Breweries in Canada: Industry Report

Breweries in CanadaFebruary 2016 1
WWW.IBISWORLD.CA
Going flat: Changing drinking patterns and low

international demand will limit revenue growth
IBISWorld Industry Report 31212CA
Breweries in Canada
February 2016
Nick Petrillo
2 About this Industry
16 International Trade
Industry Definition
19 Business Locations
Main Activities
Similar Industries
21 Competitive Landscape
34 Industry Data
Additional Resources
21 Market Share Concentration
34 Annual Change
21 Key Success Factors
34 Key Ratios
4 Industry at a Glance
32 Industry Assistance
34 Key Statistics
21 Cost Structure Benchmarks

23 Basis of Competition
5 Industry Performance
24 Barriers to Entry
Executive Summary
25 Industry Globalization
Key External Drivers
Current Performance
26 Major Companies
Industry Outlook
26 Anheuser-Busch InBev
11 Industry Life Cycle
27 Molson Coors Brewing Company
13 Products & Markets
29 Operating Conditions
13 Supply Chains
29 Capital Intensity
13 Products & Services
30 Technology & Systems
15 Demand Determinants
31 Revenue Volatility
15 Major Markets
31 Regulation & Policy
35 Jargon & Glossary
www.ibisworld.ca | 1-800-330-3772 | info @ibisworld.ca
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About this Industry

Industry Definition
The Breweries industry primarily

produces alcoholic beverages, such as
beer, malt liquor and nonalcoholic beer,
using water, barley, hops, yeast and
Main Activities
The primary activities of this industry are
other occasional adjuncts.

Manufacturers of wine, spirits and other
alcoholic beverages are not included in
this industry.
Canned beer production

Bottled beer production
Draught beer production
Non-alcoholic beer production
The major products and services in this industry are
Bottled beer
Canned beer
Draught beer
Similar Industries
31211aCA Soda Production in Canada

Establishments in this industry bottle, cap and market carbonated and uncarbonated soft drinks. Soft drink
manufacturers often operate in the market for bottled water production.
31211bCA Bottled Water Production in Canada
Establishments in this industry purify and bottle water for resale.
31211cCA Juice Production in Canada
Establishments in this industry manufacture fruit and vegetable juices. This industry excludes producers of
functional drinks, ready-to-drink teas and flavoured water products.
31214CA Distilleries in Canada
Establishments in this industry distill ingredients such as grains, potatoes and sugars into spirits. These spirits
are then bottled and sold.
44531CA Beer, Wine & Liquor Stores in Canada
Establishments in this industry include government outlets and specialized stores licensed specifically to sell
alcoholic beverages for off-premises consumption.
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About this Industry
Additional Resources
For additional information on this industry

www.beercanada.com
Beer Canada
www.brewersassociation.org
Brewers Association
www.brewers.ca
Brewers Association of Canada
www.bmbri.ca
Brewing and Malting Barley Research Institute
www.homebrewers.ca
The Canadian Amateur Brewers Association
IBISWorld
writes over 400 Canadian

industry reports to help you make
better business decisions, faster. To
see all reports, go to www.ibisworld.ca
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Breweries in Canada February 2016
Industry at a Glance
Breweries in 2016
Key Statistics
Snapshot
Revenue
$6.7bn
Annual Growth 11-16
Annual Growth 16-21
Profit
Exports
Businesses
0.1%
4.9%
$552.4m $223.9m 351
Per capita disposable income
Revenue vs. employment growth
Market Share
Anheuser-Busch
InBev
31.0%
15
4
2
% change
Molson Coors
Brewing Company
26.9%
% change
10
-2
-5
-10
Year 08
10
Revenue
12
14
16
18
20
22
-4
Year
09
11
13
15
17
19
21
Employment
SOURCE: IBISWORLD
p. 26
Products and services segmentation (2016)
9.7%
Draught beer
Per capita disposable

income
Per capita alcohol
consumption
World price of wheat
47.4%
World price of aluminum

Canadian-dollar effective
exchange rate index
Canned beer
42.9%
Bottled beer
p. 5
SOURCE: IBISWORLD
Industry Structure
Life Cycle Stage

Revenue Volatility
Mature
Medium
Regulation Level
Heavy
Technology Change
Low
Capital Intensity
High
Barriers to Entry
High
Industry Assistance
Low
Industry Globalization
High
Concentration Level
Medium
Competition Level
High
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 34
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Industry Performance
Executive Summary | Key External Drivers | Current Performance

Industry Outlook | Life Cycle Stage
Executive
Summary
Over the past five years, the Breweries

industry benefited from massive growth
in the popularity of craft beer. Although
this resulted in large revenue and
enterprise growth from a range of new
small-scale breweries, consumers have
shifted away from the traditional light
and premium beer brands that currently
represent the vast majority of sales for
the industrys largest brewers.
Consumers are increasingly electing to
buy less beer in exchange for higherquality brands or, in some cases,
reducing purchases of alcohol altogether.
Due
to changing preferences, consumers

have shifted away from traditional light and
premium beer brands
Although industry revenue is expected to
grow at an annualized rate of 4.9% to
$6.7 billion over the five years to 2016,
growth in the number of new breweries
has stabilized since surging in 2013.
Consequently, industry revenue is
projected to grow only 0.9% in 2016.
Major industry players, AnheuserBusch InBev (AB InBev) and Molson
Coors, are expected to generate the
overwhelming majority of industry
revenue in 2016. The planned merger
between AB InBev and rival brewer
SABMiller will likely result in the latter
company relinquishing its majority stake

Disposable income growth is an
important indicator of industry growth
because greater purchasing power
bolsters consumers discretionary
alcoholic beverage purchases. During
periods of economic growth, rising
disposable income may encourage
consumers to purchase either more beer
or higher-margin brands. Per capita
in the North American MillerCoors joint

venture that it operates alongside Molson
Coors. International brewers have been
significantly pressured because they
depend on high-volume sales of their
respective flagship value products,
Budweiser and Molson Canadian, two
brands that have experienced stagnant
growth due to the growing popularity of
craft beer. As industry players continue
to innovate and market new products,
profit is expected to account for 8.2% of
revenue in 2016. IBISWorld projects that
the price of wheat will remain relatively
steady during the next five years,
increasing at an annualized rate of only
0.2%. However, brewers may lose some
profit due to increasing price-based
competition and a projected 3.5%
annualized increase in the cost of
aluminum over the next five years.
The Canadian dollar has struggled in
comparison with its largest trading
partners. The increasing strength of the
US dollar has made Canadian beer
relatively more expensive for US
consumers, thereby reducing industry
exports across its southern border. The
continued strengthening of the US dollar
will contribute to poor trade performance
for an industry that is already
experiencing waning interest among
consumers in the United States.
Consequently, industry revenue is
forecast to expand at a minimal 0.1%
annualized rate to $6.8 billion by 2021.
disposable income is expected to increase

in 2016, representing a potential
opportunity for the industry.
Per capita alcohol consumption
The average consumers alcohol
consumption patterns can serve as an
indicator of demand for industry
products. Consumers cultural and taste
preferences can reduce drinking
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frequency and affect sales of beer. For

example, many people drink
occasionally due to personal preference
or for health reasons, which reduces
alcohol consumption and, therefore,
total sales volume. Per capita alcohol
consumption is expected to decrease
slowly during 2016, posing a potential
threat to the industry.
World price of wheat
Malted cereal grains such as barley, rye
and wheat are the primary ingredients
required to produce beer. Therefore,
sudden increases in the price of wheat
and barley will impose a significant cost
burden on industry brewers; increases in
the global price of grain erode industry
profit margins. The world price of wheat
is expected to decline in 2016.
World price of aluminum
Aluminum canning is a very popular
method of packaging beer. Aluminum
cans have historically been the most
cost-effective container for holding beer
and limiting the beers exposure to flavordamaging UV rays. An increase in the

world price of aluminum will lead to
higher costs for brewers who
predominantly ship their products in
aluminum cans instead of glass bottles.
Consequently, rising aluminum prices
hamper industry profitability. In 2016,
the world price of aluminum is projected
to decline.
Canadian-dollar effective
exchange rate index
The Canadian-dollar effective exchange
rate index (CERI) is a weighted average
of bilateral exchange rates comparing the
Canadian dollar with the currencies of
the countrys largest trading partners.
The CERI uses the US dollar, the Euro,
the Japanese yen, the UK pound, the
Chinese yuan and the Mexican peso in its
index. Depreciation in European
currencies will likely encourage faster
appreciation in the US dollar. As a result,
the Canadian dollar and the CERI are
expected to decline over 2016.
Per capita alcohol consumption

