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, beers 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)

Forestryandlogging 3,729Pharmaceuticalandmedicinemanufacturing 3,451Postalservice 3,179,Breweries 3,166Radioandtelevisionbroadcasting 3,081Dairy product manufacturing 2 866Dairyproductmanufacturing 2,866Coalmining 1,666Softdrinkandicemanufacturing 1,168Fishing h nting and trapping 1 127Fishing,hunting,andtrapping 1,127Wineriesanddistilleries 889

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Sources: Statistics Canada; The Conference Board of Canada.

What is the Beer Economy?Its 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?Its 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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Beers economic footprint.(Annual average, 2009-2011)

Accounts for 0.9% of total GDP.

Every $1 spent on

Spendingonbeer(billions,real$) 12.3

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

RealGDP(billions,real $) 13.8

Economicmultiplier 1.12

Beer economy supports 1 out of every 100 jobs in

Jobs 163,200

Taxes (billions nominal $) 5 8 Canada.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

Corporateprofitsbeforetax 4.3Primary household income 7.2 household income.

These incomes help to generate sizeable

Primaryhouseholdincome 7.2

Personalincometax 1.0C t i t 1 0 generate sizeable contributions to federal,

provincial, territorial, and municipal revenues.

Corporateincometax 1.0Taxesonproducts 3.8

Totaltaxes 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 worlds 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, andcontribute $327,000 to taxes on products.$ , 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 Canadas GDP and 163,000 jobs.

Growing global demand offers an even brighter future.

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