Currently, spirit-based RTD beverages must be sold at the SAQ, while malt, wine and cider-based beverages, despite having comparable alcohol content, are available in grocery stores and convenience stores.

This arbitrary distinction, based solely on the manufacturing process, deprives consumers of fair access and creates a major competitive distortion at the expense of spirits producers. Therefore, Spirits Canada, the Union québécoise des microdistilleries (UQMD), the Association des détaillants en alimentation du Québec (ADA), and the Retail Council of Canada – Quebec are asking the Quebec government to promptly rectify this situation.

Clear support from Quebecers

A recent Léger poll conducted on behalf of Spirits Canada revealed overwhelming support among Quebecers for the sale of RTD spirit-based beverages in grocery stores, supermarkets and convenience stores. Among consumers of these products, 91 per cent of regular consumers and 77 per cent of occasional consumers say they are in favour of this change.

“The message from Quebecers is very clear: they want choice, consistency and fairness,” said Cedric Salibi, senior vice president, policy and analytics at Spirits Canada. The alcohol content of RTD spirit-based beverages is comparable to that of other alcohol-based beverages and offers unparalleled diversity. It is time to modernize outdated regulations and allow the sale of RTD spirit-based beverages in grocery stores and convenience stores in Quebec.”

A fair measure to support local producers

The UQMD supports this reform, which would strengthen Quebec’s domestic spirits sector and contribute directly to the economic vitality of the regions. “According to a study conducted earlier this year by the UQMD, the sale of RTD beverages in grocery stores and convenience stores would generate $15.1 million in additional revenue for our members,” said its president, Nicolas Bériault.

“However, at present, RTD beverages with the same alcohol content are sold through two different sales channels simply because some are spirit-based and others are malt- or wine-based. It makes no sense. Consumers buy a container and an alcohol content, not a list of ingredients. This kind of regulatory easing would offer a great opportunity to modernize an outdated law in our sector.”

Strong support from the distribution sector

In addition to the UQMD, the two main retail trade associations have expressed their support for expanding their offerings to include RTD spirit-based beverages in the same way as other categories of RTD beverages. “Quebecers’ shopping habits have changed over the past few years; this is the natural evolution of a vibrant market,” said Michel Rochette, president of the Retail Council of Canada – Quebec.

The spirits segment has grown significantly, both in terms of quality and reputation, in Quebec and elsewhere in the country. In this context, it is only natural that grocery store offerings should adapt as well. The arrival of RTD spirit-based beverages would be a logical extension of the current offering and would help to rectify a situation that has become difficult to justify.

Pierre-Alexandre Blouin, president and CEO of the ADA, says he is delighted that Quebecers are open to expanding the sales networks for these products. “If there is one type of business that listens to its customers’ needs, it is grocery stores. The survey conducted for Spirits Canada confirms that consumers want greater and more convenient access to these RTD beverages, and as local stores, grocery stores are ideally suited to meet this demand,” said Blouin.

Rob Kelly previously owned a landscaping business and is one of the co-founders of Black Fly. He had originally been looking to start a craft brewery in London, Ont., as the only brewery there at the time was Labatt. However, his attention shifted and he hasn’t looked back since.

Cathy Siskind-Kelly, Rob’s wife and the other co-founder of Black Fly, joined the dream by helping with the business and regulation side. Originally, their plan was to use Canadian vodka that was already distilled along with Canadian juices, but they quickly realized this too required a distillery license. So, they started trying to source one. In 2005, they were successful and were awarded the first distillery license in Ontario in 100 years. Both Rob and Cathy were learning the business and regulations on the fly.

The first production facility they had secured was directly across from the thriving Canada Life Place where the London Knights play and many entertainment events take place. After a handful of years, they outgrew the location and moved into a 6,000 square foot facility just off Veterans Memorial Highway, allowing them to increase their lineup and their staffing capabilities.

After a few years at this location, Black Fly moved again due to growth. This move allowed for an expansion to include a 250-can-per-minute canning line in addition to their plastic bottling line. Today, they are housed in a 225,000 square foot facility that has a second canning line with the capability of producing 1,750 cans per minute, one of the fastest canning lines in North America. All of this significant facility growth has occurred since 2020, with a bag-and-box line being the final line installed two years ago. They are now serving as a co-packer for other brands in the beer, wine, ready-to-drink and non-alcoholic industries.

