A Refreshing Difference: Big Rock’s Ed McNally is the 2000 Alberta Marketer of the Year
Alberta Venture bestows the designation of Marketer of the Year on an individual whose business philosophy and practice demonstrates his commitment to the role of marketing as an integral component of success. We are pleased to name Ed McNally, chairman and CEO, Big Rock Brewery, as the 2000 Alberta Marketer of the Year.
by Alberta Venture Staff
[Article originally posted in 2000]
Ed McNally, chairman and CEO of Calgary’s Big Rock Brewery, likes to tell the story of how he started his craft brewery 16 years ago. The story goes that McNally, at the time a lawyer and barley farmer, was sharing a few brews with his old friend, Swiss businessman Otto Leverkus. “Otto told me he liked Canada but hated the beer.” After more spirited discussions about the failings of Canadian beer, McNally turned to Leverkus and suggested they open a brewery.
McNally says he forgot the conversation until several weeks later when Leverkus called from Switzerland to say he had found an experienced brewmaster for their proposed brewery, and that he would be arriving in Calgary shortly. “The next thing I knew, Bernd Pieper arrived in December and I was brewing beer by the following September.”
It’s interesting to contrast McNally’s anecdotal tale with the official corporate history that appears on the Big Rock website. It talks about the brewery’s founding in 1984 in terms of market studies, packaging and worldwide ads for a brewmaster.
The difference in the two scenarios highlights the two realities of Ed McNally: The image of a flamboyant, maverick entrepreneur and the underlying reality of a savvy businessman blessed with unparalleled marketing instincts.
That’s an image familiar to Mogens Smed, founder and CEO of Smed International furniture in Calgary and a Big Rock director. “Ed doesn’t like to come across as a conventional business person,” says Smed, “but behind it all, he really is very conventional about his business.” Smed also calls his longtime friend one of the most “intuitive” business men he has ever met.
In many ways, the story of Big Rock exemplifies this contrast. It’s a story of how McNally achieved conventional business success using unconventional methods born of his instinctive business sense. He has built Big Rock from a microbrewer with eight employees into a major craft brewery which last year sold $22.7 million worth of its product into markets across North America. And he has done it his way, without relying on expensive mass media advertising or textbook marketing techniques.
His initial choices of marketing strategies were dictated by money, or more specifically, the lack of it. In 1984, the Alberta economy was still depressed from the effects of the federal government’s National Energy Program, and financing was hard to come by. It was McNally’s family and close friends like Leverkus who provided most of the approximately $1 million he raised to start Big Rock.
McNally was convinced there was a market for unpasteurized, naturally made, high quality beer, but he was taking on big time competition in the form of Molson’s and Labatt’s who controlled virtually all of the market. Making a good beer wasn’t enough; McNally had to differentiate his product to consumers. Or as he says: “When a symphony orchestra is playing, the only way you can stand out in your corner is by doing something different so everybody will notice you.”
McNally quickly came up with one differentiation technique: put his beer in bottles and one without the twist-off caps prevalent in the marketplace. It kept the beer fresher and prevented tampering, but more importantly it made them stand out among the ranks of mostly canned product on liquor store shelves.
Next came the now famous Big Rock labels. Wanting to give people something to talk about and desperate to make his beers stand out, the brewer hired local artist Dirk Van Wyk who pioneered the concept of beer labels as art with a series of quixotic and unique designs.
McNally looked for more simple, inexpensive marketing strategies and came up with the idea of giving his brews distinctive and often cheeky names like Warthog, Grasshopper and Cock o’ the Rock Porter. The story of how Grasshopper got its name is another vintage McNally tale: “We were brainstorming a name for our new wheat beer when somebody said, Ed, you’re a farmer. What do you think about when you think about wheat? I said grasshoppers. When I get a bumper crop of wheat, I get a bumper crop of grasshoppers. Everybody loved the visual image. They thought I was a marketing genius.”