4
108
106
Liters
% change

continued
0
-2
-4
Year
104
102
09
11
13
15
17
19
21
100
Year 06
08
10
12
14
16
18
20
SOURCE: IBISWORLD
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Current
Performance
An evolving industry
Over the past five years, changing

consumer preferences have boosted
industry growth. Per capital alcohol
consumption among Canadians has
declined an annualized 0.2% over the
five-year period, although substantial
growth in the popularity of new craft
breweries has propelled the industry in
recent years. IBISWorld expects industry
revenue to increase at an annualized rate of
4.9% to total $6.7 billion in the five years to
2016; however, this industrys recent
explosive growth has begun to plateau.
Consequently, industry revenue in 2016 is
projected to increase a slim 0.9%.
% change
The entire North American market for

beer has experienced drastic change over
the past five years. Major international
brewing companies such as Anheuser
Busch InBev (AB InBev) and SABMiller
have either acquired or merged with large
North American brewers that historically
represent a large group of domestically
owned and operated brands. In recent
years, however, many small-scale,
independently owned breweries have
entered the industry. Although this has
not resulted in any significant industry
decline, an emerging disparity exists
between large international brewers and
their smaller domestic competitors.
Profit, which is measured as earnings
before interest and taxes, is projected to
represent 8.2% of revenue for the average
brewery in 2016. Both AB InBev and
Molson Coors, however, boast profit
margins that substantially exceed this

average. Due to the economies of scale
that come with major brewing operations
across the country, the industrys
largest players hold tremendous market
share in the industry despite concerns
that the popularity of standard
premium beer is waning.
As a result of these structural
changes to the industry, the number of
breweries in Canada has increased
significantly. The total number of
brewing enterprises is projected to
increase at a 10.5% annualized rate to
351 in the five years to 2016. Industry
employment is expected to grow an
annualized 0.1% over the same period
to 8,805 workers in 2016, indicating
that the vast majority of the industrys
new enterprises are small-scale
breweries with very few employees.
Industry revenue
15
10
5
0
-5
-10
Year 08
10
12
14
16
18
20
22
SOURCE: IBISWORLD
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Uncertain input prices Industry profitability has historically been
Declining
international sales
In
recent years, many

small-scale, independently
owned breweries have
entered the industry
erratic. Due to both the fickle nature of

consumers drinking patterns and the
significant price volatility of the industrys
key inputs, industry profit is prone to
sudden fluctuations. The world price of
wheat, for example, represents a crucial cost
for industry operators. Since cereal grains
such as barley, rye, wheat and other
adjuncts are significant expenses for
brewers, increases in the cost of these grains
will severely erode profit margins. Large
brewers largely compete on the basis of
price, thus an increase in the bulk price of
cereal grains will likely translate to a
reduction in the brewers profit margin. For
small-scale brewers of craft beer, increases
in the price of ingredient inputs could lead
the brewer to increase the price of their
product, although this poses a challenge for
breweries that already charge a premium
on beers that use costly ingredients. The
world price of wheat has declined at an
8.2% annualized rate over the five years to
2016, which has benefited both small and
large brewers alike.
The world price of aluminum also poses
a threat to breweries that primarily package
their products in aluminum cans. Over

the five years to 2016, the world price
of aluminum has declined by an
annualized rate of 9.3%. Although the
industry has benefited from declines in
the price of raw aluminum, breweries
are continually prone to sudden shocks
in input prices that, although
temporary, can have significant
consequences regardless of the
production scale of the brewery. Input
price uncertainty creates a significant
degree of fluctuation in industry profit
margins. The industrys profit margin
declined to 6.8% in 2013, despite
reaching 10.2% in 2011. In 2016,
industry profit is expected to account
for 8.2% of total revenue, representing
a gradual improvement in the years
since the industrys sudden price hikes.
Although Canada has historically been a

net importer of beer, the industry has
generated several prominent international
brands. Canadian staples such as Labatt,
Molson, Sleeman, Rickards and craft
brand Dieu du Ciel are widely available in
Canada and have achieved some
popularity throughout North America.
Over the past five years, however, the
value of Canadian beer exports has
declined at an annualized rate of 1.2% to
$223.9 million. This has occurred during a
period in which total imports have
increased considerably; in the five years to
2016, the value of industry imports has
increased at a 4.3% annualized rate to
$746.1 million. Much of the decline in
exports may be attributable to changing
US taste preferences. The United States

overwhelmingly represents the largest
market for Canadian beer exports, and
recent consumer preferences for the
countrys emerging class of domestic
craft beers accounts for much of this
decline. Additionally, the majority of
Canadian exports to the United States
consist of traditional premium and light
beer styles. Although the Canadian dollar
has suffered against the US dollar,
consumers may perceive imported
Canadian beers as being too comparable
in taste to similar domestic premium
beers. These products may be less
desirable considering the range of
high-quality craft styles of beer
throughout the United States.
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Industry
Outlook
Industry operators will likely face significant

challenges as consumers shift away from
traditional light beer consumption and
international competition increases.
Although the consumer shift toward craft
beer has greatly benefited the industrys
smaller producers, this has come at the
expense of the industrys premium beer
brands that generate the majority of the
industrys revenue. In addition, consumers
are less likely to purchase craft beer in large
quantities, unlike premium beer brands that
Slow and steady
With input prices stabilizing and the

industrys largest companies slowing their
merger and acquisition activity, the
industry is not expected to undergo a
structural overhaul similar to that of
previous years. The world price of wheat,
which has been steadily declining since its
massive spike in 2011, will likely remain
stable over the next five years. The world
price of aluminum is projected to increase
over the next five years, but at a
manageable 3.5% annualized rate. The
industry will likely remain in a holding
pattern in the years to come. IBISWorld
projects the number of industry
enterprises to increase an annualized 2.3%
to 394, while total industry employment

will grow an annualized 0.6% rate to
9,067 workers. Barring significant input
price shocks, average profit in the industry
is anticipated to slip slightly to 8.1% of
revenue in 2021. The gradual influx of
smaller breweries will slightly erode
average industry profit.
The craft brewing phenomenon that has

taken the US beer market by storm has not
been as significant in Canada. This is
largely due to the greater difficulty of
entering the Canadian market. Since nearly
every province regulates and distributes
beer through provincial liquor control
boards, the regulatory costs associated with
establishing a new microbrewery are far
greater for Canadian breweries than their
US counterparts. US brewers have
witnessed the gradual loosening of state
distribution regulations in recent years,
which has facilitated the surge in the
number of US microbreweries.
Additionally, the market for craft beer

is not as large in Canada as in the United
States. The United States has many more
markets across a diverse range of
climates that make many styles of beer
suitable for brewing. Different types of
surface water containing different pH
levels and minerals play a key role in
brewing variant styles of beer. In
addition, the proximity between many
major US commercial areas enables
small-scale breweries to retail their
products to a large market. There are far
fewer metropolitan areas in Canada
capable of sustaining small breweries,
Craft brewing and

foreign competition
are comparably more affordable and

purchased in higher quantities. Beer is also
increasingly perceived as less healthy than
wine, and substitution has slowed industry
sales even as consumers have demonstrated
significant interest in craft beer.
Consequently, industry revenue is expected
to grow at a minimal annualized rate of 0.1%
over the next five years to $6.8 billion in
2021; revenue is projected to increase 0.5%
in 2017 as marketing spending by major
companies bolsters industry performance.
The
gradual influx of
smaller breweries will
slightly erode average
industry profit
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Craft brewing and

foreign competition
continued
and the transportation costs associated with

delivering small-scale batches of beer to
remote locations across Canada are
prohibitive. Although small-scale breweries
will continue to play a large role in shaping
the Breweries industry for years to come, a
resurgence in local breweries akin to the
craft beer renaissance currently emerging in
the United States is unlikely.
The Breweries industry is also projected
to experience slight growth in total exports.
IBISWorld projects industry exports to

increase at an annualized rate of 1.7%
over the next five years to $243.5 million
in 2021. Industry imports, which
improved over the past five years, are
expected to pick up further in response
to stronger consumer demand for
foreign brands. Total imports are
expected to increase at an annualized
rate of 5.2% to $962.7 million over the
five years to 2021.
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Life Cycle Stage
Per capita alcohol consumption has

shown steady signs of decline
The industrys largest companies are
consolidating to achieve greater market share
% Growth in share of economy
The brewing process has experienced

little technological change
20
Maturity
Quality Growth
Company
consolidation;
level of economic
importance stable
High growth in economic

importance; weaker companies
close down; developed
technology and markets
15
Key Features of a Mature Industry

Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
10
Quantity Growth
5
Sawmills & Wood Production
Many new companies;

minor growth in economic
importance; substantial
technology change
Breweries
Beer, Wine & Spirit Wholesaling

Bottled Water Production
Soda Production
Flour Milling
Decline
-5
Shrinking economic
importance
-10
-10
-5
10
15
20
% Growth in number of establishments