One of the things that set Black Fly Beverage Company apart early on was their innovative packaging, focusing on changing the landscape of what could be done in the cooler industry. They use wide mouth PET recyclable plastic bottles with resealable caps, becoming the perfect beverage for outdoor activities or anywhere requiring a non-breakable beverage container. Their addition of canned products and a boxed Spiced Rum Mulled Cider show they are open to pushing the boundary of what a ready-to-drink cooler might look like.

Employing over 300 staff, Black Fly Beverage focuses on keeping their craft vibe culturally, hosting seasonal parties and offering a profit share structure. They have many employees that have been with the company for more than 10 years. Cathy, who has always worn many hats in the business – including product innovation, overseeing brand management and meeting with key buyers across the country – leads many of the marketing initiatives. Martin Kamil is the chief financial officer, chief operations officer and managing director of industrial sales, meanwhile Mike Pearce is the vice president of sales and marketing and Isiah Kelly, Cathy and Rob’s son, is part of the marketing team. Rob and Cathy’s youngest son, Owen, is also working in the business as a sales representative in Toronto.

We want to make sure we can work with the smaller craft guys too, because that’s where we once started.

Mike Pearce, Black Fly Beverage Company

Black Fly Beverage Company’s growth focus is not only tied to their personnel, clientele and product diversification. The brand also keeps a keen focus on improving their efficiencies, with on-site testing occurring regularly to maintain high standards that allow them to be a key player in the co-packing market. “I don’t think any of us sat here and said we are going to service some of the biggest names in alcoholic and non-alcoholic beverages in the world from London, Ontario, but here we are,” said Pearce.

Black Fly Beverage Company has won Co-Packer of the Year internationally twice in the last three years from Molson Coors and won various awards from the LCBO, including Medium Supplier of the Year in 2022/2023 with the Black Fly brand. In addition to these larger awards and partners, Black Fly believes it is important to have a diverse portfolio that includes smaller local brands and brands that are scaling up for growth.

“We want to make sure we can work with the smaller craft guys too, because that’s where we once started,” Pearce said. 

With one of the fastest producing bottling lines in North America, some state-of-the-art equipment would be expected. In addition to their production lines, Black Fly Beverage Company houses a double deck pasteurizer that can hold 75,000 cans at any given time. They also treat their water with a reverse osmosis system, first purifying it through UV and specialized filters. As their granulated cane sugar became increasingly more difficult to source in the quantities they needed, they made the shift to liquid cane sugar, which is also housed in large tanks. They call their production “pellet to pallet,” focusing on using their own injection and blower moulders.

Their gin and vodka are always sourced from Canada, but they bring in tequila from Mexico and their rum is sourced from the Caribbean through Amsterdam. “We see 22,000 litre tankers arriving daily on-site,” said Pearce. Their spirits are mixed with real fruit juices, never juice blends, and they stick to their mandate of only utilizing real cane sugar, never substituting or using high fructose corn syrup. 

The beauty of our products is we don’t have to distill, ferment or brew. We bring everything in, combine it and you can pop a bottle right off the line and it’s ready to go. We’re not stuck sitting and waiting on a lot of stuff or waiting for things to age,” said Pearce.

Currently, Black Fly Beverage Company’s products are available through every liquor board in Canada. In 2011, they won the Small Business of the Year award from the Liquor Control Board of Ontario. That same year, they were also awarded an environmental award for their practices focusing on a reduction in packaging design, lighter bottles for a reduced carbon footprint and recycling initiatives at their plant.

What’s next for Black Fly? An expansion into malt flavours in Ontario and Quebec. “It’s the last channel for us to explore. We’ve worked through other areas of the ready-to-drink category already,” said Pearce.

One of Canada’s first draught cocktail and bottled cocktail producers, their creations can be found in partner restaurants like Cactus Club on draught and on the shelves in a few select stores and restaurants in Ontario.

At Civil Pours, the team is small but mighty. They have grown from a team of three at their inception to a team of ten staff. Along with their quick growth over four years, they are working on obtaining their own distillery license, while currently producing their finished product in Reid’s Distillery’s space.

