A Brewery’s Unexpected Move into Non-Alcoholic Seltzers

0:00Any founder feels like building something is a core part of their DNA when you're an entrepreneur. So for us to be able to take something that was at that point seven or eight years old and be able to kind of get into startup mode again, it was very rewarding. Hi there, I'm Shuang Esther Shan, and this is Shopify Masters, your companion for starting and building a business. Sometimes product ideas come from unexpected places. For example, a non-alcoholic psalter was born at a beer festival. The brand is called City Seltzer and it's made by Dominion City Brewing in Ottawa, Canada. City Seltzer now makes up 20 % of the company's revenue after just four years and can be found at restaurants and retailers.

0:46Founder Josh McJanet is here to talk about launching a new brand while running the brewery at the same time. Thanks so much for being here, Josh. It's great to be here. Thanks so much for inviting me. Well, I think what's surprising for City Salter is it ironically came to be at a beer festival. You've got to tell us more about that. Yeah, absolutely. So, I mean, really our business started over a decade ago. We've been open for almost 10 years, but we started in a backyard making beer. And it was a passion that became a project that became a business. We were content to make a product we were proud of and, you know, grew along the way from, I joke we were negative three employees to now a team of almost 30.

1:30But along the way making beer, we wanted to make something that was for everyone as well. And the reason this was born at a beer festival was because we threw what we wanted to be Ottawa's greatest ever beer festival. So it was an all-inclusive ticket. We brought our friends from across the beer industry, from across Ontario, Quebec, the United States, a couple European beers on offer. And when you bought your ticket, you weren't lining up for tokens. We were trying to really make an experience that was as seamless as possible. So you had a small glass. You could go walk right up and talk to a brewer and ask them about their product and try whatever you wanted.

2:01And you were there for three hours. So obviously, the risk of overconsumption was on our minds. And we wanted to encourage people to make responsible choices. So we batched up a first-ever orange cream water. Basically, the idea was to make a creamsicle into a sparkling water. and we just put it out and made it available around the beer festival. And we had great feedback after the festival. It was an outdoor February beer festival in 2020, so we narrowly dodged a few boulders. But afterwards, the feedback was all about, you know, that was great. Where can I get more of this orange cream water?

2:35So that gave us an idea that maybe there was more to this than just tempering people's beer consumption.

2:46I'm still not over the fact that you ran a outdoor beer festival in February in Ottawa, but I will let that pass. For those not in the loop, I think we have the world's coldest capital, but for Mongolia or something. So yeah, it was a bold choice. And I think it's also a bold choice to consider launching a new brand while you still have the brewery business. What about this opportunity in Salters that really attracted you to actually build out a brand? Yeah, you know what? I think people have a whole big life and there's time for beer and there's time for bubbles. And I think we wanted to take the philosophy that we bring to making beer and making our product, namely make something we're proud of, make it in a way hopefully that leaves more for having done it than just selling something.

3:39make it for and kind of of our community. And we wanted to bring that to something that my kids could drink and that our fans who aren't drinking could still consume and love. I think it's been really a very fortunate choice. I'd love to say we had a grand master plan that may or may not be true, but I think, you know, the way the last number of years have played out, having a product that can go anywhere, that can be enjoyed by our fans or by people who will never drink one of our beers. It's been fantastic. It's been a really key part of our business and it's been exciting I think any founder feels like building something is a core part of their DNA when you're an entrepreneur.

4:14So for us to be able to take something that was at that point seven or eight years old and be able to kind of get into startup mode again, it was very rewarding. Was there a lot of discussion within the team to keep the same name, Dominion City, or have the discussion of launching this brand new name, City Salter? Was it a big discussion? How did you come to terms with, okay, we're going to do a whole new brand for this? Yeah, good question. To be honest, I remember less debate about the brand. That was something that I think was, you know, driven by those of us on the team that are involved in marketing.

4:50And it was fun to do that. What I do remember, though, is, you know, we have a team of brewers who are very passionate about what they do. And there was a discussion on the team. And I think there was some reluctance at first. It was like, this isn't what we do. You know, what we do is we make beer for people. What are we doing with this? How does this fit in to my purpose?

5:14That was a navigation, I would say. But really, I think once people, we all had our heads wrapped around, we want to make something compelling and delicious. And we want to make it with integrity. And we want to be proud of it. And it just so happens it's not going to have alcohol in it. The team really rallied behind it. And it's that same kind of creative back and forth thing that happens in the process when we're generating a new flavor that I see the team get into when we're, you know, making a new beer. And so in that sense, it feels just kind of like an extension of what we've always done.

