40-year-old B.C. brewery closing facility after 35% rent hike

One of the oldest craft breweries in British Columbia is shutting down its main facility and outsourcing production and packaging duties to a nearby brewery, citing a large hike in rent at its Victoria location. 

Vancouver Island Brewing, which was established in 1984, will be closing its main brewery plant on Government Street on Nov. 1, while its taproom will stop serving on Sept. 14.

General manager Thom Riley says the decision was driven by a 35 per cent hike in rent at the location.

"It creates a line in the sand for us in terms of our ability to go forward in our current location," he told CBC News. 

The brewery has signed a deal with Phillips Brewing & Malting Company to produce its line of craft beers, and Riley says the ingredients and recipes for all Vancouver Island Brewing products will remain the same. 

"For our consumers, there's not going to be much change … it's really just where the beer is brewed and packaged that's going to be changing," he said.

However, the new production deal means the company will be laying off about 15 employees, a decision that Riley says has been "incredibly difficult" to make.

The changes to the 40-year-old establishment coincides with rising concern from many craft breweries on Vancouver Island and beyond, who say they are being squeezed by rising costs and a slump in demand. 

WATCH | Craft breweries struggle to stay afloat:

Craft brewers struggle to stay afloat amid soaring rents, dropping sales

12 months ago

Duration 1:56

The affordability crisis is hitting Canada’s craft beer industry hard as soaring rents and declining beer sales are pushing some brewers to the edge. Some entrepreneurs say if things don’t turn around, they’ll probably go out of business.

According to Statistics Canada, the volume of beer purchased per person in the 2022-23 fiscal year dropped to the lowest number since it started collecting that data in 1949. 

"There aren't enough people buying beer to support … breweries that are in B.C. to a sustainable level," said Ben Thomas, co-owner of Lighthouse Brewing Company in Victoria.

He said Lighthouse had to let go 12 of its 20 employees last November.

"In a nutshell, the cost of almost everything has gone up: raw materials, wages, utilities," said Thomas — who added that craft breweries are reluctant to pass on those costs to customers.

"If we did, we would sell even less beer," he said. "Nobody wants to buy a $20 six-pack, so we have to eat a lot of those costs."

Brewers are, however, trying to stay optimistic using creative ways to stay afloat, says Thomas.

For some, that means pivoting away from brewing altogether. 

Swans Brewery, which opened in downtown Victoria in 1989, recently decided to halt its brewing operations and will instead focus on its adjoining hotel and pub. It now aims to serve more than 40 beers on tap from other breweries and a selection of cocktails.

"It allows us to really give our guests what they've been asking for, which is a bigger selection for when they come down to the pub," Swans owner Mike Boyle told CBC's On The Island last week.

The shift in demand and interest from consumers is a sobering fact for pioneering craft breweries like Vancouver Island Brewing, but adapting to the changes is key, Riley said.

"We have to find a creative way of being able to keep the brand and the legacy of the brewery alive," he said. 

"Lots of breweries are going into new avenues like non-alcoholic and ready-to-drink cocktails and things. This is all breweries adapting to the change ... finding new ways of operating to continue to survive."

On The Island6:50Swans Brewery set to turn off taps at the end of August

The second oldest brewpub in BC has decided to close its brewery. Swans owner Mike Boyle joins On The Island to discuss this decision, as well as what Swan's brewery has meant to the history of craft beer in the province.