Canadian Craft Beer & AB-INBEV – Molson-Coors

Posted on July 25, 2011

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After reading an article by Rubin who writes for the Toronto Star, it illustrates the difficulty in smaller breweries growing in a difficult cut throat industry. IN summary the story was about the battle between Ontario Craft Breweries and the privately owned by Government Regulated Beer Store.

I hadn’t known this prior to the article but Molson-Coors & AB-Inbev owned Labatts each own 49% with Sleeman owned by AB-Inbev 2%. So ultimately Anheiser-Bush INBEV own 51% of the Beer Store. I can remember going to the beer store when I lived in Toronto and it was the most uninspiring place ever to order beer. They gloat that they have 100’s of brands of beer but its all the same mainstream crap. I remember often being disappointed at the selection, and often resorted to going to the LCBO governemnt stores to buy Belgium Beer.

Ontario & BC have both grown in beer stature of the last few years, and everyone I know in both cities avoid Ontario/BC & Federal taxes by buying their beer over the border in either New York or Washington State. BC have private liquor stores whom sell US/Overseas beer that the BC government stores cannot due to volume.  As one of the owners of a beer bar in Toronto stated about the private liquor stores in Vancouver ‘How fucking civilized’. Ontario definitely is behind BC in terms of beers available, and with the regulations put in place by both Molson-Coors & AB-INbev it will continue to be the joke of Canada.

Ontario have great Liquor stores where there are products that never see the light of day outside of Ontario, due to the massive volume that it sells. Yes people in Toronto & Ottawa don’t have a choice, its LCBO or Beer Store. The Beer Store sells 85-90% of the beer in the province, and it makes sense for the management not wanting to give away too many listings to new upstart breweries, or new craft beer brands.

We can look at the US industry for insight into Canada, we can see that Miller-Coors a venture associated with Molson-Coors saw a decline in -2.7% in sales of their beers in retails sales. The bright spot for the beer companies are ‘Premium’ brand divisions such as Tenth & Blake (Miller-Coors) that attained gains in such brands as Blue Moon, Peroni & Leinenkugel. The largest brewer in the world AB-INbev had 2-3% LESS sales of their beer in the last quarter, so they are reacting by increasing prices on their products by 3-5%. Which you may deem as quite idiotic in this tough economic climate.

The Beer Store & LCBO has seen growth of their craft beer segment with declines in larger brewers such as Molson & Budweiser products. In tough economic climates the strange reaction for many people is to drink less, but better products. Friends in Toronto I know are buying more expensive wines/beers but drinking less of them. Sales of premium Vodka/Tequila has increased as has the premium beer market. The beer store could attain profit in other ways through sales of Craft Beers that are being supported by beer lovers all over the world.

Sometimes its the senior managers in these companies that need to look outside the box, instead of hiding their heads in the sands and hoping the Craft Beer Growth will go away, as it won’t!

 

 

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