Los Angeles, CA (PRWEB) February 09, 2013
The Breweries industry has suffered from slow disposable income growth and escalating competition from substitutes during the past five years. Consumers faced with historically low disposable income shifted their preferences toward value products. This shift counteracted a trend toward premium beverages, including top shelf beer, wine and spirits, which has undermined the industry in recent years. As a result of such substitution, industry revenue is estimated to decline 1.4% annually on average during the five years since 2007 to total $4.86 billion in 2012. This includes 2.4% revenue growth in 2012 as industry innovation and marketing bolster spending on beer.
Major companies Anheuser-Busch InBev (AB InBev) and Molson Coors are expected to generate 86.7% of industry revenue in 2012. Merger and acquisition activity by well-established companies countered new business entrants into the space, causing the number of enterprises to grow during the five years to 2012 at a slow 1.0% annualized rate to 318 companies. These major companies are particularly pressured because they depend on high-volume sales of their respective flagship value products, Budweiser and Molson Canadian, which consumers are substituting away from. Escalating world demand for major commodities like wheat and aluminum will cause the prices of these inputs to rise and dampen profit. IBISWorld forecasts the price of wheat will rise during the next five years, and brewers will face additional costs as the industry adapts to the elimination of the Canadian Wheat Board, which monopolized western wheat and barley prices until late 2012. The largest players in the Breweries industry are Anheuser-Busch InBev and Molson Coors Brewing Company. Foreign investment into the industry has led to consolidation and rising market share for these beverage behemoths. Additionally, regulatory oversight at the retail level has provided breweries with retail stores with a significant competitive advantage in terms of marketing their products. Consequently, although the industry is highly fragmented, with 97.5% of businesses employing fewer than 500 employees, large operators dominate the market. Concentration is not anticipated to change during the next five years.
Another challenge for the industry has been international trade as the dollar strengthened relative to major trading partners' currencies like the US dollar and the euro. The rising value of the dollar has made Canadian beer relatively more expensive for consumers, which has depressed exports and boosted imports. A continued strengthening of the loonie will contribute to poor trade performance for the industry and deter faster industry growth. Consequently, the industry's revenue is forecast to expand at a slow rate. For more information, visit IBISWorld’s Breweries in Canada industry report page.
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IBISWorld industry Report Key Topics
The Breweries industry primarily produces alcoholic beverages using malted barley and hops. Manufacturers of other alcoholic beverages, such as wine and spirits, are not included in this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.ca or call 1-800-330-3772.