SOURCE: WWW.IBISWORLD.COM.AU
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Industry Life Cycle

This
industry
is M
ature
Consumer shifts toward craft beverages

and away from traditional light beer is a
major factor behind the industrys
performance during the past five years.
With consumers trading up in their
alcoholic beverage choices, they are
reaching for higher-priced beer as well
as substitutes like wine and spirits.
Although this has enabled brewers to
boost prices for their higher-end
products, overall sales volumes have
stagnated and in some cases declined.
Lower sales volumes and substitution
toward high-end products is posing a
challenge for major companies like
Molson Coors, since their operations are
largely based on heavily marketing value
brands. Molson Canadian and Coors
Light, despite recent declines in
popularity, currently represent more

than half of the companys domestic
beer sales.
Declining volume has led to higher
per-unit production costs. Breweries are
raising their prices as a result, and these
price increases are also taking into
account volatile input prices for wheat,
hops and packaging materials.
Consequently, industry value added
(IVA), which measures the industrys
contribution to the economy, is expected
to increase at a steady 1.1% annualized
rate during the 10 years to 2021, while
GDP rises at a projected 1.9% average
annual rate during the same period. This
rate of IVA growth implies that the
industry is currently in the mature stage
of its life cycle.
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Products & Markets
Supply Chain | Products & Services | Demand Determinants

Major Markets | International Trade | Business Locations
Supply Chain
KEY BUYING INDUSTRIES

41322CA
Beer, Wine & Spirit Wholesaling in Canada

Wholesale distributors are a vital link in the supply chain for alcohol. Most beer manufacturers
are required to sell their products to private or provincial wholesalers, who then deliver these
products to retail locations and drinking establishments.
99CA
Consumers in Canada
Individual consumers are the final purchaser of industry beverages, although some may
purchase beer directly from small-scale brewpubs and establishments that are licensed to sell
beer for on-premises consumption.
KEY SELLING INDUSTRIES
Products & Services
31121CA
Flour Milling in Canada

Brewers purchase malted grains from mills. Malt comes from barley or other grains that have
been germinated by soaking them in water and then kiln-drying them in order to develop the
enzymes needed for fermentation.
32111CA
Sawmills & Wood Production in Canada

Wooden pallets are used to transport the final product to end users such as retailers, bars and
clubs.
32221CA
Cardboard Box & Container Manufacturing in Canada

Paperboard containers are used to package bottles and cans of beer for transportation.
32311CA
Printing in Canada
Brewers adhere printed labels on their products to both market their product and to fulfill
government labeling standards.
32721CA
Glass Product Manufacturing in Canada

New and recycled glass bottles are purchased in bulk for bottling.
42451CA
Corn, Wheat & Soybean Wholesaling in Canada

Malted barley, wheat, corn, hops and other flavor adjuncts are purchased from industry
wholesalers.
According to the latest industry survey

conducted by Beer Canada in 2014, the
industry has experienced a sharp
increase in the number of licensed
breweries as well as higher production
volumes. Over the past five years,
canned beer surpassed beer bottled in
glass for the first time, representing a
surprising change for an industry that
has typically benefited from significant
glass bottle recycling programs.
susceptibility to flavour-spoiling UV light.

Although glass bottles are the standard
packaging material for most brewers, the
relative heaviness of glass ultimately adds
to their transportations costs. As a result,
some brewers have replaced some bottled
beer production with forms of canned
beer packaging. This has caused bottled
beer to decline as a share of the industrys
products over the past five years,
representing an estimated 42.9% in 2015.
Bottled beer
Bottled beer has for decades been the
standard packaging for the industrys
products. Beer bottles are made of glass
and often come in brown or green hues.
Clear bottles are rare, due to their
Canned beer
An estimated 47.4% of industry products
are packaged in aluminum cans,
representing a robust increase over the
past five years. There are many reasons
for the sudden surge in popularity of
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Products & Markets
Products & Services

continued
Products and services segmentation (2016)
9.7%
Draught beer
47.4%
Canned beer
42.9%
Bottled beer
Total $6.7bn
canned beer. For producers, aluminum is
a far lighter material than glass that
reduces the overall bulk and
transportation costs associated with
shipping bottled beer. Additionally,
compared with glass, aluminum is
relatively inexpensive to purchase from
metal manufacturers.
Consumers have also taken to canned
beer over the past five years. Although
beer packaged in cans may once have
been perceived as being exclusively light,
subpremium and bottom-shelf in terms
of quality, canned alternatives of many
premium craft beers have entered the
market in recent years. Because canned
beer is more cost-effective for producers
to manufacture, they can pass along some
of the cost savings to consumers.
Aluminum cans have given consumers
far greater exposure to higher-priced
brands without any negative
consequences to flavor. In fact, craft beer
producers regard aluminum containers
as a much better packaging material than
glass. Although dark amber glass bottles
significantly reduce the likelihood of UV
light exposure and the potential
SOURCE: IBISWORLD
skunking effects it can have on beers,

aluminum cans block virtually all
possibility of the products taste being
compromised due to UV exposure. Many
breweries have also used aluminum cans
as an opportunity to create elaborate
product labels and designs, since cans
provide greater surface area for printed
labels than traditional glass bottles.
Draught beer
Beer Canada reports that a slim 9.7% of
the beer produced in Canada is packaged
and distributed in bulk. Draught beer
production includes beer that is served
from barrels, such as standard pressurized
kegs or more traditional casks. Kegs are
commonly constructed from aluminum or
steel, are force-carbonated using nitrogen
or carbon dioxide and are sold in bulk
sizes ranging from 20.0 to 58.6 litres.
Conversely, casks are constructed using
metal or wooden housing and carry beer
that is neither carbonated nor pasteurized.
Draught beer is most commonly sold to
private drinking establishments and
individual consumers hosting events and
private functions.
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Products & Markets
Demand
Determinants
Major Markets
Demand for beer varies depending on

many factors. Customer demand for a
specific brand may fluctuate depending
on the perceived attractiveness of other
brewers products. Additionally, beer
substitutes such as wine, spirits and
nonalcoholic beverages can increase in
popularity and negatively impact sales of
beer. Over the past several years,
demand for beer has steadily increased
compared with these close substitutes,
and the industry has responded to
growing demand by expanding its
offerings of seasonal, premium and
specialty beer styles.
Marketing also influences the publics
demand for beer. Major companies that
brew very similar, mildly flavoured
products typically dedicate large portions
of revenue toward promotional
campaigns. High-profile celebrity
endorsements, major advertising
campaigns, novel packaging materials
and complex bottle designs all heavily
contribute to the industrys high
marketing costs, and these campaigns
have a major impact on consumers
purchasing decisions.
Government intervention can
influence demand through regulation and
taxation. The most common forms of

government regulation of alcoholic
beverages pertain to retail sales.
Minimum drinking ages, limits on hours
of sale, limits on the size of alcohol
purchases, mandatory minimum retail
prices and excise taxes are all designed to
limit overconsumption and control the
sale of alcohol. Throughout much of
Canada, the distribution and sale of beer
is controlled by provincial regulatory
bodies rather than private wholesalers
and merchants.
Demographics also play a significant
role in determining demand for alcohol.
Demand for alcoholic beverages tends
to be higher among households with
higher levels of disposable income.
IBISWorld estimates that households
earning the top 20.0% of income spend
60.0% more on beer from retailers than
the average household and 80.0% more
on beer at licensed drinking
establishments. Age may also
determine the taste preferences of
consumers. Per capita consumption of
beer is higher among 18- to 34-yearolds than other age groups, while
purchases of wine remain strong among
consumers aged 35 and older.
Major market segmentation (2016)
0.8%
8.4%
4.4%
Women aged 65 and older
Women aged
35 to 44
Women aged 45 to 64
13.6%
Men aged 35 to 44
14.9%
Women aged 19 to 34
3.4%
Men aged 65 and older
30.5%
Men aged 19 to 34
24.0%
Men aged 45 to 64
Total $6.7bn
SOURCE: IBISWORLD
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Products & Markets
Major Markets
continued
International Trade
Beer consumption among men

