Canadian brewers, both big and small, are still facing some stiff headwinds. In a period of stagnant growth and uncertainty, brewers are focusing on structural changes, innovation and brand awareness to boost top- and bottom-line growth.
By volume, beer sales declined 2.8 per cent to 2,061 million litres in 2021/2022, which is equivalent to 3.7 standard bottles of beer per week per person of legal drinking age. This was a new all-time low for beer volume sales per person since Statistics Canada began tracking alcohol sales in 1949. Also, the total value of beer sales by liquor stores, agencies and other retail outlets fell 0.7 per cent to $9.1 billion in the 2021/2022 fiscal year, the third consecutive annual decrease.
Additionally, beer accounted for 34.9 per cent of total alcohol sales by value in 2021/2022, followed by wine (31.3 per cent), spirits (25.8 per cent) and ciders and coolers (eight per cent). Although beer remained in the top spot, it has steadily been losing market share to the other beverage categories. Over a 10-year period, beer has lost 8.8 per cent of its market share, the majority of which was gained by ciders and coolers (up five per cent), followed by spirits (up 2.5 per cent) and wine (up 1.3 per cent).
“[At the onset of the pandemic], the [craft beer industry was already showing signs of] saturation,” says Gary Lindsay, director of Marketing and Sales at Driftwood Brewery. “There was a lot of new and aspiring breweries focusing their efforts on experimental styles and releasing products that barely resembled beer, which attracted a consumer base that wasn’t interested in beer, but the flavour of the month.”
Coping Under Pressure
Brewers are facing intensifying inflation and supply-chain pressures. As a result, inflationary pressures are passed onto consumers.
“I’ve never seen inflation impact the cost of our materials the way it has over the last 18 months,” says Brad Goddard, VP of Business Development, Innovation & Government Relations, Big Rock Brewery. “Pre-pandemic, we saw annual price increases. Now, we’re seeing quarterly price increases. Overall, aluminum cans are up between 20 and 40 per cent; cartons are up 60 per cent; logistics/transportation costs are up between 100 to 150 per cent; and barley is up 50 per cent.”
Lindsay says Driftwood’s costs for raw materials have increased between 20 to 40 per cent, noting CO2 supply is also in question.
Brewers must also contend with new labelling and packaging requirements, such as the prohibition of the sale of products in plastic-ring carriers by June 2024.
“It’s been tough for the industry to find a Hi-Cone alternative that’s affordable,” says Goddard. “We’ve been talking with our suppliers about introducing a paper-can holder, but getting quoted 40- to 58-week lead times.”
On a positive note, the federal excise tax on alcohol was temporarily capped at two per cent in April instead of a planned 6.3-per-cent increase.
Marketing Mix
Goddard says Big Rock Brewery is debuting three non-alcoholic beers on draught at the Calgary Folk Festival in July.
“Draught is a great way to trial innovation in the beer world because you don’t need any labels. All you need is a name, a steel keg and some willing consumers,” says Goddard. “We’re focusing on getting back to what we call ‘Liquid on Lips.’ Allowing consumers to try before they buy is probably most effective marketing strategy all craft brewers have, and the pandemic took that tool away from us.”
“With beer sales declining, we have to be innovative, we have to be creative and we have to try new things to re-introduce consumers to our products, even if they’re in a different category,” said Manjit Minhas, owner and CEO, Minhas Brewery & Distillery.
BY NICOLE DI TOMASSO