DRAFT Magazine

By Adam Tokarz

Located on the shore of Lake Huron in Tiverton, Ontario, Steelback Brewery is a small craft brewery dedicated to providing its imbibers with a premium Canadian beer at a premium price. But its award-winning Red Maple lager (a Gold Winner at the Ontario Brewing Awards, the maple lager is brewed traditionally with locally-sourced maple syrup for a smooth, creamy texture) only tells part of the story.

In 2008, Frank D’Angelo, then-CEO of Steelback and its avid, often-flamboyant pitchman, sold his share of the brewery to business partner Dr. Barry Sherman, billionaire owner of Apotex, Inc., Canada’s largest manufacturer of generic drugs. In turn, Dr. Sherman handed the reigns of his brewery to 24-year-old son Jonathon, a recent college graduate who studied industrial engineering and operations research at Columbia.

DRAFTMag.com caught up with Jonathon recently to discuss his portfolio of craft brews, Steelback’s new direction, and the challenges he’s faced as a young, unproven CEO in his first year at the helm.

DRAFTMag.com: All right, first things first. Give us your 30 second elevator pitch for Steelback beer.
Jonathon Sherman: Steelback is a new company. It was formed in May, 2008, and it’s a very small craft brewery in Ontario. All our craft brews are made by very traditional processes of brewing the beer. We’re a craft brewery that has won a number of different awards for quality of our beer, and our prices are pegged to the national brands, so we consider ourselves a craft brew for the everyday guy.

DM: Tell us a little bit about what makes your beer unique.
JS: Steelback has its own unique natural spring water source. We don’t have problems with filtering city water and that type of stuff. We pull our water right from the ground, treat it the way we want, and pull away or add minerals as we see fit. No one else can tap into our water source.

We’re also located in the country, so we can procure ingredients locally rather than have them shipped in from all over the place, using local buyers within 100 miles and locally-sourced food items. So that’s definitely been playing well for us.

DM: According to The Toronto Star, Frank D’Angelo is, “a man who breathed and lived fabulosity” and was coined “the consummate promoter.” He’s had energy drink companies, restaurants, even toured with his own rock band (Steelback 20-20). How has the face of Steelback changed since you’ve assumed the CEO position? What was/is your relationship with D’Angelo now?
JS: I guess I’ll answer the second part first. There’s no more association with Frank, the old owner. He’s no longer involved with the company at all from a marketing, ownership, or contributions perspective. And when he departed a couple years ago, we took six months to restructure the company. Everything was reviewed and really the only thing that remained with the old company was the name.

One of the common questions we get right now is, “Why didn’t we decide to change our name?” The reason we kept it is because there was so much history and so much done with the name Steelback, and so much money was spent in advertising. Now, the budget that was previously used by the old company for advertising is being greatly reduced, pretty much exclusively dedicated now for a sales team which goes door to door to bars, gets our beer on tap, and then sits there, talks to the regulars, educates them, and does a lot of sampling. Our new approach is basically, “One bar at a time.” Our approach from the beginning has been one-on-one education and really convincing people to become brand ambassadors.

DM: Has your craft beer portfolio changed?
JS: Yes. So there were a few brewmasters over time, and the brewmaster we kept from the old company [Jayne McGillivray], her background was more in quality control. In the six months of restructuring, she took her course for master brewing and is now an accredited beermaster. We also hired a consultant, a retired brewmaster, to help us reconfigure some of the equipment, tune up some of the recipes, and implement processes to standardize the whole brewing process. This way, we could abolish one of the flaws of the old company, which was inconsistency in the product.

We’ve streamlined the portfolio, so the old company was offering, I think, either 12 or 13 types of beer, many of which were competing against each other. What we did was limit them down to their unique different types, so now we have: one dark lager; one honey brown lager, which we call our premium draft, which is kind of like an easy-drinking, lager kind of beer for the summertime; a light, a 4 percent, low calorie beer; and we have our mainstream lager. And, once in awhile, we’ll come out with a specialty beer [like the Red Maple lager].

DM: So you’re in the midst of completely restructuring a national Canadian brewery to a quite different business model: a smaller, localized brewery with minimal advertising. What sorts of challenges have you faced as a young CEO?
JS: To put it to scale, we went from over 100 employees to a company of 10. In the beginning, I didn’t have much of a practical business background, so I surrounded myself with an experienced team. Like a very well learned CFO who I hired in for the first year to make sure that everything was being properly managed from a financial point of view. We’ve already discussed the fact that we brought in a retired veteran brewmaster to reconfigure the recipes because I could never go in there and say what they’re doing right off the bat. You learn from the people you surround yourself with.

Along with streamlining the number of beers that we offered, we also reviewed the packaging itself. In the past, there was plastic bottles, there were cans, and there were glass bottles. With twelve brands and three different package formats, it’s a lot of inventory to manage. So the new approach is to move exclusively to the brown glass bottles so the beer stays fresh as long as possible and there’s much less inventory to manage. We can now monitor it close enough so that it’s not sitting on the shelf longer than it should.

DM: Now, despite the different national and international accolades that Steelback’s garnered over the years, beer Web sites rate Steelback pretty low across the board. Do you feel the new Steelback (post-2008) should be held to its own rating standard?
JS: It’s part of the challenge that we’re dealing with, the old stigma of the company. A lot of the international Web sites probably don’t realize that we are a new company and haven’t tried the beer again, because… on the grand scale, Steelback is a relatively obscure, unknown brand. Locally, there are beer bloggers that have recognized the changes we’ve made and have started making comments on Web sites. But it all takes time. If you narrow the search to southern Ontario, beer-blog type reviews, you’ll see more positive reviews recently. Unfortunately, on the international scope, it’s hard for us in a single year to make people aware.

– Adam Tokarz is a Boston freelance writer who uses “Once, in a Blue Moon” to start all his debauchery-filled stories. He can be reached at adam.tokarz(at)gmail.com.