the COVID-19 pandemic and an oversaturated market, craft brewery insiders say consolidation is needed to save the industry What brewers say must happen to stay afloat What brewers say must happen to stay afloat Subscriber content Canada’s crowded craft beer industry is tapped out.
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