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Kenora beermaker brewing up second production facility

Expansion to Winnipeg, Minnesota fuels growth spurt with new capacity
Taras Manzie
Lake of the Woods Brewing Company president Taras Manzie is showing the flag with new brewing locations and storefronts in downtown Winnipeg and northern Minnesota with big plans for a second brewery in his hometown of Kenora. (File photo)

There’s a distinct hockey-flavoured theme behind the expansion plans of Lake of the Woods Brewing (LOW) Company.

Taras Manzie, president-CEO of the popular Kenora craft brewer, is tapping into two hockey hotbeds with the opening of microbrewing sites in downtown Winnipeg and northern Minnesota.

As the brewer marked its sixth anniversary at the end of June, Manzie was mustering capital to extend his company’s reach beyond northwestern Ontario while finding ways to boost production capacity in Kenora.

The brewer is making a splash in the Manitoba capital as part of True North Square, a major downtown development, built around the main hockey arena, the Bell MTS Centre.

Its design and purpose is as a pre- and post-game public gathering space, similar to other entertainment districts built around arenas in other major league cities.

Located between Hargrave and Carlton streets, LOW is part of the $400-million True North Square development steered by the owners of the Winnipeg Jets and is kitty-cornered from the arena. The development includes four towers with retail, office and residential space, and a luxury hotel.

The whole idea started with True North chairman Mark Chipman, who has a cabin near Kenora and has visited the brewery numerous times as a person.

Two years ago, Jim Ludlow, the head of True North’s entertainment and real estate division, invited LOW to be part of the development project.

“Mark Chipman has a camp 20 minutes from our brewery and was on our patio our first summer. They’ve always kind of watched what we were doing and been fans of the beer.”

Manzie said they’ve a signed 10-year lease with True North, with two five-year extensions. Slated to begin construction this summer, the Winnipeg location features a ground-level tasting room and retail space with an upstairs brewery connected by skywalk to a convention centre and the arena.

With on-site production of 2,000 hectolitres, Manzie knows that’s not nearly enough for the traffic he anticipates.

“It’s limited space but it’s the best we can do. It’s designed to be a showpiece for Lake of the Woods Brewing.”

South of the border, LOW has opened a location 220 kilometres away on the south shore of Lake of the Woods in Warroad, Minn. It’s also known as Hockey Town USA, for its proclivity to send players to the pros.

Their foray into Minnesota began a few years ago, when LOW considered exporting there. But it made more sense to brew directly in-state, buy local ingredients from farmers, and introduce novelty brands specific to that location.

As with their home base in Kenora, it's built inside a renovated fire hall. The Warroad brewery opened in early June to good local reviews.

Situated just steps from the waterfront boat docks, Manzie has high hopes the site can become a year-round hot spot that will get busier when the winter ice-fishing season kicks in.

“It’s a great space. Locals and tourists alike have really taken to it.”

Combined with their steadily increasing beer sales in Ontario and Manitoba, Manzie said they need to backstop that with more brewing capacity at home.

This fall, LOW hopes to start an 18 to 20-month build to refurbish one of the few remaining buildings at the mostly-demolished Abitibi-Consolidated newsprint mill site in Kenora.

The 30,000-square-foot facility will be capable of producing 15,000 hectolitres with room to scale up to 40,000 hectolitres.

Manzie said this second facility shores up what they need in the northwest, Ontario, Manitoba and Minnesota. Capacity is limited at their flagship location, a refurbished landmark fire hall in Kenora’s downtown, which delivers 2,200 hectolitres of mostly draft for their tap room and restaurant.

“The demand is five times what we can currently brew in our Kenora facility,” said Manzie. “As you can imagine, the economics of it all are problematic.”

A southern Ontario co-brewing arrangement helps with their production, packaging and shipping needs but Manzie would rather bring those jobs and production home.

Since starting from scratch years ago, Manzie said LOW is averaging year-over-year growth of 20 to 30 per cent from revenue generated mostly from commercial sales and selling to distributors in Ontario and Manitoba.

With a workforce approaching 200 employees spread among three locations, plus sales staff working remotely, Manzie expects to add a couple dozen more jobs with the new brewing facility.

Not to stop there, he intends to finally make good on his long-range plans to get into distilling. Now included in the business plan for the new brewery, they’ll produce vodka and gin from the start before expanding into other spirits.

“I have to figure how to get funds somehow because I don’t have any. I’m not a rich guy. I used to work for a bank, you learn how to borrow money, how to leverage funds and deal with governments and look for investors.”

As one of five LOW shareholders, Manzie said that might involve taking on an equity partner to maintain their growth track. One of the positive spinoffs from the brewery has been to sustain agricultural jobs.

LOW sources its ingredients, like hops, from a farming group in Emo, northwest of Fort Frances.

“Our model is to work with those that are already in the business. We don’t want to compete with anybody, but work through partnerships to shore up their business. When they’re successful, we’re successful.”

In reflecting on his past six years, Manzie thinks about the naivety by which he and his partners took on this project.

“Six years ago I knew nothing. I’m not sure how much more I know now but we’re in it. A lot of what we’ve done is trial by fire. The group that got behind me with this crazy idea, none of us came from beer, with no experience working in the industry.”

Undercapitalized from the start, Manzie said they dug into their pockets, begged and borrowed for financing to add more tanks and upgrade equipment.

“Any money that the company makes goes back into the community (to charitable causes) and goes back into building the business. It’s a very capital-intensive business. A canning line is a half-million dollar investment.”

Most to his relief is the loyal following they’ve developed through the growing pains and frequent staff turnover from those early days. Now with a core staff and the continuity, Manzie said they can now afford to think big.

“We’ve been able to attract and retain some real crackerjacks, and they’re the reason why we’re able to do some of these things and look at bigger projects.”