report on the beer Industry in Canada

report on the beer Industry in Canada

1. Introduction

This essay is a report on the beer Industry in Canada. The essay will first explore the history of beer consumption in Canada and the main factors which led to the rise of beer brewing and consumption in Canada. Secondly, the essay will analyze the type of beers produced in the Canadian industries. Thirdly, the essay will examine the volume of beer consumption in Canada and the levels of beer import and export in Canada. Fourthly, the essay will analyze the level of concentration in the Canadian industries and the key factors leading to such levels. Finally, the essay will discuss the main factors affecting alcohol consumption in Canada.

2. History of the beer industry in Canada

Overages, Canada has always been referred to as a brewing country. Beer brewing in Canada started as a household base activity where beer was produced by families to crown their ceremonies or just for family fun. Some of the greatly known domestic brewers are people like Louis Herbert, who arrived in Canada in 1617 and started practicing wheat and barley cultivation for beer (Anderson, 2017). The first brewery was started by Jesuit Brother Ambrose after the foundation of New France. After some years, a commercial brewery was established in Quebec City by the Great Attendant Jean-Talon. His main motive was to introduce as local beer brewing industry and reduce the dependence on imported beer brandy. This brewing company became successful and expanded over time. This company expanded its market became the first commercial beer brewing company in Canada to export beer to areas such as the West Indies (Cabras & Higgins, 2016).

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Many factors necessitated the historical development of the brewing industry in Canada. During the colonial era in Canada, beer was the only safer drink. This is because the colonies used milk and water as the tool to make the Canadians weak in order to maintain their power. Milk and water contained some dangerous microorganisms which made causes bacterial diseases to the Canadians (Hatch & Schultz, 2017). Additionally, the Canadians held the notion that fermentation killed some of the microorganisms. These practices made beer not only a source of fun to the Canadians but a necessity. Additionally, the culture of Canadians favored beer consumption. In many important occasions, beer was supposed to be availed in plenty in order to crown the ceremony (Garavaglia & Swinnen, 2017). Ceremonies without beer had less turn up. Beer was made in clay pots where burley or wheat was mixed with other ingredients and left to ferment for some days. As a result, Canadians have been referred to as beer lovers, and up to today, beer is the Canadian symbol of national identity and heritage (Cabras & Higgins, 2018).

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3. Types of beer produced in Canada

There are five major types of beer that shaped Canadian history in brewing. The first type is the Brown ale. This is a type of beer that was made in Canadian rural areas since the last quarter of the eighteenth century. It was a simple brand of beer to make despite the notion that it was hard to control its taste or color. The present-day brown ale is brown in color. The second type of beer is the porter. This beer was imported from overseas on the first few years before the Canadian brewing companies started producing it. It is a brand of beer that was highly consumed by the Canadians, which necessitated the developments of interest by the local industries to start making it. The third commonly used beer is the pale ale. This is a beer that is commonly consumed by young Canadian guys. As a result, most of the Canadians call it the handsome establishments or the drink of saloon. It has a very nice appearance when put into a clear glass container (Nikolova, 2017).

The fourth type of beer is Lager. Lager is commonly referred to as “the star.” It was commercialized between 1955 and 1975 during the period of prohibition. This beer needs to be kept under refrigeration in order to make it more tasty and efficient.  It bears sweet taste and favors people who have been used to soft drinks. Additionally, this beer is connected to Post World War II affluence because it established after the war was over. The fifth type of beer is the Craft beer. Craft beer new brand of beer in Canada, but symbolizes the recovery of beer, which was produced in the historical era during the development of the brewing industry in Canada. Therefore, the craft beer is just a modification of other beers that have gone out of the market in order to satisfy their customers in the changing nature of beer with the change in technology (Nikolova, 2017). All these types of beer have different customers, depending on the customers’ tastes and preferences. Additionally, some like the pale ale is consumed by a specific population in the Canadian population.

4. The market for beer in Canada

According to the report by the Global Data, Canada emerged the twelfth in the ranking after Mexico. According to the statistics, the global beer market value in Canada increased from Us Dollars 14845.17 million in 2014 to Us Dollars 15991.06 million in 2018.  This marked a marginal increase of approximately I.I million Us Dollars within a period of one year. Additionally, the volume of alcohol sold in Canada decreased from approximately two thousand and eighty-six million liters in 2014 to two thousand and fifty million liters in 2018 (Ritchie & Roser, 2018).

