The number of breweries that have started in the past two years (Bellwoods, Junction, Indie Ale House, Spearhead, Hogtown, Sawdust City, Kensington, Double Trouble, Broadhead, Gananoque… have I forgotten anyone?) has made some people wonder how long Ontario will be able to support all of these breweries. At some point, the thinking goes, it will be unsustainable to have all of these craft breweries. This isn’t simple to answer, mainly because I’m not enough of a stats geek to try and find the point of market saturation. It’s also really hard to find out how much beer any given brewery actually makes in a year and to see how production may have been affected by new entrants. (A number of larger micros – your Steam Whistles and Mill Streets – have also been shipping more beer outside of the province, making it harder to figure out how much of that beer is consumed by Ontarians). That’s my long-winded way of saying that this is hardly mathematical, but here are my reasons to think that craft beer in Ontario is far from market saturation.
Let’s begin with some of the empirical data that we do have. In the past two years, sales of Ontario craft beer in the LCBO have gone up 53% (2010-2011) and 49% (2009-2010) – big jumps that show how the market is still in a phase of expansion. (The figures for 2011-2012 will likely be released in the next month or two.) According to the Ontario Craft Brewers, the market for craft beer in the LCBO has significantly increased since 2002, “going from slightly
less than 2% to approximately 5% of the beer volume sold in Ontario.” (Source: Ontario Craft Brewers Industry Fact Sheet) Still fairly small compared to the international conglomerates, but a nice chunk of the market and growing at a sizable rate.
There’s also a lot of anecdotal evidence that shows how craft beer is still very much a growth market. Events are becoming harder to get into, with long lineups becoming the norm at a lot of bars or venues. I would argue that Toronto is underserved in terms of events and beer bars. Craft beer has done a nice job of spreading to the east and west of the downtown core, but the north end of the city has little to speak of once you get past the Monk’s Table and the Granite. Surely there are lots of people living in North York who would drink craft beer more often if only it didn’t involve a trip downtown. London has lost its beer bar (hopefully temporarily) and there are lots of other cities without a great craft beer bar. Market saturation won’t be possible until most Ontarians have access to craft beer made in the province.
The scale for most of these new breweries is also pretty small to start with, not just compared to the international breweries but even relative to Steam Whistle, Mill Street, Beau’s or Amsterdam. Initially they are probably not making enough beer to create an influx of supply that is outpacing demand. Most of these new breweries are distributing to a small amount of licensees and none are currently in the LCBO (though some will be in the coming months). At the same time there are established breweries, like Muskoka and Amsterdam, expanding their facilities in order to produce more beer, another sure sign that the market is still expanding. The real question is how much these new breweries will be able to grow as the market becomes more and more crowded.