Molson Coors, the sole North American part-owner of the Beer Store, is a vulnerable player within the global beer industry, experts say.

And the company benefits from its stake in the Ontario retailer, according to Alan Middleton of York University’s Schulich School of Business, who said warnings of a price hike from the company’s Canadian CEO Tuesday amid talk of changes to the Beer Store make sense.

Middleton says he believes Molson Coors Canada CEO Stewart Glendinning’s comments stem from the Beer Store’s role as a low-cost distribution system for its owners, Labatt Brewing Co., Molson Coors Canada and Sleeman Breweries.

“Canada will continue to be a cash cow to drive (the Beer Store owners’) profits for investment elsewhere,” said Middleton. “That’s why they’re trying to keep costs down, and that’s why in Ontario they like the Beer Store.”

The Beer Store changes being considered by Queen’s Park include a “franchise fee,” which the retailer’s owners would have to pay — or risk losing their monopoly.

“Will costs go up? Yes, they will,” Middleton said. “Can they make it up with more aggressive distribution strategies, like any other consumer good? Yes.”

Glendinning’s comments came after the Canadian-American Molson Coors Brewing Co. (the parent company of Molson Coors Canada) reported a nearly 32-per-cent drop in fourth-quarter profits to $94.1 million (U.S.), down from $137.2 million the year before.

The company cited a higher tax rate and unfavourable currency fluctuations as factors in the drop, along with lower volumes of beer sold in North America.

Glendinning was not available to speak to the Star on Wednesday.

The North American company doesn’t have the same international profile as the Beer Store’s other part-owners, said noted global beer expert and author Stephen Beaumont.

Belgian-based Anheuser-Busch InBev, Labatt’s parent company, is the world’s largest brewer, serving one out of every four beers in the world. Sleeman was bought by Tokyo-based Sapporo in 2006.

Consumer research analyst Brian Yarbrough said within the global beer industry, there is little room for growth for big players like Molson Coors, with the exception of emerging markets. Brazil, India and China are all huge opportunities, echoed Middleton.

Molson Coors does have an international footprint, with over a dozen breweries in Europe. But in emerging markets, the company only has a handful of brewery locations: Two in India, one in China, and one in Ukraine.

Amid a push for international growth, analysts expect consolidations within the industry to continue, which could impact Molson Coors in the years ahead.

“Is somebody eventually going to buy Molson Coors? Honestly, yes, because they’re vulnerable to a global player,” Middleton said.

While beer expert and Brock University professor Dan Malleck feels consolidation in the beer industry may be cooling, he said Molson Coors’ drop in revenues could make them ripe for a takeover.

“(If) Molson Coors was purchased by another big foreign brewery, we’d have no Canadian ownership of big breweries, which would not play into the hands of the Beer Store’s claims about some kind of (semi-Canadian) ownership,” he noted.

Others say Molson Coors may be more likely to go after an acquisition.

“They do not have as many international properties as some other breweries, which makes them less attractive,” said Beaumont.

While the global beer market is lucrative, beer consumption has been on the decline in Canada for several decades. In 1973, total beer sales per person were over 111 litres. Twenty years later that had dropped to just over 87 litres, and by 2013 it was just 78 litres per person.

Middleton said demographic changes are a major factor. The country’s aging population is one factor, while younger generations like millennials have a broader palate of alcohol consumption.

“I think you’re seeing a lot of these millennial customers shifting more toward craft beers and spirits,” echoed Yarbrough.

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Craft beer sales have been steadily rising in Ontario for the last several years.

Numbers provided by the LCBO, for instance, show the volume of craft beer sales in their stores have increased from 0.9 per cent of sales in 2006-2007 to 6.9 per cent in 2014-2015.

Ontario craft brewers have long felt shut out of the Beer Store. Jason Fisher, owner of the Junction’s Indie Ale House brewery, said Tuesday’s comments from the CEO of Molson Coors Canada are just the latest chapter in a “bizarre story” being told by the Beer Store owners.

“There’s a reason they’re fighting hard to keep it, and the reason is it makes them a lot of money,” Fisher said.