Perhaps McNally’s quirkiest idea was the Eddies, a contest for amateur videos he devised seven years ago “to get some ideas”. This year 2,000 of Calgary’s glitterati showed up at what Calgary Herald entertainment columnist James Muretich calls “Alberta’s Oscars”, to drink Big Rock beer, view the 24 finalists and raise $20,000 for charities. The eponymous Eddies have also helped make McNally an icon to local beer drinkers.
Big Rock has also hewed to its own line in terms of sponsorship. Unable to afford big time sports sponsorships in its early years, Big Rock was more likely to be associated with the arts and events such as the Edmonton and Calgary Folk Festivals. Today, the brewery sponsors minor and adult league sports teams, but continues with unconventional sponsorships like that of this year’s Vancouver to Maui yacht race.
Special brand beers were another marketing strategy developed by McNally’s fertile mind. Big Rock stated with centennial beers for the Banff Springs and Chateau Lake Louise hotels in the 1980s and the Cold Cock Winter Porter for the 1988 Winter Olympics. Currently, Big Rock bottles Canvasback for Ducks Unlimited and Chinook Pale Ale for the Pacific Salmon Foundation, with a percentage of sales going to each organization. Say McNally, “It lets others do our promotion for us while we ride on their shirttails.”
Big Rock’s guerilla advertising tactics were effective, but McNally is the first to admit that even the savviest marketer needs some luck. Big Rock got a major break in the summer of 1986 when employees at Alberta’s major breweries went on strike. It was a hot summer and thirsty beer drinkers grabbed cases of Big Rock as fast as the brewery could produce them. Alberta drinkers obviously liked what they tasted; by year’s end, Big Rock’s sales had doubled.
Two years later, Lady Luck again took a hand when McNally Extra was featured on the cover of Michael Jackson’s World Guide to Beer, one of the most renowned beer guides in the world.
That mention in Jackson’s book was important to McNally for much more than valuable publicity. That’s because the man is genuinely passionate about beer. It was his lifelong love of a well-made brew that led him to found Big Rock at age 60 when most men would have been thinking about retirement. As a director of the Alberta Barley Growers Association, McNally realized there was a connection between what he saw as the bland, standardized product brewed by the big breweries and the fact that Alberta’s best malt barley was being shipped overseas. “The major brewers were using more corn and wheat to give them a lighter and cheaper beer, but the best beers have to have 100% malt.” He decided to make his beer according to the holy writ of brewing, the Bavarian Pure Beer Laws of 1516.
Bob Scott, a principal with ASCOT, a Toronto research and marketing firm and a longtime Big Rock watcher, says McNally couldn’t have picked a better time to launch a premium brewery. In Britain, the “real beer” consumer revolt was driving drinkers from the standardized beers of the big breweries to the natural, unpasteurized products made by smaller breweries and individual pubs. In the U.S., Fritz Maytag had bought San Francisco’s Anchor Stream brewery with the intention of bringing back the historic beer flavours of the California Gold Rush.
McNally had noted these trends and had visited the Red Hood craft brewery in Seattle and Spinnaker’s brewpub in Horseshoe Bay near Vancouver to find out how they produced and marketed their premium beers.
Scott says McNally also made a “revolutionary” decision when he decided to market ales in a province where lager was king. The decision paid off, however, and it wasn’t until 1999 that Big Rock introduced its first lager to the market.
Alastair Smart, Big Rock’s first salesman, and still a senior sales rep with the brewery, recalls his boss telling him: “If you’re gonna sell the product, you have to get it in their mouths.” To get it in their mouths, McNally first had to get it in the pubs, and he believed the way to do that was to provide exemplary customer service.
In the mid-1980s, says Smart, the big breweries were trying to get out of the draught business because of the expensive refrigerated systems it required. McNally decided to target the market his competitors were abandoning. “We would deliver to the places that only wanted one keg a week,” recalls Smart, “and we provided next day delivery when the big breweries made pubs order a week in advance. There were lots of Friday nights when every employee leaving the brewery, including Bernd and Mr. Mac, had casks to deliver on the way home.”
