Microbreweries | Is the party coming to an end?

Beer consumption continues to decline in Quebec, but the number of microbreweries continues to rise. The still boiling sector disrupts forecasts, but until when?

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Press

“When we started making non-alcoholic beer, we were the only ones in Canada. Now everyone does. »

Michael Jean, CEO of Le BockAle microbrewery in Drummondville, is well positioned to see that the Quebec craft beer market is quite crowded.

All niches are explored, all business models are tested. And although beer consumption is in decline in Quebec, the sector continues to attract suitors. There are currently around a hundred brewers waiting for a permit from the Régie des alcools, des Courses et des jeux (RACJ).

The future of these future breweries is more uncertain than ever. Unless they choose to focus on their local market and avoid going out and conquering Quebec supermarket shelves.

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PHOTO PATRICK SANFAÇON, THE PRESS

Philippe Wouters

“Regionalization is what will save microbreweries,” says Philippe Wouters, who saw the birth of Quebec’s craft beer ecosystem and closely follows its evolution.

According to him, the brewery model in every town in Quebec is still viable. “You have to be able to invest a lot of money to distribute and sell your beer throughout Quebec and beyond,” he says.

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PHOTO BERNARD BRAULT, PRESS ARCHIVE

Outdoor facility at Livingstone Microbrewery, Franklin

In Drummondville, Le BockAle decided to do just that, focus on their local market and open a pub to sell their boozy beer. “We don’t have a choice,” says Michael Jean. We began to throw in the towel for the alcoholic beer. »

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PHOTO MARTIN CHAMBERLAND, LA PRESSE ARCHIVES

Michael Jean, CEO of Le BockAle microbrewery

We decided to refocus in our region on alcoholic beer because there are so many microbreweries that want to be on the shelves that it is elbowing and it is getting difficult.

Michael Jean, CEO of Le BockAle microbrewery in Drummondville

The company has also just partnered with Nicolas Duvernois and Romeo gin to start making alcoholic and non-alcoholic ready-to-drink beverages. An investment of 15 to 25 million is planned in a new fully automated factory to address this new market and look for growth.

The moment of the truth

It is at the end of summer, when beer sales peak, that the reality could catch up with several craft breweries, Philippe Wouters believes.

All brewers face significant cost increases: prices for grain, cans, carton and transport have risen sharply over the last year and are hurting their profitability.

At the same time, inflation and rising interest rates are reducing the purchasing power of consumers, who are less likely to want to pay even more than already high craft beer prices.

“There are challenges,” acknowledges Marie-Ève ​​Myrand, general manager of the Association des microbrasseries du Québec. The aging of the population, responsible for stagnant beer sales for years, she continues, she notes. In addition to rising input costs, fierce competition for grocery store shelf space has become a major issue, she acknowledges.

The entire microbrewery environment is changing, says Frédéric Thibeault, vice president of the group that oversees the Glutenberg and Oshlag beer brands, as well as the Oshlag distillery.

The beverage market is fragmenting. The number of types of drinks is multiplying, with a very short shelf life. This is the challenge we face.

Frédéric Thibeault, Vice President of Glutenberg and Oshlag

We must diversify, it is a necessity, believes Frédéric Thibeault. Glutenberg, number one in gluten-free beer, also brews Oshlag-branded beer, spirits, seltzers and other ready-to-drink products.

The company has established a distribution network for microbrewery beers, the first in Quebec. Transbroue has been representing and distributing its beer brands and a few others in the Quebec market since 2013, filling an important need for microbreweries.

Glutenberg et compagnie has a production capacity of 60,000 hectoliters, making it a very large microbrewery. “And we have big ambitions,” says Frédéric Thibeault.

small, by choice

There are more than 300 microbreweries in Quebec. The vast majority of them have a production of less than 2,000 hectoliters (1 hectoliter equals 100 litres). La Korrigane microbrewery is one of them. Since 2010, it has offered its craft beers in the Saint-Roch district of Quebec, with a deliberately local ambition. With a restaurant-pub, about ten employees and a production of 650 hectoliters, the company is doing well.

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PHOTO BERNARD BRAULT, PRESS ARCHIVE

La Korrigane microbrewery, in the Saint-Roch district of Quebec

From “trippers” to professionals

The craft beer industry is still young in Quebec, but in 30 years, its evolution has been spectacular.

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PHOTO MARTIN CHAMBERLAND, LA PRESSE ARCHIVES

Oshlag Brewery and Distillery Facility, Montreal

“We have gone from an industry of hikers to an industry of professionals”, sums up Raphaël Sansregret, president and co-founder of Innomalt, a malthouse serving microbreweries.

With the intention of making whiskey, Raphaël and his partner founded Innomalt in Sherbrooke in 2016. With the growing demand from microbreweries, they abandoned their whiskey project to focus on this clientele.

The demand for microbreweries is undeniable and Innomalt is currently building a second plant worth more than $40 million, in Bécancour, which will multiply its Quebec malt production capacity by a factor of 20.

Since 2016, Raphaël Sansregret has seen microbreweries become more professional.

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PHOTO ROBERT SKINNER, THE PRESS

Pascal Viens and Raphaël Sansregret, co-founders of Innomalt

More and more entrepreneurs with solid business plans are hiring brewmasters.

Raphaël Sansregret, Chairman and Co-Founder of Innomalt

more depth

There are no longer just microbrewers in the microbrewery ecosystem.

The beer giants, who needed to have at least a foothold in this growing sector, went shopping. AB-Inbev (Labatt) bought the Archibald microbrewery. Molson acquired Shawinigan’s Trou du Diable and Brasseurs de Montréal. Japanese brewer Sapporo owns Sleeman and Unibroue.

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PHOTO DAVID BOILY, LA PRESSE ARCHIVES

Unibroue bottling plant, in Chambly

Malt producers like Innomalt, hops increasingly grown in Quebec, a distribution network like Transbroue, and specialty retailers have sprung up, adding depth to the industry.

Finally, professional investors jumped on the bandwagon. The Caisse de dépôt and the BDC each invested 5 million in the activities of Glutenberg, Oshlag and Transbroue. The Fonds FTQ invested 20 million in Brasseurs du Nord, makers of La Boréale, as well as investing more modest sums in Le BockAle in Drummondville and the La Voie Maltée microbrewery in Saguenay.

It’s still tentative, but it may be the beginning of the end for the craft.

The industry in figures

500,000 hectoliters

Maximum annual production to have the title of microbrewery

100,000 hectoliters

Annual production capacity of Boréale, the largest microbrewery in Quebec

2000 hectoliters

Average production capacity of 80% of microbreweries in Quebec

84 million hectoliters

MolsonCoors Annual Production Capacity

44

Number of microbrewery licenses that have been voluntarily or involuntarily revoked since 2012

Source: Quebec Microbreweries Association

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