Steelback Brewery spent $101M it did not have on marketing — then went bankrupt

Steelback Brewery was founded in 2004 by Frank D'Angelo, owner of the D'Angelo Brands beverage company, with financial backing from billionaire Barry Sherman, founder of Apotex. The brewery was built in Tiverton, Ontario, on the shores of Lake Huron. It launched with an expensive local TV advertisement during Super Bowl XXXVIII in February 2004.

D'Angelo spent extravagantly on marketing and sponsorships. Steelback bought naming rights for an arena in Sault Ste. Marie (the Steelback Centre, $1.35M over 10 years), sponsored the Grand Prix of Toronto, and signed Formula One sponsorship deals. Marketing costs alone exceeded revenue. Beer quality was poor and the Canadian dollar was weak against the US dollar, squeezing margins.

By November 2007, Steelback and its parent company D'Angelo Brands owed Sherman's holding company Wasanda Enterprises $101.2M and filed for bankruptcy protection. The naming rights payments had largely gone unpaid. The company attempted to revive the defunct CFL team Ottawa Renegades under the name 'Ottawa Steelback' in 2006, but the bid was declined and widely seen as a publicity stunt.

The brewery was relaunched in May 2008 under new ownership with Jonathon Sherman, Barry's son, as CEO. The strategy shifted to 'craft beer at mainstream prices' with modest local marketing. But sales remained low and the brand could not recover. In July 2009, 35 of 39 staff were laid off. The brewery closed quietly in January 2010 with no official announcement.