A Pint of success.

CMA Ken Woods taps into lucrative microbrew market

Ken Woods is a CMA and entrepreneur fueled by a heady prospect -- to tap into Canada's lucrative and growing specialty beer market.

Woods and business partner John Gagliardi, a certified brewmaster, worked on the concept of opening their own business for 10 years. The moment finally came with the creation last year of the Black Oak Brewing Company, where Woods serves as president.

It was a long haul between the frothy dream of an independent business a decade ago and today's reality of stainless steel brewing tanks, bright labels emblazoned with the company's acorn-and-oak leaf logo and a market-driven sales plan.

In the intervening time, Woods kept busy for several years working for EDS Systemhouse Inc., a leader in the information technology consulting, outsourcing and systems integration market. At EDS, he worked in a variety of departments and capacities, including the finance and purchasing departments, while earning his CMA designation.

"I spent two years in the finance department focusing largely on payables and receivables," Woods says. "During my time at EDS, I created an Excel program which is key to producing staff expense reports, separating out tax and other categories. We worked out a couple of bugs and I would upgrade and train other people in how to use it."

Woods also conducted a six-month special project on Activity Based Management (ABM) in conjunction with the EDS head office in Dallas, Texas.

In the evenings, Woods was also building a reputation as a capable bartender -- all the while making business contacts that would prove beneficial later on.

He spent a dozen years in a variety of pubs and restaurants "all over the place," he says, then adds with a chuckle, "you have to stay as close as possible to the person drinking the beer." Chalk one up for grassroots -- make that tap handle -- market research.

The multifaceted nature of Certified Management Accountant training has been very useful, both in Woods' previous job and today as an entrepreneur, he notes. For instance, it has been a great help in dealing with the plethora of government forms and guidelines relating not only to business in general but to the highly-regulated beer sector.

"The CMA designation is really helpful because it firms up everything you need to know in the marketplace," says Woods, who also holds degrees in business management and biology. "This fine tunes your experience for specific business applications. As well, talking to other people who go through the CMA course offers varied viewpoints on issues in the workplace.

"You make great contacts and the emphasis on presentation skills is outstanding. It teaches you that you have to get your information across effectively, whether it's in a one-on-one situation or in a group presentation. It's helped me with keeping on top of things. Certified Management Accounting is all about information systems and helping businesses run better."

Running a small business with a niche product in a large and fast-moving industry is challenging. And Black Oak has entered a big sector; according to the Brewers Association of Canada, in 1998 brewers poured out more than 19 million hectolitres of suds in Canada (one hectolitre equals approximately 12.2 cases of 24 bottles (341 ml each bottle) or 11.7 cases of 24 cans (355 ml each can). Across the country, there are 24 conventional brewers (the likes of Molson, Labatt and Sleeman) and 54 microbrewers (defined as making less than 60,000 hectolitres of beer a year).

Last year, consumers purchased $10.1 billion worth of Canadian-made beer. And from a direct employment base of 17,000 jobs, the industry created 10 times as many jobs in such sectors as accommodation and food services, retailing, printing and publishing and agriculture.

But let's not forget the pleasures of a business that is all about taste. For Woods, 36, and Gagliardi, 34, the business also involves sampling -- and the pair have tried "probably 600 different kinds of beers," Woods says. He even keeps the empties on a shelf at home with plans to eventually build a display unit.

Black Oak's own brews, a Nut Brown Ale and a Pale Ale, are produced on site at the company's Oakville brewery, tucked away in a small, low-rise industrial mall next to a civic soccer association. It's not far from the busy Queen Elizabeth Way, a prime transportation route to the company's major markets that span the Golden Horseshoe, from St. Catharines to Oshawa. Most importantly for Black Oak, of course, is the Toronto market, where the majority of beer lovers congregate.

As craft brewers, Woods and Gagliardi focus their energies on creating the freshest possible product. Black Oak uses five different varieties of hops and malts. The company employs a reverse osmosis process that cleans and purifies its water and the company adds only those minerals necessary for each kind of beer. Producing beer in small batches means getting the freshest product to the customer as quickly as possible.

As the maestro of Black Oak Brewing's quality control, Gagliardi upholds the brewmaster's adage of "quality, consistency and character" in every batch.

