Bitter experience with Corona inspires $20 million Stanley Park Brewing launch for winery owner and Mike's Hard Lemonade founder
By Glen Korstrom
Anthony von Mandl's penchant for thinking long term is responsible for what he knows many think is a crazy $20 million investment in the craft brewing sector.
However, given that his Mark Anthony Group Inc. generates annual revenue estimated at $415 million, von Mandl has the resources to finance what he believes will become a cash cow: Turning Point Brewing Co.
He also doesn't need to consider what shareholders think, because he owns the company.
"It's an insane investment. We put $20 million into building a craft brewery that we could have done for $1 million," von Mandl told a recent British Columbia Technology Industry Association luncheon.
"What I've learned is that this is the largest single investment ever in the history of North America in a startup brewery. It was complete insanity."
His Annacis Island-based brewery is filled with new tanks, sophisticated beer-making technology and even an on-site wind turbine that towers 110 feet and powers the "sustainable" operations, von Mandl said.
Sales trends show von Mandl might not be as crazy as some would think.
According to British Columbia Liquor Distribution Branch (BCLDB) statistics, craft brew sales in B.C. grew 23.83% to $88.2 million in the year that ended March 31 compared with the previous year.
In contrast, B.C. beer sales from the big three brewers - Labatt Brewing Co. Ltd., Molson Coors Canada and Sleeman Breweries Ltd. - grew a comparatively small 1.3% to $840.9 million.
Turning Point is the parent company for von Mandl's Stanley Park Brewing brand, which has brewed more than 300 batches since he launched it nearly two years ago. Its amber ale is on tap at venues such as Roger's Arena as well as hundreds of bars across B.C.
There are no plans to expand outside of the province, but brewery officials say they expect to be the biggest B.C.-based brewer within two years.
Pacific Western Brewing currently has that title. It generated $18.9 million in B.C. sales in the year that ended March 31.
Granville Island Brewing Co., which has $25 million in annual sales, is owned by Molson Coors Brewing Co. (TAP:NYSE) subsidiary Creemore Springs Brewery Ltd. Sapporo Group of Companies owns the Sleeman-operated Okanagan Spring Brewing Co., which generated $91.7 million in annual sales in the year that ended March 31, according to the BCLDB.
The beer business is not new for von Mandl, who is likely best known for his Mission Hill Family Estate Winery. He brought Corona beer to Canada in 1986 and racked up what he called "staggeringly high" sales for that brand's producer, Mexico's Grupo Modelo.
But in 2007, the Mexican brewer pulled the rug out from under von Mandl by terminating his contract to market the brew in Canada. The way von Mandl tells it, Grupo had done a joint venture with Molson and wanted that conglomerate to market Corona.
Von Mandl got no compensation, and he had to lay off 22 staff.
"We looked at our contract and there was a remedy - arbitration in Mexico. We went down and wasted the money. We took our people. If you think you're going to win arbitration in Mexico against one of the largest corporations, even if you're completely in the right, forget it."
Von Mandl's other malt beverage initiatives grew out of necessity, not desire.
A complex series of events once saddled him with more than 100,000 brown stubby beer bottles. In desperation, he created Clark's Great Canadian Beer in Rugged Canadian Bottles.
His successful Mike's Hard Lemonade is another product that Americans consider a beer because it's made with a proprietary malted beverage recipe for U.S. consumption. In Canada, it's made with vodka.
Canadians often view Americans as having more liberal alcohol regulations. However, von Mandl said the U.S.A.'s powerful beer lobby succeeded years ago in establishing requirements that all spirit-based beverages be sold in liquor bottles and not single-serving containers.
He recently expanded the Mike's Hard Lemonade product line with Mike-arita. The malt-based margarita-style products include agave juice to mimic tequila's tang.
"We're exploding in the market with new innovations," von Mandl said. .
This article from Business in Vancouver November 2-8; issue 1097
Business in Vancouver (www.biv.com) has been publishing in-depth local business news, analysis and commentary since 1989. The newspaper also produces a weekly ranked list of the biggest companies and players in a wide range of B.C. industries and commercial sectors, monthly features and industry-focused sections that arm its subscribers with a complete package of local business intelligence each week.