State of beer industry reflects pandemic woes, inflation and nanny-state
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State of beer industry reflects pandemic woes, inflation and nanny-state taxes

The summer of 2022 is now in the books. It was in some ways a return to normal Tafter two years of pandemic-led reductions in the likes of festivals, concerts and the like.

The tourism and hospitality industries aren’t celebrating just yet, as shifts in our behaviour continue to dog their sectors. The impact can be seen among the country’s brewers, for instance.

Beer Canada, which represents the makers of some 90 per cent of domestic beer sold in the country, report sales were down 7.3 per cent from last year, which wasn’t exactly a benchmark period. The downward trend that started with the pandemic in 2020 marched on.

During that first year of COVID-19 response, draught beer sales declined by 55 per cent, with total overall beer sales declining by 1.4 per cent, in large part because of the shutdowns of restaurants and bars. Beer industry sales volume declines accelerated in 2021, with overall sales falling a further 1.9 per cent.

Now, inflation is hitting the sector particularly hard, driving up the cost of production while prompting consumers to make different choices.

It’s a phenomenon addressed in a recent opinion piece by Dalhousie University food policy professor Sylvain Charlebois, who notes sales of beer for home consumption have returned to pre-pandemic levels, but beer consumed at restaurants and events remains 35 to 40 per cent lower than before the COVID-19 crisis.

 “Over the last three years or so, many of us turned instead to wine, spirits and other products. Seltzer and ready-to-drink alternatives are also becoming more popular. And Canada went from being an on-premises beer-drinking country to a more at-home wine-and-spirits-drinking market,” he writes.

“Many of us have tried new products and experimented with new tastes and brands. These experiences have drawn many away from beer.

 “The other key factor is inflation. Alcohol is discretionary; many consumers are cutting expenses to cope with skyrocketing food prices. Beer prices have also risen by 10 to 15 per cent in the last 12 months and will likely rise more next year.”

Government taxes only add to the cost burdens. Automatic annual tax increases such as the one Ottawa tacked on five years ago make matters worse. Annual automatic increases in federal excise duty is making things tougher for brewers and the hospitality industry in general, with more than $100 million in estimated additional costs for industry and consumers since the escalator was added in 2017.

“With this year’s CPI, the deferral portion of taxes on beer could rise by up to seven per cent in April 2023, which would be a record. Some provinces have expressed sympathy by not raising their tax portion on alcohol products, but not the federal government – at least not yet,” Charlebois writes.

The beer industry has taken issue with that tax from the start, but has been especially keen for a reversal since the pandemic began. To no avail.

The automatic escalator that kicks in every April is another policy that fills government coffers without regard for the impact on the economy, people’s jobs or other detrimental effects.

In Ontario, where beer sales are down 3.3 per cent in the past year, there’s little relief in sight.

Beer pricing, like that of wine and spirits, is part of the ongoing effort to separate Ontarians from their money.

That’s the reason there’s ongoing contempt for the government in general and, specifically, with a longstanding dissatisfaction with the handling of alcohol sales in the province, from absurd pricing to rigged sales restrictions.

Much of the ire is simply a reflection of our inherent dissatisfaction with taxes and paternalistic liquor laws, coupled with our distrust of pretty much anything overseen by bureaucrats and politicians. Tax increases are seen as another reason to privatize the operation, stripping government of its outdated controls of alcohol.

Yes, the LCBO stores themselves have come a long way over the years. They’re much nicer places to shop, especially compared with the Beer Store, that even more antiquated government-sanctioned cartel selling us our suds. The hours have been extended, but there’s nothing like the convenience found in other jurisdictions. Nor the selection. And, most gallingly given that the LCBO is the world’s largest buyer of spirits, nothing like the much better prices found elsewhere.

If the LCBO really wants to be accepted, cut the prices significantly, offer a much better selection and offer more convenience.

The province, of course, has no interest in any of that.

With alcohol, as with cigarettes, governments suffer from multiple personality disorder. On the one hand, they’re addicted to the revenues, on the other they want to discourage consumption. The nanny state prevails, but they do love the money. (There’s a similar issue with gasoline, electricity and water, where government preach conservation, but decry the losses when we actually cut back.)

The nanny state is never more apparent when it comes to booze. Ontarians apparently would become hardened alcoholics without minimum pricing and fettered access. All we have to do is look at the problems in nearby provinces and states to see that. Oh, wait, that’s not what you’ll find. And the government doesn’t want you to look elsewhere, lest you become even more upset about the poor state of things here.

Premier Doug Ford tapped into that ire with his buck-a-beer push and populist booze-related stances before first coming to power in 2018. He followed up with some tweaks to the archaic beer-selling rules, but the system has remained largely unchanged.

Rolling back the taxes – and commensurate spending, part of much-needed overall – would help the brewing industry and, more widely, hospitality and tourism sectors that have been among the hardest hit since the pandemic befell us all.

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