Shortly after earning his brewmaster's designation from the world-renowned Siebel Institute in 1993, where he was classmate to beer experts from a wide range of companies, including Molson and Labatt, as well as a number of European and American brewing concerns, Gagliardi, who says he was "first and foremost" a long-time beer lover and a home brewer, ran a successful do-it-yourself wine-making store. But a love of beer was clearly in his blood and the opportunity to work with long-time friend Woods uncapped a heady mix of business ideas.

The company's beer is produced in small batches using custom-made, stainless steel equipment produced by ABC Manufacturing of Brampton. Most of its raw products, including the malt, are imported from western Canada, but the partners point out proudly that their toasted wheat is grown locally by farmers in the southwestern Ontario community of Fergus.

At 462 square metres, the company's facility is small but efficient. It includes a 17 hectolitre brew house. In the brew house, grains like toasted wheat, hops and malt are combined to produce 'raw' beer, technically called wort. The wort travels to one of four 34 hectolitre unitanks, where yeast is added and a 10 to 12 day fermentation process ensues. The process is staggered to ensure that while one batch is entering the fermentation stage, another is ready for final production. From the unitanks, the beer is filtered into the 34 hectolitre bright beer tank, where pressure is adjusted and the beer is readied for packaging.

In stark contrast to the brewery's ultra-modern, shiny equipment is the company's Brooklyn Labelling Machine, a quaint piece of industrial-green, solid cast iron that chugs and grunts away like an old but experienced shopfloor worker. A relic from the past, it pastes labels onto the bottles that wend their way down a short conveyor belt. Woods has a soft spot for the machine, originally built in the 1940s.

"It doesn't matter that it's old," he says as he gently pats the huffing machine. "It's a great piece of equipment and we got it for the right price."

The production process is concluded at the company's Meehen Bottle Filler, which fills and caps four bottles at a time. All told, it takes about 12 hours to put out a batch, or 34 hectolitres of beer. At peak capacity, the company, which has placed its product in restaurants, pubs, the Liquor Control Board of Ontario and the Beer Store, will produce 4,200 hectolitres a year.

Not a lot when compared to the big guys, but then quality, not quantity, is the most important thing, says Gagliardi.

"We're bent on making the highest quality beer possible," he says. "It's got to have the right taste, and the perfect clarity and quality. We won't settle for anything less than the best, because we know our customers are going to be expecting a high quality beer."

Getting the Nut Brown and Pale Ales into the hands of those customers means a lot of legwork and phone calls.

"Knocking on a lot of doors is the key to getting the product into consumers' hands," says Woods, who calls on restaurants and pubs and arranges for the beer to be used in beer tasting competitions. Far from heady brouhahas or sophomoric beer binges, beer tasting competitions mirror wine-tasting contests in their civility and seriousness. And the response from pub owners has been overwhelmingly positive, adds Woods.

Ed Kusins, general manager of Denison's Brewing Company and Restaurants, a downtown Toronto craft beer operation and eatery, is a big fan of Woods and of the ales he and Gagliardi produce.

"I've known Ken for nine years," says Kusins. "He's very determined, enthusiastic and quite plainly, just a nice person. He's very goal oriented and he's achieving his goals. When he talked about the concept of a brewery several years ago, my immediate reaction was that he's going to achieve it."

And the beer? "I've had the opportunity to sample the product and it's an excellent product," says Kusins. "The package stands out and I know we're going to be a licensee. We'll definitely be carrying it at Denison's."

As a former bartender who knows what beer drinkers like, Woods is no stranger to getting out and hustling his ales.

"We do a lot of work by word of mouth," he says. "The market is big enough and the public is very educated about beer. The microbrew industry in the Greater Toronto Area alone accounts for 8 to 10% of beer sales. We're doing a lot of promotional things and we have had a lot of articles written on us. And we'll start print advertising shortly. As well, our website will have a variety of items on it and we expect to attract a great deal of attention with that."

With those prospects for growth and targeted marketing on tap, Black Oak Brewing is having a good run at success. One thing is certain: Woods and Co. will definitely not be crying in their beer.

John Cooper is a Whitby, Ont.-based freelance writer.