As a McGill student, Mississauga native Darren Smith brewed beer in his apartment kitchen, but not for party purposes.
Smith, BA’09, was already thinking about setting up his own craft brewery.
His Montreal apartment was across the street from a brewpub and Smith became friends with its brew master, who is also a certified beer judge.
“So I was making beer in my kitchen, bringing it across the road to him. He was tasting it, giving me pointers (and) sending me back … to try again or do this differently or use this different ingredient or whatever.”
Smith began working on the startup while completing his degree and his ambitious plan took flight in 2010 with the opening of Lake of Bays Brewing Company in Baysville, Ont.
The craft brewery now employs about 35 people and boasts four core brands – including its biggest seller, Spark House Red Ale – and, at any given time, typically a couple of seasonal and rotational beers. Its beer is widely available in Ontario, including at LCBO stores. It’s also available in Manitoba on a consistent basis, Smith says, and as a special order in Saskatchewan and the Maritimes.
“We’ve just done a rebrand this year, so we’ve launched a whole new series of beers, a new look and feel for our product lineup,” Smith says. “We’ve got a new slogan – ‘Taste the great outdoors’. We’re running ads on the TTC. We kind of recognized that we need to take some steps in order to take ourselves up a notch, how to get to the next level.”
Among its new beers is Broken Axe American Pale Ale, which is seeing great results, Smith says. It was a ‘pick of the week’ in May by Globe and Mail columnist Beppi Crosariol who wrote, “Mid-gold and subtly hazy, this is one refreshing brew.”
Smith studied economics and history at McGill and went to university knowing that he would likely want to start his own business. The idea of a craft brewery crept up on him at McGill.
“My dad and I are sitting having a beer at Christmas 2007 and he’s kind of going ‘just bought this commercial property, I don’t know what to do with it’, and I’m going ‘I’d like to open a brewery, I don’t know where to put it.’ And the lightbulb eventually went on.”
Smith liked the idea of getting into a field with a physical product or output at the end of the day – “something you could kind of hang your hat on and say ‘I did that!’
“Little did I know how expensive and complicated it would be to actually get a brewery off the ground, but that was what attracted me to it.”
Financial backing has come from a variety of sources over the years, Smith says, including money from him and his family, banks, equity investors and a group of employee shareholders.
“Every source of capital you can think of we’ve either employed it or tried to employ it over the course of the past seven years,” Smith chuckles.
Things are going well, he says. The company experienced several years of really rapid growth when it first started, which he says was exciting and challenging.
Over the past few years, they’ve been trying to focus on profitable growth and staking out a sustainable place within the industry, “which is admittedly challenging right now based on the number of new entrants coming into the marketplace,” he says.
When Lake of Bays opened in 2010, there were under 50 breweries in Ontario – “a decent number already,” says Smith. “There’s now more than 250 and there’s another hundred in planning.”
The vast majority are microbreweries, according to Smith, who is also vice-chair of the Ontario Craft Brewers association.
Asked what he likes best about being in the business, Smith says, “I think I like the variety. I get to be an engineer, a marketer, a finance person — all of these things, all in the span of one day, which is good for my personality type. At the end of the day, it’s beer. It’s kinda cool.”
