Inflation | Draft beers

The beer world and small brewers have seen better days: consumption is, overall, down while inflation is up. To adjust to the budget of its customers who are under pressure, a microbrewery is launching a range of beers at lower prices.

“I call it my TLJ,” explains René Huard, president of Simple Malt. TLJ for “Every day”.

“It’s a range of accessible beers,” explains the brewer from Saint-Eustache.

The good news, he says, is that most specialty beer enthusiasts don’t want to go back to mass-produced. This is why it is launching a more affordable range, in these times when budgets at the grocery store and in the markets are compressed.

The range of four beers includes a classic white, but also a blackberry “smoothie”. They will sell for $3.99 a can at specialty retailers, rather than $4.99 or even over $5 for other Simple Malt products.

To lower the production cost of its new range, the company did business directly with certain Quebec producers, for white wheat, in particular. He also bought reclaimed fruit for his blackberry beer.

“Blackberries are the most wasted fruit in the fruit aisle,” says René Huard, who works with a company that collects and mashes them.

“The idea is brilliant,” says Jean-Luc Geha, professor and associate director at the HEC Montréal Sales Institute. “Here, we always offer a microbrewery beer, with a certain taste,” he says, “but the price is affordable. »

In this environment where the competition is very strong, this company attracts positive attention, says Mr. Geha, who believes that it may even create the loyalty of new customers, even attract consumers who have not yet made the jump to specialty beers.

Jean-Luc Geha does the math: a can of Heineken costs around $1.25 or $1.50 when purchased in multi-packs. “The closer we get in terms of price [des bières industrielles]the more people we will attract,” says the professor, who adds that currently, differentiation in terms of price is particularly effective, because it is one of the key elements in the purchasing decision.

The effects of inflation

Retailers specializing in beers are feeling the effect of inflation.

Customer behavior has changed, says Sébastien Lalande, owner of the Espace Houblon boutiques.

“People are moving towards safe values ​​and are less in discovery mode,” he says. When you invest a certain amount of money in a product, you want to be sure that you will like it. »

In this sense, Sébastien Lalande welcomes Simple Malt’s initiative.

“Even people who love really good beer are looking to cut costs because of inflation,” he says.

Karl Magnone, president of the Tite Frette franchises, also sees that his clientele will opt for lighter, less expensive beers, or will even try products from microbreweries that offer smaller formats.

Result: the average bill decreased by $3 last year compared to the previous year at Tite Frette.

“We can clearly see the effect on the wallets of Quebecers,” says Karl Magnone.

While the idea of ​​launching a cheaper range is not yet widespread, we see more and more Quebec microbreweries opting for volume discounts. A better price for four or six beers.

“We have seen many microbreweries doing deals for three or four months. Huge specials are everywhere,” says Annie Saint-Hilaire, co-owner of the Microbrasserie du Lac-Saint-Jean, which has been around for 16 years.

Solutions for adults

According to Annie Saint-Hilaire, in the current context, creating new products at lower prices is an interesting avenue for breweries which, although part of the large family of microphones, produce a certain volume.

“Those who have big tanks, big investments, have to make sure things work,” she says. They will certainly move towards less expensive ranges or non-alcoholic ones that we see appearing a lot in the biggest brewers, over 7000 or 8000 hectolitres. »

For very small breweries, launching an alternative range is not possible in the short term, explains Annie Saint-Hilaire. The Microbrasserie du Lac-Saint-Jean, which produces 3,000 hectoliters per year, instead wants to stand out in this niche market.

“It’s very difficult for the little ones,” says the entrepreneur. The fact remains that we make expensive products. »

The Saint-Gédéon brewery wants to keep the price of its beers below $6. Despite all the efforts, the impact of inflation is visible and required adjustments within the company to get through this zone of turbulence. Especially since the pool of brewers is well filled.

“When we started, in 2007, microbreweries had 3% market share. There were 56 of us. Now, in 2023, we have increased to 13% or 15% of the market share, but we have practically 350 microbreweries! », Calculates Annie Saint-Hilaire, who is a member of the board of directors of the Association of Microbrasseries of Quebec.

Towards rationalization

In this context, many sector observers expect a rationalization of the brewing industry in Quebec.

“The beer world experienced an Eldorado that lasted a few years,” says René Huard, of Simple Malt. Everyone and their neighbor went into this thinking it was easy and the demand was going to grow exponentially forever. »

For retailer Sébastien Lalande, this is a natural fit, which was predictable.

“We saw supply exceed demand before inflation,” says the man who was a banker before founding Espace Houblon 10 years ago.

And this restructuring of the market also applies to businesses that sell beers.

“We have seen it in recent months, there have been several closures of independent specialty retailers, and a few Tite Frette,” said the group’s president, who has lost three stores in the past year.

“It’s a difficult period,” said Karl Magnone. Not only are Quebecers spending less, but fixed costs are increasing. »