Article content continued

“I think as the industry continues to grow and, ideally, as we steal more customers from the big guys, that they’ll probably want to purchase some of those customers back,” McNeil said.

While craft brewers have forced large beer-makers to innovate and think differently about the market, the craft beer industry faces challenges of its own. Sylvain Charlebois, senior director of Dalhousie University’s agri-food analytics lab, said statistics show Canadians are actually drinking less beer than they were a decade ago. In 2019, beer sales in Canada fell by four per cent, the largest decline since Prohibition. At the same time, demand for ready-to-drink beverages such as vodka and soda and non-alcoholic drinks is on the rise.

“Don’t get me wrong, I do think we should recognize the legacy of the microbrewery movement, it’s been important,” Charlebois said. “But the problem right now is the market is retracting, it’s getting smaller.”

There are now almost 1,000 microbreweries in Canada, Charlebois said, and some reports suggest more than 200 additional ones could open over the course of the next year. He added brewing beer is a capital-intensive, low-margin business, and many microbreweries are not profitable.

In addition, interprovincial trade barriers that prevent local craft brewers from getting their products onto retail shelves in other provinces make it almost impossible for many operations to achieve significant market growth, Charlebois added.

“If you actually do very well and you have an interesting brand recognition in your province, you can’t easily start selling your product outside your borders,” he said. “That opportunity is reserved for a very small few. So for Banded Peak, this deal makes sense. This deal is going to allow Labatt to scale this organization up.”

astephenson@postmedia.com

Twitter: @AmandaMsteph