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The Globe and Mail

Weather takes head off Western beer sales

A line worker pulls out bad bottles of beer at Brick Brewing Co. in Kitchener, Ont.

J.P. MOCZULSKI/The Globe and Mail

Lousy weather in the West dampened beer sales in the spring and early summer, but ever-optimistic brewers are hoping to have a good year overall.

Canadian-based brewers say the wet and rain in the western part of the country has dented consumption there, as drinkers are less likely to have a beer when the weather isn't sunny.

"Our volumes in Western Canada certainly suffered in the second quarter because of the rain," said John Sleeman, chief executive officer of Guelph-based Sleeman Breweries Ltd., now owned by Japan's Sapporo Holdings Ltd.

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"Weather is very influential in our industry," Mr. Sleeman said. "If it's cold and rainy you just don't feel like reaching for a beer, and you don't sit outside or you don't go to the lake."

Still, Mr. Sleeman said strong sales because of hot weather in Eastern Canada have offset the slowness in the West, and his company is set for a banner year. Indeed, "we're having some challenges making enough beer to meet demand," he said.

The bulk of brewers' income is generated in the four summer months, so this time of year is crucial for companies in the business.

Figures compiled by the Brewers Association of Canada show year-over-year sales of domestically-produced beer were down by about 3.3 per cent in April and 0.4 per cent in May - the latest months for which numbers are available.

Calgary-based Big Rock Brewery said it, too, was hurt by the cool, wet conditions. It reported last week that its second-quarter results were dented by the poor weather in the West, although it managed to eke out a slight gain in sales volume.

Chief financial officer Dwayne Dubois said "the weather definitely had some adverse effects for us," although he added that the "craft revolution" - the shift of many beer drinkers to locally-brewed products - helped offset the drop.

While he too is optimistic for the balance or the year, he noted that the weather in the West hasn't improved much in recent weeks. So far August is "continually cursed with daily showers and thunder," he said. "It doesn't seem that the weather is working in our favour."

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One of the big multinational brewers operating in Canada, Anheuser-Busch - the current owner of Labatt - reported yesterday that it saw a whopping 7.1-per-cent drop in beer volume in Canada in the second quarter of 2010. It attributed the fall to market share losses and "industry weakness." A company spokeswoman would not offer any more details, other to say that the biggest share losses were in the low-priced end of the market, a segment it considers "less strategically important."

By contrast, the other big multinational operating in Canada, Molson Coors , managed a 2.6-per-cent increase in sales volume in the second quarter. It's sales were boosted by the acquisition of the Granville Island Brewing Co. in British Columbia.

For some brewers, the weather isn't crucial if they can latch on to a marketing idea that catches drinkers' attention.

That's the case at Vancouver Island Brewery, a Victoria-based craft beer maker that sells its products only on Vancouver Island and the lower mainland of British Columbia.

"In our area, all the craft beers are digging into the import brands," general manager Jim Dodds said. Despite the bad weather in B.C. this spring, the company's volumes were up sharply partly because it launched a new product to coincide with the 100th anniversary of the Canadian Navy.

Sea Dog Amber Ale was a huge hit around the time of the international fleet review that took place in Victoria at the beginning of June, Mr. Dodds said.

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For Moosehead Breweries Ltd. of Saint John, Ontario is the most important beer market in the country, and the hot weather in that province has been very helpful this year, far outweighing weakness in the West, spokesman Joel Levesque said.

For brewers, "if you luck out on the weather, and you are smart enough to execute well, you should do okay no matter what the economy," he said.

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About the Author
Reporter, Report on Business

Richard Blackwell has reported on Canadian business for more than three decades. At the Financial Post and the Globe and Mail he has covered technology, transportation, investing, banking, securities and media, among many other subjects. Currently, his focus is on green technology and the economy. More

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