The province of Quebec is being hit quite hard right now and it’s not by just one factor—the crowded market, inflation and labour shortage are the main culprits of the provinces’ current situation.
Labour shortage leading to limited hours, inflation increasing transport and raw material costs, and a rise in seltzers and other drinks have contributed to a 13.3 percent drop in beer sales in the province, according to a Beer Canada report as reported on CTV News Montreal.
“Inflation has hit pretty much all spheres of the economy,” said Avant-Garde craft brew pub co-owner Renaud Gouin. “On our part, the transport fees for distributing the beer or even the grains and the hops and everything definitely has been affecting our costs greatly.”
In addition, the federal and provincial beer taxes are based on the consumer price index, which measures price change by comparing the cost of a fixed basket of goods and services over time.
“The federal government has an indexed tax formula now since 2017, and that’s based on the CPI,” said Sylvain Charlebois, senior director of the Agri-Food analytics lab at Dalhousie University, noting that typically it is between 1.5 and 2.5 percent.
With inflation, that number is set to be much higher in 2023.
“They’re looking at between 6.5 and 7.5 per cent, making beer less affordable next year, starting in April,” he said. “That’s certainly not going to help beer sales at all.”
“This is a very competitive market right now,” said Gouin. “There’s supposed to be about 100 permits for microbreweries in Quebec in waiting. Most of them should open within about a year or so… It’s a lot of new competition that’s coming in, and definitely, there’s not enough space for everyone.”
“We thought that perhaps because of the end of lockdowns, people going out a bit more, we expected beer sales to rise compared to 2021, but they’ve actually dropped,” said Charlebois. “People are drinking less beer at restaurants.”
“It’s really impacting the beer industry in Canada because people are looking for different things,” said Charlebois. “The market is a lot more fragmented than it used to be a few years ago.”
“There are a few microbreweries that are getting into that market – it got crowded really fast,” said Gouin. “I hear mixed results. There was a huge growth over the last two years, but I think it’s going to stabilize over the next year.”
It’s not all bad news for Montreal’s craft brewers though.
Gouin said the tax hike will likely not affect smaller shops like his and that the Molson strike, in addition to people being eager to go out and support local businesses, has helped his and other shops gain customers and clients.
“The younger generation is more and more inclined to try out new products and don’t favour the big guys,” said Gouin.
Photo courtesy of Avant-Garde/Facebook