Local brewers 'tapped out' amid inflation, changing liquor trends

Trouble on tap for craft brewers Waterloo Region craft brewers are trying to navigate an evolving industry and soaring costs of operation. Stefanie Davis reports.

The craft brewing industry is feeling the effects of inflation, evolving trends and the lingering impact of the pandemic.

Cambridge brewery Rhythm and Brews has closed its doors after five years of business. The owner says all things combined made for the perfect storm that was too much to overcome.

“Things got harder and harder, so we kind of had to pull the plug,” owner Andrew Byer said.

“Last year was great but we remortgaged twice during COVID-19 just to keep the doors open. We did everything we could but we’re tapped out.”

He said it was a difficult decision. Immediately following pandemic lockdowns he said he noticed a bump in business, but throughout all of 2023 it’s been tough.

The cost of operating has made it too much to overcome.

“Beer ingredients have pretty much doubled over the last five years, but you’re not going to double your [price of] your pint of beer. In fact, that crucial ten dollars for a pint – you can’t really go over that,” he explained.

Additionally, Byer said there’s been a dip in alcohol consumption.

“A lot of craft breweries are in a lot of trouble and this is all over the world right now. You’re going to see a lot more close and it breaks my heart,” he said.

“Younger people, in their early 20’s, they’re not drinking as much alcohol in general. Some people say it’s the cannabis shops and I don’t know, it doesn’t matter. It’s their choice and what they want, and it’s not just beer.”

Those who are drinking appear to be reaching more frequently for seltzers, mixed drinks of cocktails.

That’s a trend other breweries, including Kitchener’s Counterpoint Brewing Company, are trying to keep up with as they navigate higher operating costs.

“A few years ago, craft beer was very hot and exciting. It still is, but us, as well as the other breweries, we’re still working on keeping things relevant and going with current beer styles,” Counterpoint Brewing Company owner Graeme Kobayashi said.

“We’re making them a little bit healthier, making them lighter, less alcohol, less calories and that type of thing. We’re introducing fruit and other ingredients to make them a little more exciting or a little more competitive in the market.”

As they’ve been dealing with higher costs of ingredients, shipping, packaging and more, Kobayashi said they’ve had to increase costs and reduce staff.

“People are looking after, obviously, their needs first like groceries, housing and that type of thing. So beer really comes secondary, or third, to all of that,” he explained.

“Different ways to combat that or work through this difficult time are things like working together with other breweries and businesses. We’re looking at doing a couple of fall events with a few other breweries that should be really fun. And then just relying on our customers to stay loyal and to really continue that support local push that we’ve been feeling since day one.”

PROVINCIAL LEVEL

Despite some challenges, Ontario Craft Brewers Association president Scott Simmons said there is still a demand for beer across the province.

“It’s kind of a good news, bad news story with the industry. The good news is this is a fairly significant industry in Ontario. It was the fastest growing segment of Ontario manufacturing from 2010 to 2019. There’s now 342 of these small businesses across the province,” Simmons said.

Simmons said he anticipates another growth wave in the industry in the future, but right now, there are many businesses facing struggles.

“The troubling instances that we’re dealing with now are a combination of things,” Simmons explained, saying the pandemic, inflation and a “soft volume year for the industry” made for a difficult 2022.

He said the association hasn’t seen a lot of reported brewery closures yet, but it’s inevitable that more will close if there’s not more government support.

“The cost of aluminum, barley and cardboard have all risen 50 to 150 per cent,” he said.

“How much longer can [breweries] withstand that pressure? A lot of them, for example, have Canada Emergency Business Account loans that are coming due in December, and that’s a lot of money for a small business.”

The association is hoping to see continued customer support, as well as tax relief, going forward.

“Raising the prices of craft beer really isn’t an option in the province right now. Somehow, the costs need to be reduced and taxes are the biggest proponent of that cost,” he explained.