5:46Yeah, a little bit existential, questioning your purpose, but you got there. Yes, that's right. I wonder, because you have this network of local eateries, restaurants, retailers, how did you approach distributing City Salter and why did you put things online as well? I mean, when we started the beer business, we literally went from my backyard to a t-shirt printing factory where everything was extremely bootstrapped. And, you know, it was really like our first delivery vehicle was my business partner's personal sedan. And that was the case for a couple of years. And we had a very direct relationship with the bars and the restaurants that took our product.

6:28In the way beer sales work here, unlike in a lot of places, the United States especially, we don't have this kind of middle distributor. You're actually able to sell a keg of beer and drop it off to the bar that buys it directly. So that's been in our DNA. And I think that was a real advantage at the beginning because it was second nature to us to go to the bar manager or the restaurant owner and say, hey, try this. We think it's got a place on your bar. We think that there's a customer segment that's going to enjoy drinking something locally crafted quality, and it's going to go great with the food and the things you're passionate about.

6:58And that direct relationship carried us for the first 18 months of our business. It was literally throwing a couple cases of City Seltzer on top of the keg we were dropping off to the local bar. And then gradually, you know, there started to be a realization you don't need a liquor license to buy City Seltzer. So there's a whole new world of customers out there that we could build a relationship with. But it remained very direct. And in many cases, it still is. In our home market, we're our own distributor. And that's, I think, been a real strength in growing this business. Yeah, amazing. Digging a little deeper on the branding a little bit, because I do feel like there is a distinction.

7:36And also, it was easy, of course, for those who knew about Dominion City to say, yeah, let's take a case of Seltzer. But for those who had no idea about your previous business and City Seltzer, how did you approach actually differentiating the two or creating identities? Yeah, great question. I mean, for those who know our brand in Ottawa, it's sort of inspired by what I call inclusive Canadiana. But I mean, it's sort of our design approach. We work with a local boutique design agency that have been incredible. They're called Northern Army. And I just think that they're the most talented designers in the country.

8:13But that brand is very much of a vibe that if you were at Expo 67 in Montreal, you'd recognize the typeset and the bold lines and the real kind of vintage Canadian logo design of that sort of golden era. City Seltzer feels more like a New York deli or something. It's lighter, it's bright, it's fun. And, you know, I think that was a real deliberate choice to differentiate those things. I suppose we could have made Dominion City water, but I'm really glad we didn't. I think this is going to go further for having really thought about who it was for, you know, what occasions it was for.

8:54Originally, when we thought about it, we actually thought about Shopify. We had a whole discussion about, you know, about a person getting up and going to work in an office where they're in a shared space and, you know, you're brainstorming a product launch meeting in one of those co-working spaces. And there's a, you know, there's a recycling bin full of City Seltzer. You know, we talked about someone who owned their own little business working late hours, wanting something delicious, but, you know, not wanting to consume alcohol and they're gonna have to get up and get back to business again tomorrow morning.

9:19So we thought, you know, this was sort of the use case. And we wanted to capture that in the brand. So it is kind of youthful and entrepreneurial and bright, or we hope it is. Yeah, it is the Shopify drink. I mean, I think it's always out of stock in our fridges. We got to work on that. So whenever it's in stock, we are all vying for it. So yeah, I love the full circle moment. So you decided to have distinct brands between City Seltzer and Dominion City. Has there been anything else surprising about selling and scaling Seltzer that's different from the beer business? Yeah, now that we've been a few years into growing City Seltzer, one of the big differences is just the way that this business is going to grow now.

10:05And I think we've had to come to this realization slowly, but the nature of what's now really going to be a grocery business is we're going to work with a smaller number of very big customers as opposed to what we're used to, which is managing, you know, a very large network of small customers in the beer business. So it's been a shift that we've adjusted to. But to be honest, it's a really fun challenge. And it's invigorating to sort of realize that you're new and not very good at something again. You've got to figure it out. Maybe it's a sickness or something, but I feel like every few years I need that.

10:35And it's definitely done the trick. It keeps things interesting. And also, I feel like that challenge, it's like rebuilding on that purpose and fueling that existential question a little bit as well. I imagine because this beverage can go to so many retail stores, building out those relationships is one of those hurdles and figuring out how to distribute. Do you have any advice for chatting with retail partners and approaching those larger grocery chains and figuring out those relationships? You know what? I'd be an imposter to tell you I've got it all figured out. So I won't do that because I don't.

11:12But one of the things we're mindful of is I think if we're going to win, you know, we're often at a higher price point. Actually, it's really, I think there's an interesting analogy to the beer business when we started. By the time I was having my first beer, we had been through several decades of basically three big companies making essentially one product, and that was beer, some total. And we've just come through a really compelling decade, maybe decade and a half, where that has been flipped on its head. And actually, all the mojo and the creative energy and the initiative was seized by small companies, very differentiated products, local to their own markets, small networks of relationships driving the growth of those businesses.

