When and how did Goldenfield get started?

Ethan Chiti: The idea came into my mind right before COVID-19 at the end of summer 2019. I was thinking about it and I hadn’t even talked to anybody about it, but then COVID-19 came, so I had time to do more research. Every day, I became more interested in the craft brewery industry and started looking for the equipment. Then, I went to other breweries to see what they had online and in-person. It was my first time opening a brewery and a manufacturing business.

How did you manage to get the partners together?

EC: After I came up with the idea, I talked to my best friend and his brother. We always wanted to create a business together. They agreed to come on board and work together. Later on, we got introduced to [Canally] – actually, we kind of found each other – and we’ve been working together ever since.

Culum Canally: [Chiti’s] family in Iran owns a leather tannery and his best friend’s family owns a couple of flour mills. They had a manufacturing background, so that helps explain why he and his friends were so eager to get started in manufacturing.

“There are two different mindsets. There’s opening the brewery and the excitement of getting a project done. Then there’s running a brewery, which is the day-to-day slog of managing and growing a business.”

Culum Canally, Goldenfield Brewery

How did you choose your location?

EC: Right after we ordered our equipment, we had to start looking for a location because in order to get all the licenses we needed a location. We finally found [one] after about six months of looking.

CC: There was a concentration of breweries on the west side, and it was a lot more expensive [there], so there were fewer risks on the east side. The east side had good links to downtown and the rest of Toronto, so that was good for scaling for distribution and access to the tasting room.

What did you like about the building?

EC: One of the hardest things to find was a building with high ceilings because of the size of the tanks that we ordered. We needed at least 14 feet for the ceilings, which was not easy. The other thing about the building that I liked was I always wanted to have a standalone building. I didn’t want to get a space in something like a plaza, which is attached to [many] other units. There were offices inside the building when we started, so we had to take them out to make space for our equipment.

CC: We’re on the first floor, but it goes down into a sort of basement in the back because we’re on a bit of a hill. We’re essentially on a floating slab, where we were able to drill some holes for drainage. It can also take the load of the equipment. We have a nice loading dock out front that allows us to get easy access in and out for supplies and shipping.

What was the permitting and licensing process like?

EC: The very first permit that we had to apply for was from the AGCO (Alcohol and Gaming Commission of Ontario), which allows us to manufacture beer. We needed to get three licenses: A manufacturing license, a boiler gas license and a retail store license. It requires many documents, but we didn’t have a hard time. The most time-consuming license was the city license, so we could open our doors to the public.

CC: To add some context, in order to get our manufacturing license, we had to get our excise license from the CRA (Canadian Revenue Agency). It’s one of those weird scenarios where you have to apply for your manufacturing license, and then they give you a provisional license to brew the beer. You then brew a beer and submit it to the Liquor Control Board of Ontario (LBCO) for testing. They test it, and if they say it’s okay, you can then submit that to get your manufacturing license.

At that point, you can now apply for your excise license, which means that the CRA comes in – or in this case they do it virtually – where they measure your tanks and look at your equipment so they can have a baseline for what they’re going to tax you. This provides them with accurate information on the size and scope of your brewery. The CRA can then give you the excise license, which you can put in for the manufacturing license, and then you get your full manufacturing license.

So, it’s a bit of a back and forth. I think some of it doesn’t make much sense because you’re technically not allowed to open until you have your manufacturing license, but you need to submit a beer to LCBO for them to test it.

Did you have to open in phases because of this process?

CC: We started to phase in July 2023 when we got the taproom license, but we didn’t launch yet. We sold cans of beer, but we weren’t quite ready at that time to have a grand opening. It took a few months to plan and get our beer stock up. We also had to co-ordinate all the parts of having the grand opening, which didn’t take place until November. We had a packed house when we opened.

What sets your business apart?

EC: The first is the ownership and the second is that we are trying to introduce the craft beer industry to people that have not yet been introduced to the industry. Most of our customers who come into the brewery say it was the first time that they visited a brewery.

“When we sat down and did the marketing plan, the owners said they had a lot of friends who didn’t know about craft beer, but when they were introduced to craft beer they really liked it. They were not your traditional craft beer consumers so we came to the conclusion that this might be a growing market or an untapped market that Goldenfield is uniquely situated to target.”

Culum Canally, Goldenfield Brewery

CC: When we sat down and did the marketing plan, the owners said they had a lot of friends who didn’t know about craft beer, but when they were introduced to craft beer they really liked it. They were not your traditional craft beer consumers so we came to the conclusion that this might be a growing market or an untapped market that Goldenfield is uniquely situated to target because of the ownership coming from a non-traditional craft beer community like Iran. There are also a lot of networks within other new immigrant or first- and second-generation immigrant communities that aren’t traditional craft beer drinkers.

So, the idea was to focus on that target market first and foremost. We also wanted to develop a community that is based around our area. A lot of your market comes from within a small radius around the brewery. It just so happens that our area is fairly multicultural, so the ones who are walking by here come from all sorts of backgrounds.

What is the current beer line-up?

CC: Our beer lineup includes what we’re calling a Persian Pilsner, which is pretty much a Mexican Cerveza. But it’s with a twist of different flavours based on hops and just using hops as the flavouring. It has more grape and lime to it. We also have a solid amber ale and a solid IPA.

Strangely enough, we have a double IPA, which was an accident from our first brewing. We never really intended to brew a beer that strong, but people took to it. It was daunting to try and reproduce the same beer in the same method. We’ve gotten pretty close with our second batch and it’s selling well.

What advice do you have for someone thinking about setting up a craft brewery?