The original focus for Civil Pours was business-to-business offerings for bars and restaurants, purely for cocktails. Their goal was to address pain points in the hospitality industry, including bottlenecks in service and labour, and cost challenges, which grew more difficult during the COVID-19 pandemic. In 2022, King Taps and Cactus Club were where Civil Pours’ first kegged cocktail products launched, with the Old Fashioned.

In 2024, Civil Pours moved from a smaller space with a local distillery to one about six times the footprint at Reid’s Distillery’s space, which can now hold Civil Pours’ production and office facilities in the same space.

“We were working with [the local distillery], [and] they were so gracious to allow us some space to research and develop our products. They were humble beginnings,” said Madison Homewood, head of research and development at Civil Pours.

She says they used pop-up picnic tables, noting that what they were able to achieve in that small space was truly impressive. “We made the most of that small space,” she said. “We are a very scrappy team of ‘make it work’ and ‘do the best you can with what you have and upgrade over time’ [people]. It was such an amicable decision between the local distillery and us moving forward. We found this space at Reid’s Distillery and it has really allowed us to grow.”

From their first cocktail, the classic Old Fashioned, Civil Pours has grown to include a full roster of cocktails. Their second launch was a margarita, which was created to stabilize citrus juice, a challenge in the hospitality industry due to its short shelf life and when it’s out-of-season.

The third cocktail to join the ranks was the espresso martini. With this one, the Civil Pours team needed to make sure the cocktail still had a froth in a draught format, motivated by the pain points of bartending, including the time producing espresso takes.

Their fourth launch was their unique Hesperidium, a dry curaçao or orange liqueur that was also motivated by a sustainable focus of utilizing excess citrus fruit waste in a partnership with Fairmont Royal York Hotel in Toronto.

We work like we are in the woods; we want our company to leave the world a better place.

Chris Williamson, Civil Pours

Fifth to join the roster was the Whiskey Sour, which had a unique motivation from their partnership with the Mule, a Mexican restaurant group, whose largest waste item was avocado pits. Civil Pours saw this as another challenge. They roasted the avocado pits, distilled them and found they created a product that has flavours much like an amaretto.

Jalapenos were another culprit of waste that Civil Pours has been able to divert from the landfill. Using seeds, stems and other parts that are otherwise headed to the trash bin, they created their Jalapeno Margarita.

Their newest and last addition to their lineup currently is the Cosmopolitan, which uses 100 per cent Muskoka cranberries and their orange distillate.

Their cocktail-making method is “a very niche process, but we are bringing out very concentrated flavours that allow us to use not as much of the core ingredients,” said Homewood. Their process for research and development is carefully thought out, considering what customers are asking for, what the market is looking for and what the current trends are. Then, after creating a classic bartender-made version to understand exactly what they are trying to create, they perform testing including ABV and sugar and acid levels. Then, they work backwards.

“We isolate what ingredients need to go in the rotary evaporator,” said Homewood. “Do we have a partner where we can secure these products? In the espresso martini, we use cacao husks, [and] there’s not a lot of market value to that product currently (sometimes it is used as mulch and very rarely as tea), but when chocolate comes into our food system, 10 per cent gets turned into chocolate and 90 per cent is going to waste. Just the sheer volume of that is a lot, so we wanted to give that another life as well.”

Innovation and sustainability are at the heart of their product line and business. Civil Pours isolates what ingredients need to go in their rotary evaporators to become the concentrated output and ensure that they have a partner that can secure the necessary ingredients.

“Constraint is a source of creativity,” said Chris Williamson, director of sales and marketing at Civil Pours. “It was amazing how quickly the can-do attitude came into this organization. ‘Crawl, walk, run’ is really important to us – we do not want to be reckless, and we want to meet the commitments we make in a responsible and sustainable way as well.”

They focus on three main criteria: First, is there going to be a demand for the product? Second, can they make it effectively with their technology? And third, can they make it sustainably? “We work like we are in the woods; we want our company to leave the world a better place,” said Williamson. The main type of equipment that is allowing Civil Pours to produce their unique product line is their rotary evaporators, also known as vacuum stills, used in the process of vacuum distillation.

“This equipment allows us to take the atmospheric pressure out of the environment,” said Homewood. “Our raw ingredient goes in [there]. We do not make any base spirits; we partner with the people who do it best and we purchase bulk totes of these spirits.”

