A very interesting article in the Globe and Mail's Business section by Derek DeCloet this morning on the pressure to drop prices in the Canadian macro-brewing industry. The factual highlights are these:
Just before Christmas, John Sleeman, the man who runs Canada's third-largest brewery, committed an act he'd once hoped he would never be forced to do. He slashed the cost of his beer...So mega-beer producers suffer from unhealthy images; equal advertizing opportunities granted to the competition; homogenization and standardization of product; and none of the breaks in taxation micros get. In his very interesting article, DeCloet goes on to analyze which brewers are going to be the best bets for investment over the next while. A good read.Mr. Sleeman says part of the change can be traced back to a 1991 story by 60 Minutes that documented the so-called "French paradox," which suggests the French live longer and suffer less heart disease because of their love of a fine Beaujolais. Wine sales began to climb "the next morning," recalls Mr. Sleeman, and they haven't stopped. In 2003, the average Canadian of legal drinking age consumed about 14.4 litres of wine, up 31 per cent from a decade earlier. Average beer consumption fell 5.5 per cent in that period. If the wine makers had CBS on their side, liquor manufacturers benefited from changing laws and social mores. In 1995, the Federal Court of Canada struck down as unconstitutional a regulation banning hard liquor advertising on TV...
Some industry watchers argue that brewers have themselves to blame for their downbeat image. Accountants may love the Canadian brewers' deal to use the same, long-necked brown bottles for most of their brands because it saves millions in packaging costs. But since every bottle looks the same (with few exceptions), and the liquid often tastes the same, who can blame beer drinkers for concluding that most beers are the same, and buying the cheapest one?...and
It's not that Lakeport is more efficient than the mega-brewers. Rather, it is small enough to qualify as a microbrewery under Ontario law, and gets preferential tax treatment. A micro that ships about 1.2 million cases a year in the province will pay a basic production tax of $3.1-million. Sleeman, Molson Coors and Labatt pay nearly $5.6-million to sell the same number of cases.


Comments
georgia - May 10, 2005 6:34 am
buying beer from molson company we need to know the price of caises 24 cannettes send me the price and i like to do business with you thank you for your attention
president :
georges
Alan - May 10, 2005 7:44 am
Is this a new twist on the Nigerian scam? Are you going to offer me 24 million for some cans of Ex?
Guy Desrosiers - May 12, 2005 9:37 am
Folks,
As the price of beer increases, so does consumption. This is true in every Canadian province.
As beer prices rise, the cost in a bar also increases. As bars will not increase their price by a penny or nickel, the price changes are usually in increments of a quarter. Therefore, bars absorb small increases at great cost. A price increase of $.20 on a dozen can rob a bar of $200 per week of revenue. When the cost of a beer rises a quarter in the bar, it is then less expensive to purchase off-sales and drink at home.
If you look at Manitoba's consumption per capita, there is a spike of 2 liters in 2002. This corresponds with the minimum pricing regulations that occured in 2001. In an attempt to prevent over drinking in bars, Manitoba initiated a minimum price of $2.25. Instead of reducing consumption, it increased.
As well, when smoking was prohibited in bars, customers simply purchased at vendor and drank at home. The net result is that per capita alcohol consumption in Manitoba has increased by 4 liters directly due to the effects of "social responsibility" pricing and smoking bans.
In BC, per captia consumption fell steadily until 1999-2000 when smoking bans began in Vancouver and Victoria. As the WBC regulations affected bars all over the province, per capita consumption increased. It is now, 3 liters per capita greater than in 2000. The same thing happened in Nova Scotia. In 2003, nine communites (including Halifax and Cape Breton) initiated smoking bans. The result was an immediate increase of 3 liters per capita.
Beer is most responsive to price and smoking bans. As there has been a gradual increase in wine and coolers (coolers are quickly becoming a female beer), beer consumptions reacts immediately to price, and lifestyle restrictions. This is not lost on brewers who refer to "home based" consumers as a growing market segment.
Unfortunately, there are some societial costs associated with these changes. More residential drinking means more unregulated drinking. Here in Rural Manitoba, party houses are starting to appear that feature poker, no restrictions on age, and they go all night. The local bars are failing (three so far since the October 2004 smoking ban) as they have difficulty attracting customers. Why go to the bar when you can't smoke, play poker or have fun?