Table 1: sales in 2014 and 2018

Source: Author’s own (2020)

The change in the quantity of beer sold in Canada reveals the falling demand for the Canadian beer. The fall in quantity may be as a result of increase in the prices of beer in Canadian market. However, the sales column show the increase from the gross sales in 2014 and gross sales in 2018 despite the fall in quantity consumes. This is an indicator of the rise in prices of the beer in Canada which led to the increase of incomes from alcohol sales (World Health Organization, 2019).

In 2018, Canada exported beer worthy Us Dollars 165.5 million to the other parts of the world. According to global data analysis, United States the top importer of beer from Canada. In 2014, Canada had gross exports value of approximately, Us Dollars 192.6 million and in the following year where the gross beer export value was Us Dollars 196.5 million. Since then, the gross exports of the Canadian beer have kept the trend of decreasing year after year (World Health Organization, 2019). The case of exports is not different. Canadian import of beer from other countries has kept a declining trend for the previous years. According to the Global Data about beer market in Canada, the gross imports value of beer was Us Dollars 558.3 million. In 2015, the gross imports value of beer was Us Dollars 612.4. this shows that there is declining importation of beer into Canada. With the declining imports, exports and the total quantity of beer old in Canada, this is a clear indicator of the declining beer consumption in Canada and other parts of the word. Additionally, when comparing the value of exports and imports, we can see a clear picture that Canadians consume more beer from other parts of the world than the locally manufactured beer. Additionally, the difference in the exports and imports gross value indicate that beer industry is less developed in Canada or the other parts of the world do not prefer the Canadian beer (World Health Organization, 2019).

Statistics have shown that, there were nine hundred and ninety-five licensed beer breweries in Canada and more than a thousand of other small unlicensed beer breweries. Larger quantity of beer produced in Canada is consumed locally and the reminder exported to the parts of world. of all the other types of beer consumed in Canada, Lagers has proven to dominate the Canadian market. Income gained from the sale of lagers is more than sixty percent of the total sales.

Figure 1: Canada’s Beer Market

Source: World Health Organization ( 2019).

According to the statistics the dark beer is ranked the last according to the sales of the recognized beers in Canada. This is an indicator that the dark beer is not preference of many both internally and externally (World Health Organization, 2019).

Beer consumption when measured in terms of per capita expenditure seen to have increased over the recent years. In 2018, the per capita expenditure was Can$110.7 which significantly rose from as low as can$19.2 in 2014. The per capita expenditure on beer such as ale is Can$90.0 and seems to be on rise. This reveals the trend that the ale is sold at a very price and can only be afforded by the rich Canadians. When comparing the quantity of alcohol consumed in Canada from 2014 up to today, the alcohol consumption seems to be declining (Velić et al. 2017).

5. Concentration in the Canadian beer industry

Many firms of the brewery industry are located near the places where they hold greater market proportion in order to lower thing like the transport cost associated with the distribution of the products to the consumers  (Cho & Ogwang, 2018). As a result, most of the firms are located in metropolitan places where there is dense population such as Quebec. Researches have shown that in the previous years, many beer firms have been located in Ontario in order to supply beer in Toronto where the demand is high. Additionally, Ontario supplies beer to the areas surrounding Toronto and the American who wish to import beer from Canada. This shows that the access to the market is one of the determinant factors for the Industry concentration ((Lamertz et al., 2016).

Secondly, the availability of raw material affects concentration of the beer industry in Canada. Many firms are located in areas the raw material for processing beer are found. Therefore, many of the beer processing firms in Canada are likely to be found new big barley farms and places where there is possible access to water needed in the processing industry. As a result, there are very few firms in New Brunswick because  it is located in are where there is limited supply of raw material for processing beer (Weightman, 2018).

The largest breweries in Canada are supposed to earn the country a lot of income. The internal breweries have penetrated the market of Canada. This is because these companies sell their products at a relatively low price because they enjoy economies of scale in the production process which lowers the cost of production per the unit of the output (Thompson et al.,2017). Additionally, the international Breweries are able to rich out a larger market because they advertise their products using powerful media. As a result, they keep expanding their market share both in Canada and other parts of the world. this leaves the local industries vulnerable of losing market which will eventually force them to close down. This also affects the level of concentration in Canadian brewery industry. Most of the international breweries are located in strategic places because they have all it takes to acquire the most favorable location. As a result, international breweries are found in the metropolitan places where they secure a bigger share of market for their products. The Canadian industry has therefore chosen to work with a few of the international breweries and maintained the increasing number of the local independent brewing industry.