When they remove the atmospheric pressure from the system, it allows the ethanol to boil at a lower temperature than it normally would. Once the boiling occurs and the ethanol is turned into a gas, they precipitate it by running it through subzero temperatures of around -8 to -20 degrees Celsius, depending on what the final product is intended to be. Because of the super low temperatures, it makes it possible to preserve the natural flavours of the ingredients. “It precipitates into this beautiful, fresh and vibrant flavour,” said Homewood.

The other benefit to this process is it takes ingredients that are typically short on shelf life or perishable and they get blended into finished drinks that make them viable on the shelf. The shelf-life on Civil Pours’ products is well over a year non-refrigerated. “It is pretty cool that we are going through all of the processes – some from beer, some from wine, some from distilling – all to make some really cool finished products,” said Homewood.

The Civil Pours Cosmopolitan is made with premium vodka and the distillery’s proprietary vacuum-distilled orange and lime distillates, along with locally-sourced Muskoka cranberries.

“Our new Civil Pours Cosmopolitan offers the right balance of flavours, freshness and vibrancy so that anyone can enjoy a really delicious Cosmo even if they aren’t in a great bar,” said Madi Homewood, award-winning bartender and head of research and development at Civil Pours. “Just grab some fun glassware and pour, and you’ve got an incredible bar quality Cosmo – you don’t need to mix, stir or garnish, it’s ready to enjoy!”

The Civil Pours Cosmopolitan is the sixth shelf stable bottled cocktail to join Civil Pours’ line-up, alongside the Old Fashioned, Margarita, Espresso Martini, Whisky Sour and the recently introduced Jalapeño Margarita.

All Civil Pours bottled cocktails are available to purchase in Toronto at Eataly (both in Yorkville at the Manulife Centre and at Sherway Gardens), and select bottle shops across Ontario, as well as online at WineOnline.ca. They are available in two sizes (750mL and 240mL) and a list of retailers can be found at civilpours.com.

Editor’s note: tune in to Poured Canada’s next issue to see a Distillery Profile on Civil Pours.

It started in 1939 when Alcan built an aluminum sheet rolling plant for making military aircraft to support Allied forces in the Second World War. The plant also housed an innovative research facility, which helped the Canadian aluminum mining and manufacturing company make its mark in other major sectors like automotive, transportation, and beverage and packaging.

With some facilities shutting down or moving elsewhere, the aluminum industry in Kingston isn’t as big as it once was. However, a wealth of knowledge and expertise around aluminum manufacturing remains in the city – something Kingston Aluminum Technology (KAT) was eager to tap into when it launched its aluminum container business back in 2012. KAT CEO Ben Pilon says the help his company received from retired folks who used to work in the aluminum industry was tremendously valuable.

“We found a lot of people with a technical understanding of aluminum, how it flows and moves and how to process it,” said Pilon. “We couldn’t have done this alone. We had a lot of people with decades and decades of experience work with us, and we’re thankful for them.”

Pilon’s mother, Betty, is the president and founder of KAT. She’s an aluminum veteran herself; in her previous work at Montebello Packaging in Kingston, she oversaw the mass production of aluminum packaging used by such major names as L’Oréal, Johnson & Johnson and Pfizer. Pilon is no stranger to the industry either. He got his first job in aluminum manufacturing at age 15 and has been involved ever since.

Pilon says KAT spent a great deal of time and energy on research and development, which resulted in a patented technology called Alumishape. It’s this process that enables the company to produce custom-shaped aluminum bottles for clients in the beer, wine and spirits industries, and in other sectors like pharma and cosmetics as well. “We found different ways to manipulate the aluminum,” said Pilon.

Benefits of custom shaping

Pilon notes for their alcoholic beverage customers, there’s a lot of value in custom-shaped bottles. For one, they’re something out of the ordinary and can really stand out on store shelves. “A lot of our customers are very passionate about their products, and they want a different look and feel,” he said. “For a smaller company, they just might be looking to make an impression and be eye catching.”

Pilon says for some customers, the shape of their product’s bottle is an essential part of their brand, so being able to retain that unique shape when transitioning the packaging from plastic or glass to aluminum is a major plus. “Some alcohol companies have really distinguished themselves with their look over the last 50 or 100 years, so they really want to stick with it,” he said.