However, as bars across the country are hurt by price increases, the provincial governments are making record profits selling an increasing amount of alcohol.
There is more, but I will end here. Suffice to say, pricing increases are increasing consumption. However, his increased consumption is unregulated. Generations of liquor laws were established to ensure people had a safe place to drink - a place if you fell down, someone would pick you up - a place where if a fight started sober staff would break it up - a place where people could have fun and not worry. Those places are slowly being legislated out of existence.
Guy Desrosiers
Researcher
Manitoba Association of Rural Hotel Owners
cantheban@yahoo.com
Alan - May 12, 2005 10:16 am
Great info, Guy. Add your two cents anytime. I am starting to be surprised who is reading this blog out there.
Jim Green - June 29, 2005 11:45 am
Hi
Living and working and now retired in Canada (Vancouver Island British Columbia) I cannot understand why the cost of beer is so high in British Columbia and all of Canada for that matter. Now that we are snowbirds and spend winters in Arizona the price of beer in Canada seems more amplified. My 24 can flat of economy priced suds here costs around $36.00 Canadian. When in Yuma Arizona any large grocery store like Frys or WalMart the price for a 30 can box of the same brand beer is $10.00 USD. How is Canadian beer priced? How much of the purchase price is tax?
Jim Green
grandpa.1@seaviewcable.net
Tofino, British Columbia
Alan - June 29, 2005 11:56 am
Good questions, Jim. This site claims that 52% of Canadian beer is tax but given the discount wars and the various provincial schemes we may want more detail than that. Any takers?
Melissa - February 20, 2006 2:25 pm
I really would like to know how much appro. 2 kegs would cost?
jesse - June 9, 2006 4:49 pm
hay.......................wute
jesse - June 9, 2006 4:50 pm
yo ok to kags is 1200000000000000000043$ ok man
Chris Attersley - January 18, 2007 11:54 pm
Sin taxes in Canada is highway robbery. Taxes as it stands in Ontario, and it varies greatly from Province to Province, to Territory is right now just under 50% of the price paid at the LCBO, and beer store. Since the Liquor board and the beer store have a monopoly price wars like you would see in Quebec which has beer/wine are the grocery store is almost non existent. A case of Molson or Labatt is now 36.35$, where as the same case in Quebec is 22.95, and in New Jersey is 18.99 USD$ In cans is another story. The price of can's in Canadian will set you back 2 - 4 $ more depending on brand (24's), were as in the US you can get most 30 packs of for between 12 - 15$ USD. In the US there is little if not any taxes. We are being raped up here, and enough is enough...
Chris Attersley.
Oshawa, Ontario.
Girl from Vancouver - January 29, 2007 2:18 pm
When thinking about the cost of beer I urge everyone to take a look first at the alcohol content of the beer in Canada, or do a home-test. The % alcohol of beer in Canada is substantially higher, thus allowing for a higher price. Check out the marketing schemes in the US where the "Strong" beer is priced higher to target a specific market. Another item to look into is that there are still economically priced beers available on the market, but they are less 'in vogue" than the wide varitey of premium beers that are accessible to Canadian beer drinkers! I for one feel lucky to have a wide selection of a variety of types and styles of beer ranging from pacific pilsner to lucky lager to unibroue from quebec, without even bringing up the fabulous array of bc craft brewers. I don't mind paying a little bit more when the quality is above and beyond. Cheers!
Alton Thring - February 3, 2007 8:49 pm
If the alcoholic content has any bearing on the price of beer, then surely the "lites" would be cheaper.
I don't think the Coors Lite is any cheaper than Laker.
I fell into this forum looking for a reason our beer is priced so highly. I understood there was a minimum price structure in place?? Am I wrong?
On another issue, why does Molson's Fosters taste like all other Molson's while Aussie Fosters tastes good?
Alton
Chad - March 9, 2007 8:44 pm
Unfortunately Canadian beer isn't actually any stronger than American beer. We, and much of the world, just measure the alcohol content in terms of the volume; the US measures based on the weight of the liquid. Look it up.