Men continue to dominate Canadian beer
consumption, drinking an estimated 71.5%
of beer in terms of volume. Men aged 19 to
34 will drink an estimated 30.5% of beer
sold domestically in 2016, because they are
more likely to purchase beer in high
quantities and buy a variety of craft brews to
sample. Men in this age range are not only
the most likely to drink beer, but also
typically drink a greater volume of beer than
other age groups. This is especially true
among younger drinkers between the ages
of 19 to 24.
Men between the ages of 35 and 44
consume 13.6% of the industrys
products. This demographic represents a
broad range of alcoholic beverage
consumers who hold disparate product
preferences and consumption habits. The
increasing popularity of craft and local
beer styles has played a significant role in
broadening the consumption preferences
of this demographic.
Meanwhile, men aged 45 to 64 are
expected to drink 24.0% of the beer
produced in 2016, as many in this
segment substitute purchases of beer
with wine or spirits due to higher
disposable incomes and shifting healthoriented attitudes. Similarly, men aged
older than 65 are estimated to drink just
3.4% of the beer produced in 2016 and
generally do not represent a significant
share of the industrys targeted

marketing activities.
The Canadian market for beer is

relatively self-sufficient, with domestic
brewers fulfilling most of the domestic
demand for alcoholic beverages.
However, Canada does participate in the
international market for beer and is a net
importer of beers from Belgium, Mexico,
the Netherlands and the United States.
Beer imports have steadily increased in
recent years, owing to consumers
gradual shift in taste preferences toward
diverse types of foreign craft beer.
Conversely, Canadian beer exports have

experienced inconsistent performance
over the past five years due to increasing
competition from foreign breweries.
Beer consumption among women

Because women consume beer less
frequently than men, they represent a
smaller market for the Breweries
industry. Although consumption by
women has increased during the past five
years, women are estimated to drink only
28.5% of the beer sold in Canada.
Breweries are introducing new products
that have performed well with female test
groups, such as sweetened beers like
Molson Sublime or Labatt Blue Light
Lime. Low-calorie products are also
increasingly marketed toward women as
brewers seek to tap this growing market.
Women aged 19 to 34 are estimated to
drink 14.9% of the beer sold in Canada in
2016, surpassing all other female age
groups as they try newer products. This
demographic has been particularly
receptive to new types of local and craft
beer. Women aged 35 to 44 are expected
to consume 4.4% of the beer produced in
2016. Beer consumption among older
women is generally low, as substitute
beverages such as wine and mixed
beverages are often more popular within
this age range. Women aged 45 to 64
consume an estimated 8.4% of the
industrys products, and women aged 65
or older are anticipated to drink 0.8%.
Imports
During the past five years, the continued
strength of the Canadian dollar has made
foreign products relatively inexpensive
for Canadians. As a result, imported beer
sales have increased, climbing at a 4.3%
annualized rate since 2011 to $746.1
WWW.IBISWORLD.CA
International Trade
continued
Level & Trend
xports in the
E
industry are L ow

and S
teady
Imports
in the
industry are
Mediumand
Increasing
million in 2016. Canadian beer imports

come from many different countries,
although imports from the United States,
the Netherlands, Mexico and Belgium
consistently rank as the most popular
foreign beer brands. Brands such as
Budweiser, Bud Light, Coors Light, Miller
Lite, Heineken, Grolsch, Modelo, Dos
Equis and Duvel are popular imported
brands that are widely available across
Canada. Continually expanding
advertising campaigns and consistent
consumer approval of these brands will
likely lead to continued growth in beer
imports over the next five years.
$ million
Products & Markets
Exports
Export growth has been inconsistent over
the past five years, although a growing
number of Canadian craft breweries has
introduced a minor degree of
international appeal to some of the
industrys newest companies. Foreign
demand for Canadian beer often depends
on US taste preferences, since the United
States represents the overwhelming

majority of the industrys export market.
In recent years, US taste preferences have
shifted away from foreign and domestic
premium brands toward local and
regional craft styles, thereby reducing
overall interest in Canadian exports
among US drinkers. With US consumers
increasingly looking domestically for
Industry trade balance

600
300
0
-300
-600
-900
-1200
Year 08
Exports
10
12
14
Imports
16
18
20
22
Balance
SOURCE: IBISWORLD
Imports From...
Exports To...
9.9%
1.9% 0.7%
Japan
Other
Belgium
0.8%
Australia
1.1%
Ireland
32.1%
12.2%
Other
Mexico
21.3%
95.5%
Netherlands
24.5%
United States
Year: 2015
Total $223.9m
SIZE OF CHARTS DOES NOT REPRESENT ACTUAL DATA
United States
Total $746.1m
SOURCE: USITC
WWW.IBISWORLD.CA
Products & Markets
International Trade
continued
their beer purchases, this trend is

expected to cause industry exports to
decline at an annualized rate of 1.2% to
$223.9 million in 2016.
WWW.IBISWORLD.CA
Products & Markets

Business Locations 2016
Establishments (%)
Less than 5%
5% to less than 20%
20% to less than 40%
40% or more
NT
YT
NU
NORTHERN TERRITORIES
0.4
BC
26.5
AB
4.5
SK
1.2
MB
1.2
ON
34.3
NL
QC
1.6
22.4
NB
2.4
NS
PE
0.4
4.9
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Products & Markets
Distribution of establishments vs. population

40
30
20
10
Saskatchewan
Quebec
Ontario
Prince Edward Island
Nova Scotia
Newfoundland
Northern Territories
Establishments
Population
New Brunswick
Manitoba
Alberta
0
British Columbia
Due to the high transportation costs

required to ship a heavy product such as
beer, breweries are commonly located
near the major markets they serve most.
As a result, industry establishments are
overwhelmingly concentrated in
provinces with densely populated
metropolitan areas: Ontario, British
Columbia and Quebec. Ontario holds a
leading 34.3% of industry establishments
due to high demand for beer from
Toronto and surrounding suburban
areas, and even from US distributors
across the border that may wish to
import Canadian brands for US
consumers. British Columbia holds
26.5% of industry breweries despite
representing only 13.3% of the Canadian
population. This is largely due to the
commercial dominance of Vancouver as
well as the provinces convenient ground
transportation access to Washington
state and California. Quebec holds 22.4%
of industry breweries, falling closely in
line with the provinces 23.1% share of
the Canadian population. Large
populations in Montreal and Quebec City
help stimulate demand for beer in the
province, and shipping activity to and
from the cities of Hull and Gatineau
support the steady trade of alcoholic
beverages throughout the province.
Access to raw materials is an
additional factor that determines the
locations of industry businesses. Only
Business Locations
SOURCE: IBISWORLD
2.4% of the industrys breweries are

located New Brunswick, for example,
due to lack of access to fresh inputs like
barley, hops and adequate brewing
water. Although such areas may have
an increasing number of
nanobreweries, homebrewers and pubs
that operate outside the scope of the
industry, regions such as New
Brunswick, Prince Edward Island,
Manitoba, Saskatchewan and the Yukon
do not possess sufficient means of
transportation or large enough
populations to sustain a significant
number of industry breweries.
WWW.IBISWORLD.CA
21
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks

Basis of Competition | Barriers to Entry | Industry Globalization
Market Share
Concentration
Level
Concentration in this
industry is M
edium
Key Success Factors

IBISWorld
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
The three largest breweries in Canada

are expected to generate 61.7% of
industry revenue in 2016. Foreign
investment over the past decade has led
to fundamental restructuring of the
industry in the form of intense
consolidation and rising market share
for international beverage behemoths.
Major international brewers have
developed significant market share
through economies of scale in
production, which allow these
companies to produce large quantities of
beer at a low per-unit cost, heavily
market these products through a variety of

advertising channels and generate
operating margins that are significantly
higher than the margins of the industrys
independent, regional brewers.
Consequently, the industry continues to
be represented by both an increasingly
high number of small brewers and a select
few major international brewers. As these
major international brewers continue to
acquire the production facilities of popular
Canadian and foreign brands, industry
concentration is anticipated to increase
over the next five years.
Effective quality control

Brewers operating large batches must
ensure that their product is made in a
regulated and sanitary environment,
the ingredients are measured
consistently and precisely,
fermentation occurs uniformly and
final packaging is consistent.
Having a cost effective distribution system

