New York, NY (PRWEB) March 04, 2014
Breweries suffered from slow disposable income growth and escalating competition from substitute products over the five years to 2014. 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, undermining the industry. As a result of substitution, industry revenue is estimated to decline an annualized 2.6% over the five-year period to $4.8 billion, including a 3.4% drop in 2014.
Major companies Anheuser-Busch InBev (AB InBev) and Molson Coors are expected to generate 91.7% of industry revenue in 2014. Merger and acquisition activity by well-established companies countered new business entrants into the space, causing the number of enterprises to grow marginally during the five years to 2014 at a 0.6% annualized rate to 328 companies. According to IBISWorld Industry Analyst Vanessa Giraldo, “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 shifting away from.” As players continue to innovate and market new products, profitability is forecast to continue declining over the next five years. Escalating global demand for major commodities like wheat and aluminum will cause the prices of these inputs to rise, consequently dampening profit. IBISWorld forecasts the price of wheat will rise 7.9% annually on average 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.
International trade has also challenged the Breweries industry 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,” says Giraldo. A continued strengthening of the loonie will contribute to poor trade performance for the industry and deter faster industry growth as disposable income rises during the next five years. Consequently, the industry's revenue is forecast to expand slowly from 2014 to 2019.
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IBISWorld industry Report Key Topics
The Breweries in Canada 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
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