11:54The fact that there is a small manufacturing business in every local community in our province really tells you something about what beer managed to do from something that was probably the most ossified industry that you could have found, for an example. I actually think we're at a similar moment with our product in City Seltzer. You look at who makes it. There's a very small number of very large international companies, and it's on every shelf at every brand of grocery store. And so what I think is going to work, if this is going to work, and I really believe it will, is we have to reach people and communicate some of that humanity, authenticity, direct connection and purpose bigger than just trying to sell you something for a dollar.

12:32You know, I think I think people want to feel something in the choices that they make. And I think City Seltzer's point of differentiation should be a purpose greater than just us. And that's what we're trying to get at. We try to weave that into the whole makeup of the product.

12:53For us, that means remitting a percent of our sales to Ottawa Riverkeeper. So it's local in our community, but we have one of the greatest rivers, like literally across the street from us. And every time someone's buying one, there is a little bit of that sale that's going back to make sure that there is clean drinking water for all of us for a long, long time to come. It's very cool to get a behind-the-scenes look into City Salter. I'm chatting with Josh McJanet, co-founder of City Seltzer and Dominion City Brewing. I'd like to take a moment to thank you for tuning into today's show. Please take a moment and subscribe or follow Shopify Masters and leave us a review.

13:34Thank you so much. Of course, Cool Melon is my favorite flavor, but there's a ton of different flavors that City Seltzer creates and there's limited edition flavors. Talk to us about how the team conceptualizes and develops these different flavors. Yeah, it's a lot of fun, actually, as far as the process goes. There's kind of a small team within the brewing team that kind of are the keepers of the flame of new flavor development. It's been a really fun element of the business, although it's become, you know, a smaller subset of the business. But we basically every three to four weeks have a new flavor that we make at the brewery that is really intended for a direct consumer customer, you know, just a handful of real close to home customers who are going to take it, you know, eight to 10 cases of something.

14:21The point is, it's not around for very long. And it's meant to be something you haven't tried before. And the hope is the next time you're back, there's something new you haven't tried before. So that process is often inspired by nostalgia, to be honest with you, flavors that you remember. I mean, we haven't made it yet. But But I can tell you that there's been, I have sampled a tiger tail ice cream inspired city seltzer. We've got, you know, fruit flavors. I think the best thing about it is a little bit of a tension between a couple of the elements in there. You know, there's like something obvious pairing all the time.

14:48So often there's, you know, a really accessible or common sort of flavor like a fruit with something a little bit different. So those are a lot of fun. And honestly, we probably mix as many ideas as we actually ever go about making. So there's a lot of creativity in that process. keeps everybody fed and engaged. Because I think that's also a big part of why people join our team is I think that they want to feel like there's an outlet and an expression. I know certainly when I was working at a big company before starting our business, I could have gone on and done that. I think it was on a path that would have worked.

15:21But I really think people want agency. They want to feel like they can have an idea and they're willing to do the work and take it step by step by step. But when you have a team that feels empowered, it's my experience that that just takes you a lot further. So I love that we've kept that going and I hope we never change it. Yeah. I mean, seeing the impact that you have and seeing an idea become an actual viable flavor and a product, that's really cool. How long from idea to canned beverage, how long is that process? Yeah, this is another really big strength, I think, in being as nimble as we are, because we are really quite small, actually.

16:04That process doesn't have to be terribly long because of the way we're doing it. There's this kind of fun, wavy label that gets applied to a blank silver bullet can that comes off our canning line and the product comes out of a tank in our building that's normally reserved for beer. So it can go from a concept and an idea to a kind of beta to a product that we're selling within a month even, which is really cool. And some of the things that we've done have become recurring flavors because they've really hit. And you get that immediate feedback from people. And all of a sudden, you're making larger batches.

16:35And I think down the road, there's probably an argument for larger volumes of like seasonal rotation flavors that come out of this process of having like one-off small batch stuff all the time. So I don't know. I consider that a real strength. If we'd gone about this a different way, maybe we'd started going straight into co-packing. You don't have that luxury. You've got to have a box. It's got to have a barcode. You need months of planning. You've got minimum order quantities. They're going to make everything prohibitive. So that flexibility feels like it's been a real key. And I feel like there's also freedom and flexibility in the fact that you're not just creating with a team.

17:09You're also collaborating with different people. Talk to us about those collaborations. Yeah, I don't know. I mean, at this point in time, I think it's my favorite part of the business.

