Grocery stores, craft breweries behind declining Beer Store profits: expert

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Grocery stores, craft breweries behind declining Beer Store profits: expert

Ontario's decision to allow grocery stores to sell beer and the growth of craft breweries are two of the main forces driving declining profits at the Beer Store, according to an Ottawa industry expert.

According to its annual report released last week, the Beer Store generated about $7.2 million in profits in 2016 — less than half of the approximately $14.7 million in profit the foreign-owned consortium reported in 2015.

Significantly, 2016 also marked the first full year that beer was available for Ontarians to purchase in grocery stores and supermarkets.

"I'm surprised by how much [profits] are down, but I'm not surprised that it is down," said Geoffrey Skeggs, who teaches a 14-week beer tasting course at Ottawa's Algonquin College and has worked in the beer, wine and spirits industry for the past two decades.

"The sale of big brewery beer is flat or in decline across Canada. And what really is keeping beer sales nationally and provincially and locally trending slightly upwards is the volume of craft beer being sold."

According to its annual report, the Beer Store's consumer sales by volume were less than 4.4 million hectolitres in 2016 — roughly the same as in 2015 and 2014, but down from the nearly 4.7 million hectolitres sold five years ago. (One hectolitre, a common measurement in the brewing industry, is equal to 100 litres.)

The number of Beer Store outlets has also remained relatively consistent over that time, while on-site brewery stores have steadily increased. Beer was also available at 130 grocery stores in Ontario in 2016, according to the annual report.

The sheer choice of options available to Ottawa beer drinkers means it's no surprise the Beer Store is losing its market share, Skeggs said. 

"From an Ottawa perspective, with about 30 breweries within an hour's drive of [the downtown], each one of those breweries has an on-site store. So there's so many more outlets for beer," he said. 

Skeggs said that the decision to offer beer for sale in the province's grocery stores has streamlined the alcohol-buying process.

"It's very convenient. Most of the grocery stores I'm in seem to have a beer and wine selection," Skeggs said. "That's made one-stop shopping for so many people."

The Beer Store told CBC News it was unable to provide a comment on Sunday. 

Why are Beer Store sales down?

CBC News spoke with customers at a downtown Ottawa grocery store that sells beer and asked why they thought Beer Store profits might be down. Their comments have been edited for length.

"I think beer sales are down mainly because it's more accessible to get it at places like supermarkets ... now that you have the option to do that, it [gives] people more choice. 

I'd say I buy more specialty beer, just because I see more advertisement. There's more breweries, as opposed to just buying domestic stuff. Especially in Ottawa — there's a lot of local things going on."

"It could be because of the increase in the intolerance towards drinking and driving, with strict laws and all that."

"It's actually more convenient that I can grab it across the street [at the grocery store]. I don't have to go to a specific vendor to get it."

"My beer consumption is pretty even and I don't really drink too much. So they're not making a whole lot off me, and they're not losing any either." 

Read the Beer Store's 2016 report here