A lot of our customers are very passionate about their products, and they want a different look and feel.

Ben Pilon, Kingston Aluminum Technology

Pilon says the custom-shaped bottles for their beer and wine customers tend to resemble the traditional glass or plastic forms for those beverages. However, he adds there are exceptions where some beer and wine makers are looking for something completely different. “I think it’s just people have become so used to and familiar [with] certain shapes,” said Pilon. “I think that those will always be common. Then as companies want to try something new, we’re happy to work with them.”

Pilon says there’s generally a lot more flexibility when it comes to creating aluminum bottle shapes for liquor companies, since spirits have been sold in a wide range of differently-shaped containers over the years. He adds a growing number of customers are turning to square bottles, which makes them easier to transport and store.

The custom shaping offered by KAT can also include a logo or graphics imprinted on the bottles; another way customers can reinforce their branding. Moulds for each unique custom-shaped bottle are created with a 3D printer, and KAT has in-house designers who can complete all the design work or simply help customers design their bottles. KAT has a second production line that pumps out bottles in approximately 15 standard shapes.

Pilon says the current split is around 50/50 in terms of orders of custom-shaped and standard-shaped bottles, with the total output for the two lines at about 50 million pieces annually. KAT’s customers are primarily in Canada and the United States, but the company has started shipping products to Europe as well.

Less aluminum required

Pilon says the KAT team looked at traditional production lines for aluminum packaging that had massive energy requirements and thought there had to be a better way. He adds part of the improvements came from looking at other industries that have different technologies and different ways of doing things.

According to Pilon, the company’s proprietary technology enables KAT to produce a lighter bottle – one that requires 30 per cent less aluminum than a traditional aluminum can or bottle – on a smaller production line, resulting in energy savings of 60 per cent per bottle. It also features an 80 per cent reduction in volatile organic chemical emissions.

KAT’s production process is designed to make changeovers between customer orders efficient and small batch orders easier to complete. Pilon says this enables anyone, from start-ups to large brands, to work with KAT. While KAT does individual orders as large as five million bottles, Pilon says their sweet spot is generally in the 15,000 to 250,000 range.

Small beverage companies may need small product runs because they lack sufficient funds to buy large quantities of raw materials, or don’t have the storage capacity for large volumes of product. Pilon says the “just in time” inventory model generally works better in these instances, and the 30 or so folks who work at KAT are happy to help out. “We really like working with the smaller companies, watching them grow,” Pilon said. “We started off as a small company ourselves, so we understand the challenges of starting a business.”

He notes some of the best companies KAT has worked with over the years started with small orders and have since grown into medium- and large-sized businesses. “That’s really nice to see,” he said.

KAT’s work in this area was recognized at the SIAL Canada food innovation trade show in 2023. The company won the Own the Change special award for its production process that uses less aluminum and makes aluminum bottles more accessible to smaller companies by offering small runs.

The brand is dedicated to not only crafting beverages, but going beyond the product itself. Firmly upholding the values of health, adventure and environmental sustainability, Bali Water’s collaboration with the IDEP Foundation supports the Bali Water Protection Program. This program addresses the island’s water crisis through the implementation of rainwater recharge wells. By aligning their mission with this initiative, each purchase offers a contribution to the preservation of Bali’s invaluable resources.

“What we found through our research was the last two years were really a market correction after the high growth rates of alcohol consumption during the early days of the pandemic,” said Ryan Lee, a market analyst with IWSR. “Overall personal alcohol consumption is expected to remain above pre-pandemic levels into 2023, although less than those seen during the pandemic.”

Moreover, consumer habits developed during the pandemic have remained intact, even as more people venture to restaurants and bars.

“Many consumers purchased premium products during the height of the pandemic. So, it could entice them to spend more when they’re out,” said Lee. “At the same time, as the recession continues to impact Canadians’ financial situations, it could slow premiumization trends too.” Lee says the latest findings from consumer research in February 2023 show that Canadian drinkers are reducing their stated alcohol consumption and spending, though this is nuanced by specific category. “This change in behaviour has a lot to do with growing feelings of insecurity and apprehension, especially among younger adults,” he said.