17:24Don't get me wrong. I love beer. I love what we make. But I think the most rewarding days are the days where we get to make something we're proud of with someone who's got their own project or their own energy that they're bringing to something. And together we make something more. One of my favorite examples of this is we made a, we really had a mission to get to know and work with Ottawa's Black community. So there's a group here that does incredible community building work called Jaku Combat. They run Black entrepreneurial courses. They do youth education. They're really inspiring. and we teamed up with them to make a sorrel-inspired city seltzer.

17:59So for those who don't know, it's common in the Caribbean to drink this hibiscus-infused drinker in Christmas time called sorrel. It's delicious if you've never had it. We basically wanted to capture that essence and make a flavor for them that also fed back to support the work that they do. So we came up with a city seltzer called Cool Runnings. It comes out at Christmas every year and we kick back a portion of the sales to Jakku Combat to support their programming.

18:30That's just been really cool. And to reach, frankly, a community that isn't necessarily just automatically coming through the door of a craft brewery. We do a great job. People who look like me, who wear tight jeans and have facial hair, they get very excited about what we do all on our own. But we have been not as effective as an industry of reaching some of these other communities who love what we make or should love what we make just as much. And so the ability to work together with a great community organization and make something relevant for another community is really, really, really rewarding.

19:01That's so cool. I feel like maybe you already have this, but you need to have a subscription program for like the diehard fans where they just get send new flavors without even knowing what they are. That would be really cool. Yeah, we'll sign you up. Sounds good. Sounds good. I mean, I do have the privilege of being in an office that was connected to City Salter, and therefore I had the chance to taste and experience it. I guess one of the hurdles for you is outside of the bars, outside of those relationships, for someone who's never heard anything by Dominion City or City Salter, how are you getting them, like, one, aware of the brand and also try to take a chance and taste some of your products?

19:47Yeah, we don't have an enormous, you know, national advertising budget or anything like that. But some of the things I think that have worked really well is when we get out in the world and we put the product in someone's hand and we can kind of convey our real enthusiasm and excitement for it. But one of my favorite things that we did was we went to Toronto and popped up at a festival a couple years ago, Music and Arts Festival. And we were there for a day under our tent. And we literally just brought about 10 ,000 cans of City Seltzer. And everybody at the festival, from kids to parents to anybody else, was drinking one.

20:21And it was really cool. A few years ago, we made kind of like a Dickie D bike. It's got a cooler on the front. So we were biking through this music festival and handing out Free City Seltzer. And to this day, there's probably not a week that goes by where I don't get an Instagram message or an email from somebody about how they discovered us there. So I think finding those occasions where people are having a great time and finding a way to take what you do and make it, you know, authentic to those moments, I think that's where you forge some sort of real connection with people. So those are my favorite ones.

20:53I mean, I have a personal connection to Ottawa because I did my undergrad there. A lot of my great friends are still there. So I visit often. So the city means a lot to me. But I guess to our listeners who might have not been to Ottawa or not known a lot about it, it's not known as a thriving entrepreneurial city, despite Shopify being born there. But talk to us a little bit about the startup community there and how important the city is to the brand as well. Yeah, I'm so glad you asked this. Yeah, before Shopify was everywhere on their press releases, they were in Ottawa. And if that's not enough to change people's minds about the entrepreneurial scene in this town, I don't know what will be.

21:38But I digress. I moved to this town to go to journalism school longer ago than I care to admit now. But my plan was never to stay, I thought, for sure. I'm getting out of here. I'm going somewhere bigger where the lights are brighter. But this town is a way of getting its tenterhooks into you and keeping you. And there are good reasons for that. I don't know a city that's got nature as close. I don't know a city that's got the ability to be on the water within five minutes from like your home or office and feel like you're in the middle of a national park. There's so much going for it. And one of the things people don't know about it is I think partly maybe because the federal government is such a big employer in Ottawa.

22:15and so many people maybe have that security going on, but there's actually a ton of people working on a side project. And if you look for it, the community's just big enough that there's at least one of everything. You know, there's like teeny little communities of people who are passionate about their thing and there's stuff happening under the surface. So I don't know, not to be tongue in cheek, but somebody told me once that boring people think Ottawa is boring. And I think there's a lot of truth to that because in my experience, there's just so much happening here. And it's really been what's kind of fed the growth of both of these businesses is just finding cool people, doing exciting things, and cheating our way in.

22:50And I always say if we made like blinds for a business or something, it would be very difficult to make our thing part of your thing. But beer and bubbly water tends to have a way to do that in a fairly low effort way. Yeah. And I feel like the millennials of Ottawa, at least all of my friends, they love supporting local businesses. There's always a version of anything you want it created by locals. So they go out and seek out those businesses and support them in any way. So it's been always fun revisiting. So we chatted about how the business supports Ottawa River Keeper, and you're trying to incorporate more sustainable and responsible business practices like investing in electronic vehicles and using renewable power.