EC: The first advice from me would be that it takes longer than you think. It’s much longer and it’s a hard process. At the same time, it can be enjoyable because you will see that it’s growing.

CC: I would say there are different skills to open a brewery and to run one. I remember opening my first brewery and I realized the day after the grand opening that now we have to do this day in and day out. So, there are two different mindsets. There’s opening the brewery and the excitement of getting a project done. Then there’s running a brewery, which is the day-to-day slog of managing and growing a business.

I would also suggest creating as comprehensive a business plan as possible. That is the one thing that I think could be a game changer and forces you to think through a lot of your problems beforehand.

Beer manufacturing in Canada is both an economic and social engine for large and small communities from coast to coast. As a grain-to-glass or farm-to-table industry, brewing creates jobs at every step of the journey. At a macroeconomic level, brewing contributes to the country’s gross domestic product (GDP) more than five times that of winemaking and distilling combined.

Canada’s relationship with beer began with the first European settlers, including those from France, England, Ireland and Scotland recognizing the land was well suited for beer production. Starting with premium grains and clean freshwater, they adapted their traditional brewing techniques to sow the seeds of today’s Canadian brewing sector. Now, Canadian brewers marry the best of these old-world brewing traditions with new-world innovation to provide a range of beer styles and flavours.

Canadian vs. Foreign Content: Beverage Alcohol Categories in Canada

Beer is as intimately tied to Canada’s culture and heritage as is hockey or maple syrup. Canadians continue to have a deep love for “their beer.” Local brewers act as a community’s social hub, whether at their in-house taproom or at a neighbourhood pub. Sharing a few laughs, stories or discovering the next million-dollar idea over a beer provides a much-appreciated break from people’s busy lives.

Brewing in Canada has provided these benefits for generations of Canadians, but governments in Canada may not be doing all they need to do to ensure these benefits are available for future generations.

Beverage Alcohol Production Contribution to Canada’s GDP

In 2017, the federal government, under then Liberal Finance Minister Bill Morneau, increased federal beer excise duties by two per cent and introduced an annual inflation-indexing formula to raise rates automatically each year from then on. The cumulative effect of these increases has been a federal beer tax rate increase of nearly 14 per cent. These increases were imposed annually, even through the worst of the COVID-19 pandemic when out-of-home beer sales channels were no longer available due to the health-related closures of restaurants, festivals, professional sporting venues and similar venues.

Given that Canada already had among the highest beer taxes in the world and the highest in the G7, the impact of these punishing federal tax hikes was entirely predictable with depressed beer sales volumes and declining net federal revenues on beer sales.

In fall 2019, combined federal excise duty and GST revenues on beer sales reached $9.85 billion, but these decreased to an estimated $9.51 billion in fall 2023. While federal government revenues decreased by 3.4 per cent, beer sales volumes decreased by 9.3 per cent. Chasing ever higher tax rates while the brewing, hospitality and tourism sectors were fighting the economic challenges of a lifetime was short-sighted and misguided.

Estimated Total Beer Taxes as Percentage of Retail Price (G7)

A year ago, a huge coalition representing grain farmers, consumers, businesses, workers, hospitality and tourism sectors and brewers came together and demanded a change in policy direction. The coalition was partially successful in that Budget 2023 replaced the inflation-based scheduled 6.3 per cent beer tax increase with a two per cent increase, but it was a stop gap measure only.

Canada has seen a deteriorating market in recent months as the double punch of higher costs for almost all goods and services and higher interest rates have squeezed most family budgets to the breaking point. Discretionary items like a dinner out or a beer after work are casualties of tightening belts. A hallmark of the parliamentary system and western Liberal government is that the legislature and elected officials vote on tax measures.

This basic and fundamental role of individual members of Parliament was taken from them in 2017 and must be restored. At that time, the Senate of Canada and the chair of the House of Commons standing committee on finance vigorously opposed this weakening of the role of elected officials and of ministerial accountability. Only after a tax measure is tabled in parliament and is subjected to open debate and consultation, then voted on, should new taxes be imposed on Canadians. Morneau short circuited this process and short-changed Canadians.

Raising beer taxes by nearly another five per cent on April 1, 2024, (as is now scheduled) must be put to a vote or be set aside. Members of Parliament, of any political party, would likely oppose a beer tax hike when they take into account the following:

• Beer sales volumes remain well below pre-pandemic levels.
• 53 per cent of Canadian brewers selling less than $5 million annually were unprofitable in 2022.
• Taxes already represent 46 per cent of the price of beer in Canada, the highest rate of G7 countries.
• As of March 2023, over half of Canadian foodservice restaurants reported they were operating at a loss or simply breaking even.
• Beer is a key profit and revenue driver for licensed restaurants and pubs, generating significantly higher margins than available on food.
• The livelihoods of unionized and non-unionized brewery workers are entirely dependent on a healthy beer market.
• Tying commodity tax rates to inflation fuels higher inflation.
• Persistent high inflation puts upward pressure on interest rates.
• Canadian brewers buy 350,000 tonnes of malting barley each year valued at more than $175 million with these purchases being crucial for Canadian farmers.
• Brewing in Canada supports 149,000 jobs across its added-value supply chain and directly employs 21,000 well-paid jobs in breweries.
• Progressive tax policy should prioritize lower alcohol strength products such as beer, the typical alcohol content of which ranges between four and five per cent by volume.
• Canadian brewers need to continually invest in their facilities to remain globally competitive and leaders in environmental performance from facility water and energy use to container and packaging stewardship.

Once again, the coalition is working hard to encourage all members of Parliament to demand a debate and vote prior to any future beer tax increases.