STARTING A CIDERY IN ALBERTA

IMG_20181102_184421_102.jpg

When it comes to financing a cidery in Alberta, there are a few options but not nearly as many as the craft beer industry has. Brewers have historically been able to apply for what is essentially a rebate for their excise taxes which, up until recent court hearings, was massively helpful for the industry (the fate of this looks grim for brewers in Alberta).

Cidery's and Distilleries were exempt from this "Small Brewers Development Program" so this didn't end up affecting us. I spent a great deal of time speaking with the head of this program as well as corresponding with Joe Ceci and applying pressure to no avail but hopefully the Alberta government comes up with something to support this industry; something which stands up legally.

The options you have really boil down to where you see your cidery in 5, 10, 15, 30 years. Do you want to outright own the business or just be a cider maker? Do you want to give up shares in your company or maintain all shares?

A good time to decide this is at start up or during a major growth phase. If you decide to maintain full ownership, you can finance via a few ways.

The Canadian Small Business Financing Program is a program that will allow you to borrow several hundreds of thousands of dollars for your cidery; strictly for equipment or lease hold improvements (building your cidery) or purchasing real property. The good news? Your corporation (and yes you should incorporate and are required to) is only liable for 20% if things go belly up. The fine print? You cannot use this money for direct costs (i.e. apples, bottles etc.) What you also need to know, and what they don't always explain, is that there is a legal fee once you are approved for this loan for vetting your invoices, and securing the loan. This will cost you anywhere between $3,200 - $6,000 which has to come from your personal/corporate equity. Whichever institution you choose to process this loan will also charge a service fee (ATB is around $350 I think). The other catch, and one that my lawyer told me a lot of people don't expect in their business plan, is that you are responsible for all of the GST from purchases...this can add up, count on it.

A note on incorporating...you can file to incorporate at any registries office if you're in Alberta for about $350 on the low end, make sure you give yourself lots of shares in different categories for future growth - consulting an accountant can be worthwhile here as well (you will need one). You will need a complete and accurate Minute Book created (I made my own and consulted my lawyer to review it...$150?) to legitimize your corporation and protect yourself as a shareholder from the corporate veil being pierced if things come to litigation. Even if you are the sole shareholder, director, CEO, CFO, etc you need to hold AGM's with yourself, keep good meeting minutes and act as any corporation does.

Back to financing...other options are credit lines, or multiple credit cards (Phillip's Brewery has a great success story here) or getting a friend to buy equipment that they own until you can pay them off reducing their liability.

We initially decided to look into commercial real estate as we wanted to open our own shop. After many months of speaking with contractors, agents, architects, plumbers, cideries, breweries, and developers, we came to the conclusion that if we wanted to maintain full corporate ownership, the $600,000+ price tag was going to be too much for a business starting with low capital input. So we went with option B.

Option B is what brewers call "contract brewing". Essentially you hire a brewery to make your product reducing your overhead. However, beer making is not like cider making, so we wanted to be the ones controlling this entire process. We managed to negotiate a deal with a brewery where, for a cost, we bring in our own tanks and equipment and produce as an agent under their licence (what we really wanted was to produce in our garage but the AGLC is still too archaic to consider that...we asked and Calgary is no Portland!).

Acting as an agent means that you are filing with the AGLC (or which ever province you live in's commission) to be an agent, not for a licence to produce alcohol in your own facility. It's a fairly straightforward process if you have your business plan done up. Once you are an agent, in Alberta, you are required to use Connect Logistics as your distributor - you cannot store/ship your own product. This means that you are shipping your product to their warehouse, and then that product is then shipped back to the bar across the street who you wanted to sell to to begin with. Our biggest gripe was not just the shipping cost, and multiple other storage costs, but the carbon footprint that this creates - there is something to be said for eventually having your own production licence and being able to distribute through other channels. In saying this, Connect has been easy to work with thus far...just make sure you are very clear if you keg cider that you need cold storage, otherwise...

Insurance is something you will likely need. Product contamination insurance means having a recall and action plan and customer complaint plan lined up. I have one and am happy to share it, just email. Insurance provides comprehensive coverage for fire, theft, and of course product loss due to contamination. This is variable depending on your equipment costs and quantity of product produced.

What did we buy for equipment?

We ferment in IBC totes with fittings modified to connect to tri-clamp...I can send you these details if you need them. Dandy Brewing used these for a bit I believe and were very influential in allowing these to be used in Alberta...thank you Dandy! We force carbonate in stainless steel and filter our ciders with a lenticular filter. The brite tank was our most expensive purchase and these take months to arrive, so plan ahead. Jake at PALL was very helpful for filtration education, and of course Brodie from Uncommon Cider was very kind in passing along information on sourcing totes - Mahalo!

Options for ingredients?

You can press your own juice in BC and truck it in utilizing mobile juicing services or you can try to source out a cidery that is willing to let you use their press and go at it this way. Even better, DIY your own press and scratter or buy one and press in the city. Freezing juice is a good idea if you do single press runs/year of heirloom fruit - there are many accounts that this does not impact your final product. "Jacking" can happen if your juice doesn't fully thaw and you're left with floating ice in the juice and you remove the ice or juice prematurely; your Brix will increase in this case (maybe you want this if you have low Brix).

The other option is to buy juice and there are a number of suppliers who do this, very few in Canada - you will not find heirloom/cider apples pre-pressed unless you go through Tieton in the Yakima Valley (not sure of eastern Canada), there may be some others willing to do this, so shop around, but as a baseline Tieton is $$$/gallon so expect to get desert fruit if you're buying juice and get creative with it, Pacific Northwest Style!

Of course the other option is ordering concentrated apple juice...but this is not real cider and will not make a product of grade anywhere near that of one made with real fresh pressed juice. There is a real push to educate consumers on what constitutes real cider and what is made with these concentrates. A lot of cideries use real apples as a base and will then blend different fruit concentrates in for added flavor after, keeping the cider more true to form while adding a bit of natural flavor. If you need a lead on finding real juice, hit us up.

More to come as we move in to produce our first batch in 3 weeks.

Elizabeth Horner