Smart says McNally also turned accepted sales strategy on its head. While other start-up breweries were selling to taverns and hoping to work up to larger establishments, Smart says, “Mr. Mac started at the top of the pyramid with places like the Westin Hotel, the Palliser and the Ranchman’s Club. He made a lot of those sales calls himself.”
The Big Rock sales force continues to play a key role in McNally’s marketing strategy, and has been expanded significantly over the last two years. “They’re our best advertising,” says McNally. “They go out there and bond with our customers and the community.”
As the company has grown (it went public in 1993), so has the money available for more traditional advertising and marketing strategies, but it wasn’t until 1998 when Big Rock hired an agency of record to design a traditional billboard and radio ad campaign. Part of the reason for the delay was McNally’s belief that while agencies did excellent work for the big brewers, they couldn’t relate to his company’s quirky image. “I can’t do the same advertising as the big guys. If Big Rock advertises like everybody else, people will start to say that our beer must be the same, too.”
That’s one of the reasons why this year McNally has returned to handling most of Big Rock’s advertising and promotions in-house, using ad agencies and consulting companies only for specific projects.
Bob King, former chief executive of the Alberta Gaming and Liquor Commission, and the man McNally hand-picked to replace him as president in 1999, says Big Rock will be continue to be “vigilant” about where and how it spends its advertising dollars. “Advertising is expensive and as a small company we need to get the biggest impact for our small amount of money.” To King and his boss, conventional advertising obviously remains only one component of their overall marketing strategy.
However, ASCOT’s Scott thinks this approach may have backfired on the brewery earlier this year. Only weeks after announcing ambitious plans to launch its successful new lager Kӧld into Texas, Big Rock pulled out of the Lone Star state. Scott believes that Big Rock might have succeeded if it had adapted its strategies to the new market. “Their guerilla marketing tactics have worked in Alberta where Ed McNally is a huge personality and where he is very much identified with Big Rock,” says Scott. “Outside of Alberta, they are going to have to look at marketing tactics that fit each individual market.” As additional proof, he points to Big Rock’s performance in the Ontario market, which it entered in 1996. “During those years there has been a tremendous growth in the premium beer market in Ontario, and they have failed to have an impact, especially in Toronto.”
For his part, McNally says the problem in Texas was dealing with big distributors who didn’t understand Big Rock. The brewery was also unable to provide enough product for the major grocery chains supplied by the distributors. Still, he’s confident Big Rock will return to the Texas market, this time using the smaller specialty food distributors.
For the time being, McNally and King are concentrating their marketing efforts on “complimentary” markets closer to home such as the Pacific Northwest and Saskatchewan. And although 75% to 80% of Big Rock’s sales continue to be in Alberta, those sales have increased 18% in the last year despite a flat growth rate in the provincial beer industry. McNally’s goal within the next few years is to increase the brewery’s current output of 130,000 hectolitres a year to 300,000.
To handle Big Rock’s continuing growth, McNally built western Canada’s most technically advanced brewery in southeast Calgary in 1995. The new plant, which has three times the capacity of the original, was designed in typical Big Rock fashion. Instead of hiring architects and consultants, McNally asked his two brewmasters to design the facility. The result, says Big Rock’s CEO, is “a plant that cost us less than $100 per hectolitre of production compared with $500 per hectolitre.”
Throughout the past 16 years, Ed McNally has become Big Rock Brewery in the minds of many Albertans. But now at 75, he says he wants to reduce his involvement, a decision he signalled when he hired Bob King as president in 1999. “I think I’ll be filling a different role now. I may be more valuable working from a distance, supporting their ideas and giving them philosophical guidance.”
Not everybody is sure that McNally can really pull back from the brewery he created. Brit Petersen, Big Rock’s marketing co-ordinator, says McNally still routinely works a nine-to-five day, and continues his habit of working directly with his staff on every aspect of the business.
Mogens Smed is also skeptical. “Big Rock is Ed McNally. That’s not going to change.”