Historic Canadian Beer Labels
SABMiller recently agreed to a US$107-billion takeover by Anheuser-Busch InBev in a merger of the world's two largest brewers. The deal would see Anheuser-Busch InBev control 31 per cent of the global beer market. Molson Coors is poised to nearly double its size after agreeing to spend US$12 billion for SABMiller's share of U.S. joint venture Miller Coors and Miller's International brands, including those sold in Canada. In Ontario, bars and restaurants are required to pay a 30 per cent premium above the retail price at the Beer Store, a fee charged by many of the big breweries. But after establishing its Canadian division earlier this year, Miller eliminated that charge, which works out to be about $10 per case of 24 beers. James Rilett, Ontario vice-president of Restaurants Canada, fears that Molson Coors will abandon that incentive once its purchase for Miller brands goes through. "We had originally hoped that the Miller decision would go to other brands, but I think that hope is in jeopardy now," he said. Molson Coors declined to comment, saying it is premature to talk about changes when the deal is far from closing. Molson Coors and InBev together control about 71 per cent of the Canadian beer market, according to market research firm Ibis World. It said the craft brewing phenomenon that has taken the U.S. beer market by storm has not been as significant in Canada, largely because it is more difficult to enter the market with provincial regulations about distribution and greater costs. The popularity of craft beer has been on the rise across Canada for years. While overall beer consumption declined by six per cent in 2014, craft beer servings grew by seven per cent, according to recent findings from data research company NPD Group. Beer giants have responded by buying up craft beer companies. Over the last decade, Molson Coors has acquired Creemore Springs and Granville Island, while Labatt's recently bought Mill Street Brewery and Turning Point Brewery. John Hay of the Ontario Craft Beer Association said competing against even larger global brewers has risks. But he said it also presents an opportunity for craft brewers to leverage their small size to appeal to customers who like to know where their beer is made, where the barley and hops are grown and talk directly to the brewmaster. "The bigger you get, the more distant you get from all of those strategic elements," he said. "We're going to focus on doing what we've been doing and what the consumer seems to be responding well to."
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