Breweries are typically more efficient when
streamlining distribution agreements with
provincial entities and wholesalers.
Economies of scale
Breweries that can manufacture beer
on the largest scale possible can
purchase wholesale ingredients at a
cheaper bulk cost and sell their
products at a lower retail price.
Profit
Industry profit, defined as earnings
before interest and taxes, fell slightly over
the five years to 2016 to 8.2% of revenue.
The industrys largest breweries typically
yield much higher profit margins as a
result of significant economies of scale,
while smaller breweries are often unable
to spread large fixed costs over similarly
large product output. This differentiation
among companies profit is the result of
high variable costs and the bargaining
power that larger players have over
suppliers and distributors. Larger
Economies of scope
Brewers that produce a variety of beer
styles can achieve a marketing advantage
by appealing to a greater range of
customer tastes.
Establishment of brand names
Successful branding through label design
and heavy marketing is critical to success in
a brand-centric market.
companies with greater economies of

scale can typically produce higher
quantities of beer at a far lower cost per
unit, especially when these companies
brew styles that require few or very
low-cost adjunct ingredients.
Purchases
Raw ingredient purchases represent the
largest component of brewers expenses,
and purchases are estimated to represent
40.0% of the industrys revenue. Basic
materials include packaging, principally
glass, aluminum and corrugated
WWW.IBISWORLD.CA
22
cardboard, and these costs have fluctuated

wildly over the past five years as a result of
volatile commodity prices. Major purchases
of barley, wheat, hops, sugar, corn, rice and
mineral additives and preservatives, which
are both critical ingredients for ensuring
proper water quality, have mostly declined
over the past five years in response to
falling global grain prices. The price of hops
can experience significant variation each
season depending on the climate of various
source regions. Fluctuations in price often
have a significant impact on a brewers
overall costs and may even impact the final
retail price. Over the five years to 2021,
prices of raw ingredients are projected to
decline overall.
Wages
During the past five years, wages have
remained relatively steady as a share of
revenue, accounting for an estimated 6.7%
in 2016. Both industry employment and
average industry wages have stagnated

over the past five years, which is
consistent with the industrys minimal
revenue growth in recent years. It is
possible for many expanding breweries to
transition wage expenses toward
investments in more efficient capital, but
these investments have not been drastic
over the past five years.
Other
Marketing costs have escalated to an
estimated 4.5% of revenue in 2016 due to
rising advertising spending by the
industrys largest companies. Brewers are
competing against not only new industry
entrants but also against an increasing
number of wine, distilled spirit and soft
drink manufacturers. Other costs, such as
rent, utilities, taxes, fees, administrative
expenses and government licensing, have
been stable and will continue to represent
a significant component of revenue.
Sector vs. Industry Costs

Average Costs of
all Industries in
sector (2016)
100
80
Percentage of revenue
Cost Structure
Benchmarks
continued
8.2
12.3
8.2
6.7
40.0
60
59.0
40
20
Industry Costs
(2016)
2.5
3.7 1.5
12.8
n Profit
n Wages
n Purchases
n Depreciation
n Marketing
n Rent & Utilities
n Other
4.7
4.5
6.5
29.4
0
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
23
Basis of Competition
Level & Trend
ompetition
C
in
this industry is
Highand the trend
is I ncreasing
A recent influx of small, local breweries

into the industry has created additional
competition for the few major breweries
that have dominated the Canadian beer
market in recent decades. The industry
consists of a small number of major
international alcoholic beverage
producers, many domestic and regional
brewers and a new class of upstart
brewers throughout the country. Major
imported brands, such as Heineken,
present the largest source of competition
to all of the industrys domestic brewers.
Internal competition
Because the Breweries industry produces
many types of beer that cater to a wide
range of customer taste preferences,
many small-scale breweries emphasize
seasonal flavours, limited-edition styles
and new brands rather than compete
exclusively on price. Conversely, the
industrys larger beer brands, such as
Molson, Moosehead and Sleeman, are
produced and marketed with the brands
cost-effectiveness in mind, and
competition from major beer
manufacturers is of little concern to local
microbrewers whose products are geared
toward connoisseurs and those who
prefer more intricate styles of beer.
Therefore, industry competition is based
primarily on brand, quality and retail
pricing. In general, marketing efforts
typically focus on male consumers aged
19 to 25 years, because this demographic
represents the market in which
consumers are most likely to try new beer
products. Alternative marketing
techniques like beer tastings and brewery
tours have become common among both

small and large brewers, while major
brewers tend to focus their advertising
efforts toward celebrity endorsements
and primetime TV spots.
Consumers show significant brand
loyalty, making it difficult for new
entrants to capture market share from
established brands. Competition for
brand loyalty has intensified on a
regional level and, as a result, many
regional players have aggressively sought
to expand their geographic market reach.
Competition has also increased with the
rise of the craft-brewing segment in the
past five years. Internal competition is
anticipated to continue growing over the
next five years.
External competition
Competition from other beverages and
foreign producers is escalating. Imports
increased over the five years to 2016, as
consolidation among the industrys
largest beer brands compelled
consumers to increase purchases of
major foreign brands.
Other beverage industries are also
posing a major threat to the industry,
offering drinks that compete directly with
beer. Not only is wine becoming
increasingly popular among 18- to
35-year-olds, but there are also new adult
drink categories emerging that are aimed
at consumers in this age range. These
include low-sugar sodas that are marketed
as healthy alternatives, relaxation drinks
and exotic juices that retailers, restaurants
and other establishments are increasingly
selling alongside beer.
WWW.IBISWORLD.CA
24
Barriers to Entry
Level & Trend
arriers to Entry
B
in this industry are

Highand S
teady
Different barriers exist depending on

whether a new operator wishes to enter
the Breweries industry as a small local
brewer or as a large regional producer.
Entry for craft brewers, for example, can
be facilitated by the option to purchase
turnkey facilities, but starting a largescale production facility will require
significant cash investments and
substantial purchases of capital
equipment. Before a new brewer can even
enter the industry, however, it must fulfill
major regulatory obligations. The
manufacture and distribution of alcohol
in Canada is highly regulated, and most
provinces require that all breweries
distribute their products through
provincial liquor boards. Licensing fees,
audits and excise taxes on production
also compound the total costs breweries
incur on a regular basis.
Barriers to entry include the sunk costs
and other high ongoing capital
requirements necessary to operate large
brewing operations. Many major brewers
can ship large quantities of beer because
they have preexisting agreements with
distributors. Establishing relationships
with distributors is an important
component of achieving success in the
industry, and new entrants will face the
challenge of developing these
relationships from the bottom up. A
lack of major relationships in the
industry is a significant issue for new
breweries; since distribution is heavily
regulated and limited on a regional
basis, distribution opportunities are
scarce. Shelf space in retail outlets is
limited and major breweries are often
the first to claim retail space as a result
of their large distribution contracts and
heavy negotiating clout with
wholesalers and retailers.
Barriers to Entry checklist

Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
High
Medium
Mature
High
Low
Heavy
Low
SOURCE: IBISWORLD
Brewers benefit from establishing

economies of scale throughout the
brewing process. As fermenting tanks,
bottling facilities and ingredient contracts
expand, the cost to produce a single bottle
of beer substantially declines. As a result,
prospective entrants may struggle for
success in the industry unless substantial
upfront investment is made on large
brewing equipment. Although the industry
has experienced steady growth in smallscale microbreweries over the past five
years, many of these breweries cannot
support national distribution and thus
achieve far smaller profit margins than
larger brewers. Entering the industry is
costly for new breweries of all sizes, and
increasing competition among the
industrys smallest brewers has made it
even more difficult for new entrants to
achieve success.
Economies of scale enable greater
profit margins, which the industrys
largest breweries direct toward major
advertising campaigns. The major
marketing activities of the industrys
largest companies make it difficult for new
entrants to set themselves apart from
established brands. Brand recognition is
difficult to establish by word of mouth,
and this poses an additional challenge to
small-scale brewers.
WWW.IBISWORLD.CA
25
in this
industry is H
ighand
the trend is S
teady
International trade is a
major determinant of
an industrys level of
globalisation.
Exports offer growth
opportunities for firms.
However there are legal,
economic and political risks
associated with dealing in
foreign countries.
Import competition can
bring a greater risk for
companies as foreign
producers satisfy domestic
demand that local firms
would otherwise supply.
Trade Globalisation
200
Going Global: Breweries 2004-2016

Global
Export
150
100
50
0 Local
0
unfavourable exchange rates and waning

consumer interest in Canadian brands.
Exports have fallen as a percentage of
revenue from 4.5% in 2011 to an
estimated 3.3% in 2016.
Imports are projected to steadily
increase over the next five years,
although imports as a percentage of
domestic demand for beer have
historically been low. In 2016, the value
of imports will reach a projected $746.1
million, which represents 10.3% of
domestic demand for beer. With total
imports projected to increase over the
next five years, IBISWorld anticipates
imports to satisfy 12.9% of domestic
demand for beer by 2021.
200 Export
Exports/Revenue
Level & Trend

lobalization
G
Both of the industrys largest companies

are foreign-owned and engage in a
significant amount of international trade.
Anheuser-Busch InBev, headquartered in
Belgium, is the largest brewing company
in the world, while Molson Coors, the
worlds seventh-largest brewer, is a
US-based brewer participating in the
MillerCoors joint venture holding a
financial stake in many of the countrys
Beer Store retail locations.
However, exports have declined as a
percentage of industry revenue over the
past decade. The United States, which is
the leading purchaser of Canadian beer,
has reduced overall purchases of
Canadian beer brands in response to
Exports/Revenue
Industry
Globalization
Breweries
40
80
Import
120
Imports/Domestic Demand
160
Global
150
100
50
0 Local
0
2016
2004
40
Import
80
120
160
Imports/Domestic Demand
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Major Companies
Anheuser-Busch InBev | Molson Coors Brewing Company | Other Companies
Major players
(Market share)
Molson Coors Brewing Company 26.9%
42.1%
Other
Anheuser-Busch InBev 31.0%
Player Performance
Anheuser-Busch
InBev
Market share: 31.0%
Industry Brand Names
Budweiser
Labatt
Becks
Stella Artois
Alexander Keiths
Bass
Kokanee (Columbia
Brewing Company)
Lakeport
Lucky
Oland
Anheuser-Busch InBev (AB InBev) is the

