FROM FARM TO GLASS:FROM FARM TO GLASS:The Value of Beer in Canada

Glen HodgsonGlen HodgsonChief Economist and Senior Vice President, The Conference Board of CanadaNovember 5, 2013

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Economic Footprint of Beer.

• Report investigates size and scope of beer economy.

• Breweries are a large manufacturing industry, but there is more to the story.

• Beer has a long supply chain and is retailed in stores and consumed in bars, and restaurants.

• Therefore, beer’s contribution to Canadian GDP is much to Ca ad a G s uclarger than brewers themselves.

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Beer is the preferred alcohol choice.(volume of Canadian sales in absolute alcohol content; millions of litres)

Spirits Wine Beer

120

140

Spirits Wine Beer

60

80

100

0

20

40

0

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Sources: Statistics Canada; The Conference Board of Canada.

Putting the industry into perspective.

Canadian breweries industry:Canadian breweries industry:

• Smaller than forestry and logging

• About the same size as the postal service

• Larger than wineries and distilleries soft drink• Larger than wineries and distilleries, soft drink manufacturing, and many others.

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Putting the industry into perspective.(2012 real GDP for selected Canadian industries; 2007 $ millions)

Forestry and logging 3,729Pharmaceutical and medicine manufacturing 3,451Postal service  3,179,Breweries  3,166Radio and television broadcasting  3,081Dairy product manufacturing 2 866Dairy product manufacturing  2,866Coal mining  1,666Soft drink and ice manufacturing  1,168Fishing h nting and trapping 1 127Fishing, hunting, and trapping  1,127Wineries and distilleries  889

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Sources: Statistics Canada; The Conference Board of Canada.

What is the “Beer Economy”?It’s more than just breweries…

When you drink a bottle of beer, you support:

1. Direct Impacts: The brewing industry1. Direct Impacts: The brewing industry

2. Supply Chain Impacts:

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What is the “Beer Economy”?It’s more than just breweries…

3. Induced Impacts: Employees of breweries and the supply chain spend their earned income on goods and services.

4. Fiscal Impacts: • Corporate taxes• Income taxes of employees of breweries and supply chainIncome taxes of employees of breweries and supply chain

industries• Product taxes: includes GST, PST/HST, remittances from liquor

authorities to provincial governments fuel transport taxes etcauthorities to provincial governments, fuel transport taxes, etc.

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Beer’s economic footprint.(Annual average, 2009-2011)

• Accounts for 0.9% of total GDP.

• Every $1 spent on

Spending on beer (billions, real $) 12.3

• Every $1 spent on beer generates $1.12 in real GDP.

Real GDP (billions, real $) 13.8

Economic multiplier 1.12

• Beer economy supports 1 out of every 100 jobs in

Jobs 163,200

Taxes (billions nominal $) 5 8Canada.

Taxes (billions, nominal $) 5.8

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Sources: Statistics Canada; The Conference Board of Canada.

Economic footprint of beer, by industry.(GDP annual average over 2009-2011; real $ billions)

2.23.1

Manufacturing

Retail trade

Accommodation and food services

Fi i d l2.21.0

Finance, insurance, and real estate

Wholesale trade

1.71.2 Other

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Source: The Conference Board of Canada.

Prominent Commodities in Beer Supply Chain.

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Regional Supply Chains: Atlantic Canada.

• Long brewing traditions: Moosehead, Oland Brewery, etc.

• There are 22 breweries in Atlantic provinces.

• The region supplies beer, electricity, paperboard containers and much more to the national beer economy.

• Beer consumption across Canada supports10,349 jobs in the Atlantic provinces.

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Beer Consumption Across Canada Supports L l J bLocal Jobs.Number of jobs supported as a result of beer consumption in various regions.

Provincial consumption Central Canada consumptionProvincial consumption Central Canada consumptionOther Atlantic consumption Prairie consumptionB.C. & North consumption

Newfoundland & Labrador

Prince Edward Island

Nova Scotia

New Brunswick

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

New Brunswick

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Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada.

Regional Supply Chains: Central Canada.

• Brewing hub of Canada, home to the three largest breweries in the country.

• Quebec and Ontario account for 71% of brewing activity in Canada.

• Supplies beer, and head-office and financial services to the pp ,national beer economy, among other things.

• Beer consumption across Canada supports 86,913 jobs in p pp , jCentral Canada.

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Beer Consumption Across Canada Supports L l J bLocal Jobs.Number of jobs supported as a result of beer consumption in various regions.

Provincial consumption Other Central Canada consumptionProvincial consumption Other Central Canada consumptionAtlantic consumption Prairie consumptionB.C. & North consumption

Quebec

Ontario

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

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Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada.

Regional Supply Chains: Prairie Provinces.

• Not large brewers relative to other regions.

• Very important region for the supply chain of beer.

• Supplies many inputs into production: malting barley, energy, water, etc.

• Large transportation and warehousing activity.

• Beer consumption across Canada supports 20,394 jobs in p pp jthe Prairies.

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Beer Consumption Across Canada Supports L l J bLocal Jobs.Number of jobs supported as a result of beer consumption in various regions.

Provincial consumption Other Prairie consumptionProvincial consumption Other Prairie consumptionCentral Canada consumption B.C. & North consumptionAtlantic consumption

Manitoba

Saskatchewan

Alberta

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000

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Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada.

Regional Supply Chains: B.C. & the North.

• B.C. has an active brewing industry, with 72 large, medium, and small breweries.

• One brewery in Whitehorse: Yukon Brewing.

• Tourism boosts beer consumption, and supports a sizable accommodation and food services industry.y

• Beer consumption across Canada supports 18,967 jobs in B.C. and the North.

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Beer Consumption Across Canada Supports L l J bLocal Jobs.Number of jobs supported as a result of beer consumption in various regions.

B.C. & North consumption Prairie consumption

Central Canada consumption Atlantic consumption

B C & the NorthB.C. & the North

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000

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Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada.

Fiscal Impact of Beer Economy.($ billions; annual average, 2009-2011)

• Beer economy supports corporate profits and household income

Corporate profits before tax  4.3Primary household income 7.2 household income.

• These incomes help to generate sizeable

Primary household income  7.2

Personal income tax  1.0C t i t 1 0 generate sizeable

contributions to federal, provincial, territorial, and municipal revenues.

Corporate income tax  1.0Taxes on products  3.8

Total taxes 5.8

• Every $1 spent on beer generates $0.44 in ta es (nominal)

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Source: The Conference Board of Canada. taxes (nominal).

Economic Contribution of Beer Exports.

• Growing global demand for beer from developing countries.–China is currently world’s biggest beer market.

• Canada exports less than $300 million of beer/year.Ca ada e po s ess a $300 o o bee /yea

• Increasing Canadian beer exports by $10 million would:support 70 jobs (26 at breweries)–support 70 jobs (26 at breweries),

–add $10.54 million to domestic GDP, and–contribute $327,000 to taxes on products.$ , p

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ConclusionMeasuring the beer economy

B i l f t i i d t b t h• Beer is a large manufacturing industry, but much more.

• The beer industry has a long and integrated supply chain C dacross Canada.

• It supporting nearly 1 per cent of Canada’s GDP and 163,000 jobs.

• Growing global demand offers an even brighter future.

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