Flavored Beer Beverages are Helping to Broaden the Market's Appeal

Monday 19 August 2013, Amsterdam

An increased interest in wine and spirits has drawn Canadian consumers away from beer, resulting in a market contraction of 2% in 2012, according to consumer specialist Canadean’s new report: Canada Beer Market Insights 2013. This has been compounded by the recent 20% increase in beer excise rates in Quebec, along with the National Hockey League’s lockout, which shortened the 2012-2013 season by almost 50%, driving a significant decline in sales for major brewers.

For organizations that have a stake in the Canadian beer market, a proper understanding of the broader context of life in Canada, and beer’s place in it, is paramount to successfully capitalizing on the opportunities the market presents.

Beer's Place in Canada’s Economy

The Canadian beer industry is a large factor in Canada’s economy, supplying hundreds of thousands of jobs, putting CAD14 billion into the economy, and representing 1.2% of the country’s GDP.

Whilst consumers have increased their awareness of both personal spending and the nutritional effects of their diets, the beer industry has coped well with these consumer transformations.

The Canadian Consumer Palate

The palates of Canadian consumers have become more sophisticated in recent years: beer is emerging as more than just something that is drunk whilst watching sports, and taking a more prominent role in mealtimes and more general socializing.

Lager is considered more traditional, and the market is heavily skewed to reflect this. 56% of Canadians prefer lager, and 34% prefer ale; craft beer, however, is growing rapidly, and accounts for much of the remaining interest in the beer industry following the expansion of Canadian consumer tastes through the co-option of new food and drink cultures brought on by the increasing diversity of the population.

The Canadian Beer Industry

Canada’s beer industry one of the most tightly regulated in the world, though has a rich history with brand names that first appeared in the 1700s still employed today. Regulations include the imposition of price floors and ceilings, a limited number of standardized package types, sizes and configurations, limited in-trade promotional activity regarding price and position, and restricted availability as retail locations and hours of operation are prescribed.

One consequence of these heavy restrictions on the price, location and packaging of beer in Canada, is the substantial emphasis placed on mass media advertising, support of high profile sports and events promotion and advertising, and involvement in local and regional community activities.  

A further consequence of the restrictive environment in the Canadian beer industry is the limiting of competition in the marketplace, which negatively impacts both the consumer and potential new entrants to the market. Conversely, it does protect the established major producers, and stock government coffers, creating an environment where high margins and lucrative tax revenues co-exist with remarkable stability and negligible protest from consumers. This stability, coupled with the favorable corporate and government returns, and the relatively broad acceptance of the current structure, suggests that the industry will move forward relatively unchanged for the foreseeable future, with the top four brewers holding over 95% of the market.


With the challenging regulatory environment for Beer in Canada, brewers must be highly sensitive to current and emerging trends in the market in order to capitalize on revenue boosting opportunities.

The beer market declined in 2012, driven by consumer migration to wine and spirits, and exacerbated by the tax hike in Quebec and the national hockey lock out. Despite this, the beer industry is becoming more diverse thanks to the growing presence of microbreweries, the changes in consumer tastes for new flavors from various cultures, and the growing pressure to attract female consumers.
 
Craft Breweries

Craft breweries are performing very well as consumers choose specialty products. The smaller breweries have been doing much better than larger breweries, which are seeing much slower growth. This is mainly because consumer tastes and choices are changing; this trend has seen larger breweries begin to buy smaller competitors to offer a variety of traditional and specialty flavors. Craft beer sales have had double-digit revenue growths in the past three years, and now represent 6% of the market and 10% of the industry revenues.

Image Shift

Beer’s image in Canada is undergoing a metamorphosis thanks to shows featuring chefs cooking with beer, and the increasing popularity of beer/food pairings and beer festivals. This popularity is being driven by the diversification of the population and the subsequent impact on culture. Consumers are looking for new beers, and producers have only been happy to meet this demand, with a growing number of breweries starting to offer unique flavors.

Women and Beer

Men currently account for 80% of the beer market in Canada, so breweries are trying to compel more women to buy beer through the introduction of new flavors such as iced tea and lime. Whilst women’s consumption of alcohol has increased however, it is more focused on wine, and with the growth in the wine and spirits market, attracting more women to beer is key for market growth.

Despite this, the diverse product offerings of craft breweries offers hope to the market, with flavored beer beverages targeted at women in particular helping broaden the market’s appeal.