The Canadian government plays a key role in determining the concentration of the breweries in Canada. The government of Canada today has allowed for the free distribution of beer rom one province to another. As a result, many brewing companies located in different areas in Canada have found it easier to expand their territories to the neighboring provinces. Additionally, the government has allowed for the free movement of the locations of the breweries from one geographical location to another (Sharma,  Sinha &Vandenberg, 2017). As a result, the firms can freely change their location to the suitable location which favors their company. However, some of the provinces have maintained stricter regulations on establishment and location of new brewing company within their territory. Some ban external companies from establishing their branching within the province which has also affected the level of concentration in the Canadian beer market.  other provisions passed by the appeal commission have also affected the distribution of breweries in Canada. One of the moves it took is to start charging tax on brewpubs which affected the cost of production in a big deal; as a result many brewpub companies have been closed down.

Merge activity is the practice of merging two different business entities into one business entity with a different name and a different business structure. Merging breweries can highly affect the level of concentration in a brewing industry in many ways. Firstly, when two breweries merge, they are likely to form a bigger business which enjoys a variety of economies of scale. This is because the new entity adopts resources from the merged entities and thus has the potential to grow bigger. The entity may also assume a new location. As far as the quantity of raw material orders, the entity will have the ability to buy large quantities of raw materials thus enjoying discounts. The company will also have the ability to employ qualified and competent personnel who will deliver quality services resulting to the company’s growth (Sherk,  Stockwell & Callaghan, 2018).

5. factors affecting level of beer consumption in Canada

Many social and economic factors determine the level of beer consumption in Canada. One of the main factors is the social and cultural background of the Canadians. As seen in the above sections, Canada has been termed as beer nation. This is because the socialization process in Canada is greatly affected by the culture of alcoholism. When children are brought in such environment, they are likely to become drunkards in their future life as their culture wants them to be. However, the socialization process in Canada and the whole world have been affected by the modernization process. The culture of taking alcohol is been eroded. This is due to the development new socialization agents such as schools and churches (Roche, Rogers & Pridemore, 2018).

Money supply and the level of wealth of individuals also affect the level of alcohol consumption. In the world economy today, many countries are undergoing a strain in economy. The per capita income in Canada is declining which is affecting the ability of the Canadians to purchase beer. Additionally, there is increased cost of living in many parts of the country. As a result, many of the Canadians who used to take alcohol in larger quantities have decreased because some can only afford their basic needs while some can only afford little bits of alcohol (Stevens & Childs, 2017). Demographic change has also affected the level of beer consumption in Canada.  Canada has experienced a decrease population or stagnation in population growth. As a result, the number of the alcohol consumers has gone down which has led to the decrease in the quantity of alcohol consumed in Canada in the previous years (Hockin, Rogers & Pridemore., 2018.

Finally, the government policy has played a key role in determining the level of beer consumption in Canada. the federal government allowed for the freer distribution of beer across the country. However, some of the Canadian provinces have looked down upon the provision of the federal government and went forth to implement their laws which prohibit distribution of beer from external sources or to external agencies. Other government policies which have discouraged beer consumption is the increase of tax on beer. This is because with increase in tax, the price of the beer will go up scaring away many Canadians from consuming the beer (Nicholls, 2016).

Conclusion

This essay was a report on the beer industry in Canada. the essay explored on the history of the development of beer industry in Canada and the key factors that led to the development of beer company in Canada. under this part the essay show how the beer industry developed from a domestic activity into a commercial activity which is practiced today. Colonial era played a key role in the development and commercialization of beer brewing in Canada (Weersink et al. 2018). Additionally, colonization led to the settlement of new settlers who planted burley and wheat for the purpose of beer brewing in Canada.  This worked a great milestone towards the development of beer industry in Canada which is present today.  Secondly, the essay discussed on the types of beers in Canada and the market trends of beer in Canada in the previous years. As observed from the analysis, there is decreasing level of beer consumption and marketing in Canada. the imports and exports level are also declining as result of the change economy, demography and the government regulation over the production and consumption of beer in Canada. Finally, the essay examined the level of concentration in the Canadian beer industry. As discussed in the essay, most of the breweries are located in places where there is ready market and availability of raw material. Factors such as the economies of scale, demography, government regulation, merging activities and size of the breweries affect the industry concentration in Canada.

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