Fen - March 15, 2007 2:32 am
Hi guys, i am an australain, what the hell am i doing here??? well im doing a uni asses on the canada's beer market, just want to know if anyone can suggest some good sites to look at, other in fo like the most popular beers in canada? cheers lads have a good one
fen_fan_dango@hotmail.com
Steve - May 13, 2007 7:59 am
I'm from Vancouver and living in Taipei. Today I just finished off two bottles of Carlsberg (660ml) (5 vol)from Copenhagen (not Canadian made)two bottles of Blue Girl a German Pilsener brewed in Hong Kong (660ml) (5 vol). One bottle of Dubuisson Bush from Belgium (12% vol)(250cc)and a bottle of St. Sebastiaan Dark from Belgium (6.9 vol) (500cc)while watching the Sens. beat Buffalo in double overtime. Plus, all this on a Sunday morning at a bar where I could have had at least six other "import" beer plus the local beer. I averaged out the cost, and each beer just made $5.00 Canadian.... this when the exchange rate was favouring Taipei. A few weeks ago these would have cost me around $4.25 a bottle Can.
MY QUESTION;
Compared to B.C. prices what do you think about the cost of drinking beer in Taipei?
Chris Attersley - June 4, 2007 7:35 pm
The alcoholic content by volume from Canada to the USA is wrong. They are pretty much the same. As for good selection... I have been all through the USA and they have just as good of a selection if not better then we do in Canada. There craft brewing industry is something to be impressed by, and ours fails in comparison. Prices go down to that we are taxed to death here Canada, and in alot cases taxed on a taxed even. Most Americans depending on the State are taxed as little at 0.025% to 16% on the price of there alcohol. Here in the Great White North we are paying a direct tax of 52%. The beer store, 24 * 355 ml cans = 40.00$ CDN, NY State Walmart the same case 16.99$ USD. Gotta love the taxation system here.
- Chris L. Attersley.
Chris - September 24, 2007 2:50 am
We are getting fleeced on the price of beer accross Canada, the excuse being we have to pay for our health care system and social benefits somehow. I can buy this argument to a certain extent but it is absolutely unacceptable that in general the price of beer is generally two to three times higher in Canada than in the US. For example, here in Manitoba 12 cans of Labatt's Light (using this brand as an example becuase I believe it is the number one seller here) sell for $20.10. On a recent trip to North Dakota I saw 12 bottles of Blue (an import there) sell for under $9.00 and twelve packs of high end US beers like Rolling Rock and Sam Adams for even less. Twenty four cans of Miller High Life (OK, not the best in my opinion) sold for under $10.00. Sorry, but our more extensive social safety net cannot justify this degree of price inflation. Don't forget, we are also paying higher income and sales taxes as well! Regarding the comments by Guy Desrosiers above, I also have noticed that business at bars has decreased in the last few years. It is becoming more and more common, especially for people over 30, to have a few friends over and drink at home. Notwithstanding the high prices at bars (usually $4 or more for a drink) and the smoking ban, I think that the transport issue is also a factor given that taxis can be very expensive and hard to get late at night, and an impaired driving conviction can in the long run cost around $10,000. Here's a tip for all you beer lovers (that is if you don't mind the limited choices respecting brands): you can save a fair chunk of change by buying king cans. As above 12 cans of Blue sell for $20.10 while six king cans (same quantity of beer) sell for $16.20. Accepting that you'll receive 60 cents more in empty returns by buying the 12 cans, this is still a savings of $3.30 on twelve of the same thing!
Brad Boomhour - April 12, 2008 11:32 pm
I buy most of my beer at the Duty Free shop when i get over to the Usa as it is far cheaper then what we get Gouged at the Beer Stores. It's high time we allow beer sales in grocery stores, etc to open up a little competition and put an end to the Monopoly the Greedy Beer Store has had for far to long.
Tyler G - May 1, 2008 6:15 pm
Apparently you all have to start worrying 10 fold if you are grumpy at paying 20 bucks for a case of beer (not even 2 bucks per can). It's supposed to double within 2 months time due to the rising costs of wheat/grains, hopps, and aluminum. Canada hasn't felt the hit too much from rising world food costs, but not for long, and we'll certainly notice with our beer doubling in cost!! Why o why!
King Reign - May 7, 2008 7:13 am
Yes, beer prices will rise soon. Grain and gas prices will certainly be a factor. I have a solution. Make your own beer. I have been doing this for over 25 years. No more standing in line at the Beer Store kicking a box of over priced bland beer. Humiliating to say the least. I have tons of beer in my basement all bottled and ready to go for the summer. My cost? $5.00 a case of 24.
joejoe - June 10, 2008 11:00 pm
How much was beer in 1960 per glass, in usa, in canada