result of a merger between AnheuserBusch (AB) and InBev, which itself
represented the culmination of
numerous mergers and acquisitions of
major brewers over the past decade. The
companys continual growth has
facilitated the takeover of many leading
Canadian brands and, although AB
InBev allows these brands to operate
with relative autonomy in terms of
production and marketing, many of
Canadas most popular independent
brewers have been absorbed by foreign
beverage manufacturing operators in a
similar fashion.
The combination of Anheuser-Busch
and InBev marked a significant change in
the market share concentration of the
Breweries industry and gave the company
a clear leading position in the global
brewing industry. Prior to the merger,
SOURCE: IBISWORLD
InBev had a strong global presence in its

own right and was the primary operator
in the Breweries industry as the owner of
Labatt Brewing Company. Meanwhile,
Anheuser-Busch had already distributed
InBevs global brands in the United
States, and the company was previously
the largest brewer by volume in North
America. ABs businesses included
brewing, packaging, theme parks and real
estate. As part of the merger agreement,
AB sold its Busch Gardens theme park
business to recover debt generated by the
merger and to gear operations exclusively
toward beer production.
Financial performance
AB InBevs industry-specific revenue is
expected to grow at an annualized rate of
6.7% during the five years to 2016 to $2.1
billion. Although sudden declines in
revenue early on in the five-year period
Anheuser-Busch InBev (industry-specific segment) - financial

performance*
Year
Revenue
($ million)
(% change)
Operating profit
($ million)
(% change)
2011
1,513.3
-4.0
564.6
-1.2
2012
1,602.2
5.9
587.9
4.1
2013
1,650.0
3.0
610.9
3.9
2014
1,776.8
7.7
669.9
9.7
2015
1,998.3
12.5
757.0
13.0
2016
2,090.2
4.6
795.2
5.0
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.CA
Major Companies
Player Performance
continued
negatively impacted the companys

performance, recent trends suggest that
AB InBev will experience steady revenue
growth moving forward as it continues its
aggressive merger and acquisition activity.
A scheduled merger between AB InBev
and SABMiller is expected to be finalized
by the end of 2016; the resulting company
would create a clear leader as the largest
beer manufacturer in the world.
Additionally, the companys massive
size has provided many of its major
brewing facilities tremendous economies
of scale. The companys operating income

is typically far greater than that of the
Breweries industry as a whole, and AB
InBev brewing units consistently boast
the highest profit margins in the industry.
Operating income among its Canadian
brewing facilities is estimated to increase
an annualized 7.1% to $941.8 million in
2016, representing a profit margin of
38.0% among AB InBevs Canadian
brewing activities. This is substantially
higher than the Breweries industrys
average profit margin of 8.2%.
Player Performance
Molson Coors Canada is the product of

mergers and acquisitions among several
major North American breweries.
Originally founded in 1786 in Montreal,
the Molson Brewery is the oldest in North
America and still produces beer at its
original location on the St. Lawrence
River in Montreal. To keep up with the
industrys growing trend of mergers and
acquisitions, Molson Brewery merged
with US-based Coors Brewing Company
to create the Molson Coors Brewing
Company, a partnership that has turned
the company into one of the largest
breweries in the world. The Molson
brand is still owned and operated by the
Molson family and the company has
expanded its operations throughout

Canada, the United States and Europe.
The company restructured its position in
the European market in 2012 with the
purchase of StarBev Inc., which has
resulted in both the expansion and
consolidation of its disparate Ireland, UK
and Central European operations. In
Canada, Molson Coors portfolio of
brands includes Coors Light, Molson
Canadian, Molson Export, Molson
Canadian 67, Molson Dry, Molson
Canadian Cider, Carling, Keystone Light,
Creemore Springs and the Rickards
family of brands. The company also holds
major joint venture agreements with
British beer manufacturer SABMiller and
Molson Coors
Brewing Company
Market share: 26.9%
Industry Brand Names
Molson Canadian
Coors Light
Rickards
Carling
Keystone Light
Pilsner
Black Label
Molson Export
Molson Dry
Molson M
Molson Coors (industry-specific segment) - financial performance*

Year
Revenue
($ million)
(% change)
Operating profit
($ million)
(% change)
2011
2,044.2
2.4
476.9
0.5
2012
2,036.1
-0.4
425.7
-10.7
2013
2,001.7
-1.7
371.6
-12.7
2014
1,980.6
-1.1
443.4
19.3
2015
1,790.1
-9.6
316.3
-28.7
2016
1,813.7
1.3
313.7
-0.8
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
WWW.IBISWORLD.CA
Major Companies
Player Performance
continued
Mexican brewer Grupo Modelo, both of

which grant limited rights to distribute and
bottle the others brands.
Much like AB InBev, Molson Coors
merger and acquisition activity represents a
continual trend in the Canadian beer market
toward major market share concentration
among the industrys largest companies.
The company has continued to consolidate
within the Canadian market. Most recently,
Molson acquired microbrewery Granville
Island Brewing in response to growing
consumer interest in craft beer styles. Facing
weakening demand for the companys core
brands of light beer, Molson Coors is
expected to raise over $2.0 billion in capital
to complete a takeover of SABMillers share
of the MillerCoors joint venture. SABMiller
is expected to sell its share of the venture to
Molson Coors to facilitate a planned merger
with AB InBev in 2016.
Financial performance
Molson Coors revenue in Canada is
estimated to decline at an annualized
rate of 2.4% during the five years to
2016 to $1.8 billion. The companys
decline is largely due to sales woes
among consumers of traditional
premium beer, brands that have
historically represented the companys
most heavily produced products. The
Molson Canadian and Coors Light
brands, for example, represent more
than half of company sales domestically
and have been negatively impacted by
consumer substitution toward other
alcoholic beverages. Although the
companys massive size continues to
yield operating margins that are far
greater than the industry average, both
company revenue and operating income
have struggled over the past five years.
Other Companies
Moosehead Breweries Ltd.
is also supported by a family of light,

flavoured and dry versions of the
flagship brand, in addition to licensed
brands such as Sam Adams, Boris,
Magners and others. Moosehead
announced in 2016 that it would be
shipping its popular Moosehead
Radler brand of carbonated soft
drink-blended beer into the US
market. The company is expected to
generate $259.2 million in revenue
over 2016.
Estimated market share: 3.8%

Moosehead Breweries Ltd. was founded in
1867 and is Canadas oldest independent
brewery. Headquartered in Saint John, NB,
the brewery has been privately owned and
operated by the Oland family since its
inception, and therefore does not publicly
disclose its financial information. The
companys flagship brand, Moosehead
Lager, remains one of the most popular
domestic beers in the industry. Moosehead
WWW.IBISWORLD.CA
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility

Regulation & Policy | Industry Assistance
Capital Intensity
Level
The level
of capital
intensity is H
igh
Breweries require substantial capital

investment in the form of equipment, such
as boil kettles and fermenters, and other
systems that facilitate various mashing,
sparging and bottling processes. Stainless
steel fermenters, mash tuns, filtration
systems, kegging equipment and other
machinery must be purchased when a
plant is first established and will also
require continuous sanitization,
maintenance and repair. As production
facilities get larger, many brewers prefer
to substitute labour with more efficient,
fixed investments in larger brewing
systems and machinery. On average,
breweries spend $0.71 on capital for every
dollar spent on labour. However, the
specific amount of capital spending varies
based on the size of the plant.
Capital intensity
Capital units per labour unit

1.0
0.8
0.6
0.4
0.2
0.0
Economy
Manufacturing
In Canada
Breweries
Dotted line shows a high level of capital intensity

SOURCE: IBISWORLD
The majority of the beer production

process is mechanized, limiting the need
for labour to brewing functions such as
Tools of the Trade: Growth Strategies for Success

Investment Economy
Recreation, Personal Services,

Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labour skills are key to
product differentiation.
Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
Bottled Water Production
Traditional Service Economy

Wholesale and Retail. Reliant
on labour rather than capital
to sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Soda Production
Sawmills & Wood Production