IWSR insight shows that while drinking at bars and restaurants may see a decline, purchasing alcohol from liquor stores, in particular premium liquor, may remain steady or even increase. Lee says diversifying product selection can help navigate these uncertain times, but paying attention to consumer behaviour will help beverage alcohol producers focus on which brands to invest in. Here are three consumer insights to help navigate the 2023 landscape.

Any occasion to clink

While the total wine category is declining in volume, IWSR shows that sparkling wine continues to grow in Canada. “There’s a pent-up demand to celebrate weddings, holidays, gatherings and other personal milestones after the pandemic restrictions,” said Lee. “A key driver here is a change in attitude from these beverages being exclusively for formal events or special occasions. Now, people are enjoying Champagne and Prosecco in more relaxed contexts, and more frequently.”

The analysis shows strong demand from Canada’s southern neighbour, as premium and above sparkling wine grew in volume by eight per cent between 2019 and 2020 in the United States.

“People got used to working with premium products during the lockdown,” said Lee. “Higher-quality products mean higher expectations, and two effects of the pandemic on the alcohol market are expected to remain the same over the long term – higher e-commerce engagement and at-home cocktail culture – and drive spirit consumption.”

Protecting their body and wallet

Lee says health and wellness are on a lot of peoples’ minds. “In a recent IWSR survey, we discovered that around half of the adults we surveyed were more interested in moderating their alcohol consumption,” said Lee. “And younger adult consumers, like millennials and generation Z, are much more likely to moderate their drinking habits than older generations.”

Unlike the first insight, where some consumers opted for more premium beverages, others are turning to non-alcoholic ones. “Molson Coors Beverage Company, formerly Molson Coors, changed the longstanding company name to represent a shift toward a wider beverage portfolio outside of just beer,” said Lee. “The company has also invested in non-alcoholic beverage categories such as Zoa Energy, an energy drink created by a team that includes Dwayne Johnson, and VYNE, a botanical hop-infused sparkling water.”

IWSR found that beverages with no alcohol grew by nine per cent in 2022, increasing their volume share of the overall no- or low-alcohol space from 65 per cent in 2018 to 70 per cent across 10 key markets, including Canada and the U.S. “No-alcohol is growing faster than low-alcohol in most markets,” said Lee. “It has a lot to do with improved taste, production techniques and a diversification of consumption occasions.”

IWSR expects no-alcohol volumes to grow at a compound rate annually by nine per cent between 2022 and 2026 across key markets (including Canada, and the U.S.).

Spirit-based RTDs

Lee says in total volume terms in 2021, every major category except ready-to-drink (RTD) across all alcohol bases posted negative growth in Canada. However, it’s not the traditional hard seltzers he’s referring to in this instance. “Premium-priced RTDs have grown faster than any other segment over the past two years,” said Lee. “On a smaller volume base, but at increasingly higher prices.”

IWSR reports that consumers in some markets trade up to RTDs from categories like beer. In some cases, consumers pay roughly double for the same serving size of RTD as beer. Findings from IWSR show that across 10 key markets, spirit-based RTDs – especially those made with vodka – held 45 per cent of the volume share of the RTD category in 2021, driving most of the beverage industry’s innovation.

“With the RTD category firmly established in markets such as the U.S., and competition at an all-time high, brand owners continue to focus on innovative products and brand extensions or partnerships to drive greater awareness and distribution. The RTD innovation IWSR is tracking year-on-year clearly shows a rapid pace of product transformation to meet consumer demand,” said Lee. “There is no single dominant type of RTD globally, which makes the category uniquely positioned to capitalize on local tastes and trends.”

Diversifying a brand

With such an extensive array of directions, Lee says it’s never been more important for companies to review their portfolio and determine where gaps exist in consumer demand and opportunity. “Many brands across beverage alcohol are diversifying their portfolio to engage and take a share in high growth categories,” said Lee. “Diversifying also allows producers to reach a wider consumer demographic and maintain a portfolio to meet evolving consumer demands.”

Even traditional, non-alcoholic brands are moving into the market. “The Coca-Cola Company launched Topo Chico hard seltzer in partnership with Molson,” said Lee. “But the company’s first alcoholic product was a chuhai, which is a type of RTD called Lemon-Dou, that launched in Japan in 2018.”

One thing to remember, says Lee, is that companies are no longer selling products to groups of consumers. “Companies are now selling products that fit a variety of consumer occasions,” he said.