A new Industry Trends report on Canada’s brewing sector casts doubt on the long-term viability of the industry in the face of changing consumer tastes and economic interruptions such as the current COVID-19 crisis. The report cites ‘intense competition’ among a record number of breweries as the root cause of the sector’s vulnerability…
The Canadian brewing sector faces an uncertain future, even without the disruption
to the bar and restaurant industry due to the COVID-19 lock down…
Even without the COVIDF-19 crisis that has closed bars and restaurants, the report says Beer consumption was already declining, placing the future of the Canadian brewing industry in a state of uncertainty.
According to a Beer Canada news release: “The number of breweries operating in Canada hit an all-time high of 1,123 in 2019, nearly triple the number in operation just five years ago. Canadian beer drinkers have an unprecedented number of beers to choose from. […] More brewers selling into a smaller market translates into intense competition. Canadian brewers face this and many other challenges – changing demographics and consumer tastes, the high overall tax and price of the product and now, the effects of an unprecedented global crisis impacting health, jobs and business.”
Quick facts:
- In 2019, 87% of beer sales were products of 5.5% alcohol by volume or less.
- Per capita beer drinking slid to 71.2 litres from 79.5 litres five years ago.
- Saskatchewan had the sharpest year-over-year decline in Beer sales, down 7.8%.
- Every province saw Beer sales decrease in 2019, with national total sales down 3.0%.
COVID-19 a clear and present danger
“Canadians are facing an incredible challenge in confronting the COVID-19 pandemic and brewers have stepped up to contribute wherever possible. Whether it’s the production of hand sanitizer for front-line workers, donations to those who are most vulnerable or by supporting the restaurant and hospitality sector. […] Yet, the future of the beer industry is unclear. Beer’s most popular selling season is around the corner and patios and pubs are shut down, and sports, festivals and social gatherings have been cancelled.”
Brewing industry not ‘small beer’
The coming ‘COVID-19 Summer’ is expected to have severe, direct impacts on the industry and Canadian brewers, who directly employ 15,000 Canadians and pay nearly $1 billion in salaries and wages, the organization stated. They also support a large supply chain across the country, contributing to the livelihoods of hospitality and foodservice employees, farmers, bottle and can manufacturers, distributors, tourism and countless others connected to the Beer industry. Beer Canada members account for 90 per cent of the Beer produced in Canada. The sale of Bbeer supports 149,000 Canadian jobs, generates $14 billion in GDP and $5.7 billion in government tax revenues.
My take
Clearly, the Beer sector is in bad shape, but the other major sectors in the beverage Alcohol industry – Wine and Spirits – have to contend with the same issues during the COVID-19 crisis, and the booze sector overall is reporting soaring sales. Accordingly, a recent report on consumer activity revealed that we are all drinking more, as a society, during the stay home lock down. With that taken into consideration, the brewing sector might be in even worse shape than the Beer Canada report suggests.
Industry sales figures over the past few years have seen a downturn in overall Spirits and Beer sales in the face of a new renaissance in Wine popularity. Winemakers have made huge strides in marketing and product innovation over the past decade. It’s time for the Beer sector get off its duff (Sorry, Simpson’s fans!) and take up the challenge.
~ Maggie J.