Flour Milling
Breweries
Beer, Wine & Spirit Wholesaling
Change in Share of the Economy
Capital Intensive
Labour Intensive
New Age Economy
Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labour abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Capital Intensity
continued
sanitizing, hydrometer readings, quality

control and other miscellaneous
administrative functions. As a result, wages
in the industry are relatively low. Some of
the industrys largest breweries, however,
have a significant global presence with
multiple factories and large corporate
offices that hold massive executive and

marketing departments. The need for
administrative employment drives up
labour costs considerably when taking into
account the additional wages that are paid
for administrative staff, sales, marketing,
accounting and other employees.
Technology & Systems Although the standard process of making
brewing processes, which have expanded

to serve parts of Quebec and the state of
New York.
Technologies used to distribute, store,
package and keep track of beer products
are also constantly evolving, giving an
indirect boost to the industry by
decreasing middleman costs and thus
lowering final sale prices. From electric
and hybrid fleet vehicles adopted by
distributors to inventory management
software used by warehouses, technology
helps the industry provide consumers
with lower-cost beer.
A range of brewing methods exist and
vary depending on the type of beer that is
manufactured. Barrel aging is a common
practice for manufacturers of sour beers.
Much like the process used to ferment
wine, oak barrels may be used in tandem
with yeast fermentation to produce a
desired result. Different ranges of
brewing styles are regularly tested and
modified over time to produce slightly
different look and taste to specific beers.
Craft brewers have adopted popular
English beer styles and developed new
twists on traditional styles. Americanstyle IPA beers, for example, represent a
new interpretation by increasing the hop
aroma, bitterness and alcohol content of
classic English IPA flavor profiles.
Level
The level
of
Technology
Change is L ow
beer has experienced essentially no major

change throughout history, technological
advancements have made brewing
processes larger, less expensive and more
efficient than ever before. Quality-control
improvements through computer
automation throughout the brewing
process are fast-growing trends. Modern
brewing plants are increasingly using
brewing, fermenting and conditioning
processes that are monitored by
computers capable of assessing
temperature changes, yeast activity and
fluctuations in the pH of the initial beer
mash. Increased automation allows
brewers to more precisely control
variables during the critical phases of
brewing (i.e. lautering, boiling and
fermenting). Technological
improvements in monitoring equipment
also allow for better quality control and a
more consistent finished product.
The use of renewable energy to power
brewing plants is also a growing trend.
For example, Beaus All Natural Brewing
Company announced in 2014 that it
intends to become Canadas first brewery
to use 100.0% green natural gas captured
through landfill emissions and biogas.
Additionally, the company has installed
solar panels to assist with day-to-day
WWW.IBISWORLD.CA
Level
The level
of
Volatility is M
edium
Unlike the US Breweries industry, where

changing distribution laws and rapidly
expanding craft brewing facilities have
created a very volatile climate for
brewers, the Breweries industry in
Canada has been mostly stable over the
past five years. Much of this is due to the
rigid structure of the countrys alcoholic
beverage distribution system, which has
been almost entirely operated by
provincial governments for decades. This
inherent stability in downstream
distribution has contributed to mostly
stable growth in brewers revenue over
the past five years.
Industry revenue volatility, measured
as the average absolute change in
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.
industry revenue over the five-year

period to 2016, is moderate and currently
stands at 4.3%. Although state-by-state
dismantling of government-operated
alcohol distribution has created a frenzy
among small-scale brewers to open new
facilities across the United States, the
Canadian market for small-scale
microbreweries is likely to remain stable
over the next several years. Increasing
popularity in craft beer has increased the
number of industry establishments
significantly since 2011; industry revenue
increased by 11.3% in 2011. Sustained
periods of massive revenue growth
among domestic breweries over the next
five years, however, is unlikely.
Volatility vs Growth
1000
Revenue volatility* (%)
Revenue Volatility
Hazardous
Rollercoaster
100
10
Breweries
1
0.1
Stagnant
30
10
Blue Chip
10
30
50
70
Five year annualized revenue growth (%)

* Axis is in logarithmic scale
SOURCE: IBISWORLD
Regulation & Policy

Level & Trend
he level of
T
Regulation is
Heavyand the
trend is S
teady
Nutrition
The industry is regulated by Health
Canada, which establishes standards for
food safety and nutritional quality.
Meanwhile, the Canadian Food
Inspection Agency (CFIA) enforces these
health and safety standards, in addition
to packaging, labelling and marketing
regulations. The Organic Products
Regulations were instated in mid-2009
and require certification from the CFIA if
a brewery chooses to advertise its

products as organic. Under the CFIAs
regulations, breweries may claim their
products as organic as long as organic
ingredients comprise at least 95.0% of
the beverages total content. Products
with 70.0% to 95.0% organic content can
have labels that advertise the products
percentage of organic ingredients, but
they may not use the CFIAs official logo
identifying the product as organic.
WWW.IBISWORLD.CA
Regulation & Policy

continued
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is L owand the
trend is S
teady
Inputs
The Canadian Wheat Board had been the
price setter and exclusive seller of
malting barley on behalf of producers in
western Canada until August 2012, when
its monopoly ended. This change
introduced volatility into the pricing and
availability of these key industry inputs.
In turn, breweries developed
relationships with suppliers and
established contracts to mitigate risk.
Imports of barley and wheat are subject
to tariffs, although imported corn, oats,
rye and other grains may be freely traded.
containers like glass to reduce or

eliminate waste from packaging.
According to the Brewers Association of
Canada, about 97.0% of bottles are
recycled, with each bottle being sterilized
and reused on average 15 to 20 times.
Manufacturing
Other policies regulate the industrys
manufacturing facilities. For example,
breweries must meet all laws with regard
to zoning and environmental
requirements, such as those included in
the Canadian Environmental Protection
Act and the Canadian Environmental
Assessment Act. If a brewery wishes to
expand the size of their facility, municipal
bodies may choose to assess the
environmental impacts of this expansion
before construction can begin. Provincial
regulations can also apply: Prince
Edward Island mandates reusable beer
Retail
Regulations limit the sale of beer by retailers
and set minimum prices for alcoholic
beverages, which reduces price-based
competition for value products. The existing
system favours the industrys major
companies, which have each established a
significant network of proprietary stores. If a
brewery wants its products to be sold by
these stores, they must pay these stores a fee
to carry their merchandise. Although this fee
is set by federal and provincial laws, it
favours breweries that own a network of
stores because they ultimately control the
in-store exposure of each product.
Government-owned stores also exist
and are mandated to carry a variety of
products. However, there are fewer such
stores and beer sales are a fraction of
their revenue. As a result, brewers
significantly limit their market reach if
they choose not to sell their products
through their competitors outlets.
The Agreement on Internal Trade is

responsible for the regulatory system that
limits provinces from impeding
interprovincial alcoholic beverage
transactions. As a result, most of the
trade barriers between provinces have
been slashed for domestic brewers. This
effectively protects brewers from new
or existing regulations that would deter
shipments of beer within Canada.
Provincial and federal sales and excise
taxes are due upon receipt at the retail
level. These costs are typically passed
along to consumers in the form of
higher prices.
Canadian breweries are heavily

supported by provincial government
assistance. Canadian provinces and
territories operate their own liquor
boards, which monitor the production,
distribution and sale of alcoholic
beverages within their respective
provinces. Each body operates
autonomously, with varying degrees of
assistance based on the regulatory
preferences of each region. For example,
the Liquor Control Board of Ontario
purchases all beer, wine and spirits for its
Ontario consumers and licensed retailers
and distributes these products using its
WWW.IBISWORLD.CA
Industry Assistance
continued
integrated distribution network.

Conversely, Alberta operates a fully
privatized system in which all forms of
alcoholic beverages are distributed and
sold to private, licensed premises.
Despite the provinces privatization,
industry wholesalers are still heavily
supported by the Alberta Gaming and
Liquor Commission, which oversees the
manufacture, importation, sale,
possession, storage, transportation and
consumption of liquor through collected
mark-ups on all alcohol products. The
Alberta Gaming and Liquor Commission

