Canada, QC: Beer consumption continues to decline in Quebec

Beer consumption continues to decline in Quebec, but the number of microbreweries continues to increase. The sector still in turmoil thwarts the forecasts, but for how much longer, OI Canadian reported on July 2.

“When we started making non-alcoholic beer, we were the only ones in Canada. Now everyone does.»

Michael Jean, CEO of Le BockAle microbrewery in Drummondville, is well placed to see that the Quebec craft beer market is rather crowded.

All niches are explored, all business models are tested. And even though beer consumption is in decline in Quebec, the sector still attracts suitors. There are currently around a hundred brewers waiting for a permit from the Régie des alcools, des courses et des jeux (RACJ).

The future of these future breweries is more uncertain than ever. Unless they choose to focus on their local market and avoid setting out to conquer the shelves of Quebec supermarkets.

“Regionalization is what will save microbreweries,” says Philippe Wouters, who saw the birth of the Quebec craft beer ecosystem and who closely follows its evolution.

According to him, the model of a brewpub in each village of Quebec is still viable. “You have to be able to invest a lot of money to distribute and sell your beer throughout Quebec and beyond,” he says.

In Drummondville, Le BockAle decided to do just that, to focus on its local market and open a pub to sell its beer with alcohol. “We have no choice,” says Michael Jean. “We started to throw in the towel for beer with alcohol.”

“We decided to refocus in our region on beer with alcohol because there are so many microbreweries that want to be on the shelves that it’s elbowing and it’s becoming difficult,” he adds.

The company has also just teamed up with Nicolas Duvernois and gin Romeo to start manufacturing ready-to-drink drinks, with and without alcohol. An investment of 15 to 25 million in a new, fully automated factory is planned to tackle this new market and pursue growth.

It is at the end of the summer, when beer sales peak, that reality could catch up with several craft breweries, believes Philippe Wouters.

All brewers are facing considerable cost increases: the prices of cereals, cans, cardboard and transport have risen sharply over the past year and are eating away at their profitability.

At the same time, inflation and rising interest rates are reducing the purchasing power of consumers, who are less likely to want to pay even more than the already high craft beer prices.

“There are challenges,” recognizes Marie-Ève Myrand, general manager of the Association des microbrasseries du Québec. The aging of the population, responsible for the stagnation of beer sales for years, continues, she notes. In addition to rising input costs, fierce competition for shelf space in grocery stores has become a major problem, she acknowledges.

The entire microbrewery environment is changing, says Frédéric Thibeault, vice-president of the group that oversees the Glutenberg and Oshlag beer brands, as well as the Oshlag distillery.

The beverage market is fragmenting. The number of kinds of drinks is multiplying, with a very short lifespan. This is the challenge we face.

“We must diversify, it is a necessity,” believes Frédéric Thibeault, vice-president of Glutenberg and Oshlag. Glutenberg, number one in gluten-free beer, also brews Oshlag brand beer, spirits, seltzers and other ready-to-drink products.

The company has set up a distribution network for microbrewery beers, a first in Quebec. Transbroue has been representing and distributing its beer brands and a few others on the Quebec market since 2013, which fills an important need for microbreweries.

Glutenberg et compagnie has a production capacity of 60,000 hectoliters, making it a large microbrewery. “And we have great ambitions,” assures Frédéric Thibeault.

There are more than 300 microbreweries in Quebec. The vast majority of them have a production of less than 2000 hectoliters. La Korrigane microbrewery is one of them. Since 2010, it has been offering its craft beers in the Saint-Roch district of Quebec, with a deliberately local ambition. With a restaurant-pub, about ten employees and a production of 650 hectolitres, the company is doing well.

The craft beer sector is still young in Quebec, but in 30 years, its evolution has been spectacular.

“We have gone from an industry of trippers to an industry of professionals”, sums up Raphaël Sansregret, president and co-founder of Innomalt, a malting plant serving microbreweries.

It was with the intention of making whiskey that Raphaël and his partner founded Innomalt in Sherbrooke in 2016. With the growing demand from microbreweries, they dropped their whiskey project to focus on this clientele.

Demand from microbreweries is undeniable and Innomalt is currently building a second plant worth more than $40 million, in Bécancour, which will multiply its Quebec malt production capacity by 20.

Since 2016, Raphaël Sansregret has seen microbreweries become more professional.

There are no longer just microbrewers in the microbrewery ecosystem.

The beer giants, who needed to have at least a foothold in this growing sector, went shopping. AB-Inbev (Labatt) bought the Archibald microbrewery. Molson acquired Shawinigan’s Trou du Diable and Brasseurs de Montréal. Japanese brewer Sapporo owns Sleeman and Unibroue.

Malt producers like Innomalt, increasingly grown hops in Quebec, a distribution network like Transbroue, and specialty retailers have emerged, adding depth to the industry.

Finally, professional investors got on the train. The Caisse de dépôt and the BDC each invested 5 million in the activities of Glutenberg, Oshlag and Transbroue. The Fonds FTQ invested $20 million in Brasseurs du Nord, creators of La Boréale, in addition to investing more modest sums in Le BockAle in Drummondville and in the La Voie Maltée microbrewery in Saguenay.

It’s still tentative, but it may be the beginning of the end for craftsmanship.

The industry in numbers

500,000 hectoliters
Maximum annual production to have the title of microbrewery

100,000 hectoliters
Annual production capacity of Boréale, the largest microbrewery in Quebec

2000 hectoliters
Average production capacity of 80% of microbreweries in Quebec

84 million hectoliters
MolsonCoors annual production capacity

44
Number of microbrewery licenses that have been voluntarily or involuntarily revoked since 2012

04 July, 2022