charges breweries a $0.22 markup per
litre brewed up to 20,000 hectolitres.
Breweries that produce more than this
level are required to pay $0.51 per litre.
Although the commission has justified this
markup policy by arguing that the lower
markup for small breweries assists these
smaller establishments to compete against
larger breweries, many small brewers have
been reluctant to expand their overall
output beyond 20,000 hectolitres due to
the additional markup costs.
WWW.IBISWORLD.CA
34
Key Statistics
Industry Data
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
($m)
5,383.7
5,123.7
5,462.2
5,093.7
5,307.8
5,423.5
6,035.2
6,491.4
6,676.7
6,737.0
6,771.9
6,752.2
6,750.0
6,753.6
6,767.7
Annual Change
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Revenue
(%)
-4.8
6.6
-6.7
4.2
2.2
11.3
7.6
2.9
0.9
0.5
-0.3
0.0
0.1
0.2
Industry
Value Added Establish($m)
ments
1,061.3
198
867.3
198
1,072.7
208
1,102.2
206
1,185.9
222
1,122.6
242
1,138.5
319
1,212.2
351
1,278.8
362
1,321.3
368
1,325.7
376
1,311.4
381
1,317.1
391
1,319.6
400
1,327.9
410
Enterprises Employment
185
8,467
184
7,998
195
8,571
194
8,692
213
8,758
232
9,081
306
8,863
334
8,544
345
8,755
351
8,805
359
8,888
364
8,871
375
8,950
383
8,980
394
9,067
Exports
($m)
374.0
370.1
270.4
267.9
238.4
228.0
233.4
217.9
223.8
223.9
229.0
234.8
238.1
241.1
243.5
Imports
($m)
626.6
635.5
722.2
700.5
605.5
627.8
675.7
679.9
737.9
746.1
787.3
831.1
871.5
918.4
962.7
Wages
($m)
458.2
406.3
444.5
440.0
437.5
499.0
426.3
433.2
445.5
448.7
452.8
451.7
454.9
456.2
460.0
Domestic
Demand
5,636.3
5,389.1
5,914.0
5,526.3
5,674.9
5,823.3
6,477.5
6,953.4
7,190.8
7,259.2
7,330.2
7,348.5
7,383.4
7,430.9
7,486.9
Industry
EstablishValue Added
ments
(%)
(%)
-18.3
0.0
23.7
5.1
2.8
-1.0
7.6
7.8
-5.3
9.0
1.4
31.8
6.5
10.0
5.5
3.1
3.3
1.7
0.3
2.2
-1.1
1.3
0.4
2.6
0.2
2.3
0.6
2.5
Enterprises Employment
(%)
(%)
-0.5
-5.5
6.0
7.2
-0.5
1.4
9.8
0.8
8.9
3.7
31.9
-2.4
9.2
-3.6
3.3
2.5
1.7
0.6
2.3
0.9
1.4
-0.2
3.0
0.9
2.1
0.3
2.9
1.0
Exports
(%)
-1.0
-26.9
-0.9
-11.0
-4.4
2.4
-6.6
2.7
0.0
2.3
2.5
1.4
1.3
1.0
Imports
(%)
1.4
13.6
-3.0
-13.6
3.7
7.6
0.6
8.5
1.1
5.5
5.6
4.9
5.4
4.8
Wages
(%)
-11.3
9.4
-1.0
-0.6
14.1
-14.6
1.6
2.8
0.7
0.9
-0.2
0.7
0.3
0.8
Domestic Per capita alcohol

Demand
consumption
(%)
(%)
-4.4
-3.7
9.7
2.2
-6.6
-2.7
2.7
-6.0
2.6
-1.1
11.2
-2.7
7.3
-3.6
3.4
2.8
1.0
-2.0
1.0
-0.3
0.2
-0.2
0.5
-0.3
0.6
-0.2
0.8
-0.3
Key Ratios
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
IVA/Revenue
(%)
19.71
16.93
19.64
21.64
22.34
20.70
18.86
18.67
19.15
19.61
19.58
19.42
19.51
19.54
19.62
Figures are in inflation-adjusted 2016 dollars.
Imports/
Demand
(%)
11.12
11.79
12.21
12.68
10.67
10.78
10.43
9.78
10.26
10.28
10.74
11.31
11.80
12.36
12.86
Exports/
Revenue
(%)
6.95
7.22
4.95
5.26
4.49
4.20
3.87
3.36
3.35
3.32
3.38
3.48
3.53
3.57
3.60
Revenue per
Employee
($000)
635.85
640.62
637.29
586.02
606.05
597.24
680.94
759.76
762.62
765.13
761.91
761.15
754.19
752.07
746.41
Wages/Revenue
(%)
8.51
7.93
8.14
8.64
8.24
9.20
7.06
6.67
6.67
6.66
6.69
6.69
6.74
6.75
6.80
Employees
per Est.
42.76
40.39
41.21
42.19
39.45
37.52
27.78
24.34
24.19
23.93
23.64
23.28
22.89
22.45
22.11
Average Wage
($)
54,115.98
50,800.20
51,860.93
50,621.26
49,954.33
54,949.90
48,098.84
50,702.25
50,885.21
50,959.68
50,945.09
50,918.72
50,826.82
50,801.78
50,733.43
Per capita alcohol

consumption
(Liters)
122.7
118.1
120.7
117.4
110.4
109.2
106.3
102.5
105.4
103.3
103.0
102.8
102.5
102.3
102.0
Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
SOURCE: IBISWORLD
WWW.IBISWORLD.CA
Jargon & Glossary
Industry Jargon
ADJUNCTSNonessential beer ingredients such as rice

or corn that are often included in the mash to alter
flavor or reduce ingredient purchase costs.
LAUTERINGThe process of soaking malted grains in

hot water and then draining the water in order to create
a liquid that contains fermentable sugars.
CRAFT BEERBeer broadly defined as having annual

production of less than two million barrels made by an
independent brewer.
NANOBREWERYA very small commercial microbrewery

that is often operated by a single owner and produces
very small batches for local distribution.
HYDROMETERAn instrument used to determine

specific gravity of liquid. For brewers, hydrometers are
used before and after fermentation to determine if
yeast has properly converted fermentable sugars to
alcohol.
IBISWorld Glossary
BARRIERS TO ENTRYHigh barriers to entry mean that

new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labour. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labour; medium is $0.125 to $0.333 of capital to
$1 of labour; low is less than $0.125 of capital for every
$1 of labour.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
real growth or decline in industry metrics. The inflation
adjustments in IBISWorlds reports are made using
Statistics Canadas implicit GDP price deflator.
DOMESTIC DEMANDSpending on industry goods and
services within Canada, regardless of their country of
origin. It is derived by adding imports to industry
revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and casual employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENT The smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by Canadian companies to customers abroad.
IMPORTS Total value of industry goods and services
brought in from foreign countries to be sold in Canada.
INDUSTRY CONCENTRATIONAn indicator of the

dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED The market value of goods
and services produced by the industry minus the cost of
goods and services used in production. IVA is also
described as the industrys contribution to GDP, or profit
plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%; medium is 5% to 20%; and high is more
than 20%. Imports/domestic demand: low is less than
5%; medium is 5% to 35%; and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industrys life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industrys products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
WWW.IBISWORLD.CA
Jargon & Glossary
IBISWorld Glossary
contined
PROFITIBISWorld uses earnings before interest and tax

(EBIT) as an indicator of a companys profitability. It is
calculated as revenue minus expenses, excluding interest
and tax.
VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
20%; high volatility is 10% to 20%; moderate
volatility is 3% to 10%; and low volatility is less than
3%.
WAGESThe gross total wages and salaries of all

employees in the industry. Benefits and on-costs are
included in this figure.
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Breweries in CanadaFebruary 2016 1

Going flat: Changing drinking patterns and low

IBISWorld Industry Report 31212CA

2 About this Industry

21 Market Share Concentration

21 Key Success Factors

21 Cost Structure Benchmarks

Key External Drivers

11 Industry Life Cycle

27 Molson Coors Brewing Company

13 Products & Markets

13 Products & Services

30 Technology & Systems

31 Regulation & Policy

35 Jargon & Glossary

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Breweries in CanadaFebruary 2016 2

About this Industry

The Breweries industry primarily

The primary activities of this industry are

other occasional adjuncts.

Canned beer production

31211aCA Soda Production in Canada

Breweries in CanadaFebruary 2016 3

About this Industry

For additional information on this industry

writes over 400 Canadian

Breweries in Canada February 2016

Annual Growth 11-16

Annual Growth 16-21

Revenue vs. employment growth

Products and services segmentation (2016)

Key External Drivers

Per capita disposable

World price of aluminum

Life Cycle Stage

Breweries in CanadaFebruary 2016 5

Executive Summary | Key External Drivers | Current Performance

Over the past five years, the Breweries

to changing preferences, consumers

Key External Drivers

Per capita disposable income

in the North American MillerCoors joint

disposable income is expected to increase

Breweries in CanadaFebruary 2016 6

frequency and affect sales of beer. For

and limiting the beers exposure to flavordamaging UV rays. An increase in the

Per capita disposable income

Key External Drivers

Breweries in CanadaFebruary 2016 7

Over the past five years, changing

The entire North American market for

margins that substantially exceed this

Breweries in CanadaFebruary 2016 8

Uncertain input prices Industry profitability has historically been

recent years, many

erratic. Due to both the fickle nature of

their products in aluminum cans. Over

Although Canada has historically been a

US taste preferences. The United States

Breweries in CanadaFebruary 2016 9

Industry operators will likely face significant

Slow and steady

With input prices stabilizing and the