A notable decline in beer and alcohol sales in both Canada and the U.S. is another sign that consumers are both grappling with affordability challenges and shifting their priorities, according to experts.
Rising gas prices in Canada amid the war in Iran are also adding to the affordability angle and forcing consumers to cut back on spending, including on alcoholic beverages.
“Canada is in an affordability crisis and when bills are coming in and disposable incomes are tightening, Canadians will spend less on things like going out to restaurants and we sell a lot of beer in restaurants,” said Richard Alexander, president of Beer Canada.
“Enjoying a cold Canadian beverage at the end of the day is something that Canadians are more and more going without.
“The industry is in decline.”
Here’s what’s happening.
According to Statistics Canada’s latest data, February alcohol sales at the retail level totalled $1,955,384, which was down 3.4 per cent from $2,024,816 a year earlier.
Separate StatCan data shows that the amount of alcohol being purchased is also declining, with absolute volume per capita sales dropping from 8.3 litres in 2020 to 6.8 litres in 2024 — a drop of more than 18 per cent.
The agency measures the per capita sale of alcoholic beverages in absolute volume, or the pure amount of alcohol, rather than the number of beverages sold, because the amount of alcohol varies greatly across different beverage types.
For example, one bottle of beer doesn’t necessarily have the same concentration of pure alcohol as the same liquid amount of vodka.
This all suggests that consumers may not only be trying to save money on alcohol, but are also purchasing and consuming less of it altogether.
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“Alcohol sales, for some people, are a discretionary item, and with the affordability crisis we’re going through right now, in particular with the heightened price of gasoline due to the conflict in the Middle East, some people have had to cut back on alcohol sales in their life or reduce it,” retail analyst Bruce Winder said.
“There’s also been a bit of a slow burn away from alcohol by young people over the last decade or so; they might partake in cannabis or other gummies or something like that instead of alcohol. So there’s a few things in play here.”
With a drop in alcohol sales in Canada, the industry has been hit hard, including producers, distributors, retailers, restaurants and bars that employ thousands of people.
He adds that, in addition to a drop in revenue, Ottawa’s taxation of Canada’s beer and alcohol industry is adding financial pressure.
“Taxation is impacting the industry, it’s impacting jobs in our industry, the 150,000 people that rely on our industry and restaurants and bars and all those small mom-and-pop businesses.”
In the U.S., alcohol sales have also been on the decline, according to the latest NielsenIQ data shared with Global News.
In the 52 weeks ending May 2, dollar sales of alcoholic beer, fermented malt beverages, cider and seltzers fell 3.5 per cent compared with the 52 weeks prior. The same dataset shows wine sales down 4.2 per cent and spirts dropped 1.9 per cent.
At the same time, the data shows dollar sales of non-alcoholic beverages spiked in the U.S., with associated beer, fermented malt beverages, cider and seltzers up 13.2 per cent, wine up by 18.4 per cent and non-alcoholic spirits up a whopping 46.6 per cent year over year.
Winder says these trends may be in line with a push towards more health-conscious lifestyles since the COVID-19 pandemic.
“A lot of people did a lot of drinking during COVID too, so there could be folks who are sort of trying to get on the straight and narrow from a health perspective again,” he said.
“There’s probably just a heightened awareness too about it and just maybe people sort of getting out of COVID, saying, ‘I want to see if I can drink a little less for my health.’”
He adds that the rise in GLP-1 treatments for weight loss may be playing a role here, too.
“A lot of people are participating in GLP-1s, weight-loss drugs, and they know that alcohol adds weight. There could be movements towards sort of healthy drinking and avoiding alcohol for that reason too.”
As the alcohol industry adapts to a drop in revenue tied to changing consumer habits and affordability challenges, Alexander says more needs to be done to support the beer industry.
“We need our federal government to be implementing policies or removing policies like automatic tax increases to try and strengthen the Canadian brewing industry and protect those strong unionized jobs, those careers. And that will benefit Canadians and help them with affordability as well,” he said.
Winder says relief at the gas pump may help free up more non-discretionary spending in household budgets, but the industry also needs to keep adapting to demand from consumers.
“I think innovation within those categories could be good if they can come up with something that’s a little more healthier. There’s been light beers, which has been around for quite a while, light alcohol beverages with less calories. Those have been around a while, but you might see those grow,” he said.
“And of course, a reduction in the affordability issues through peace in the Middle East as it relates to the United States and Iran, and the lowering of gasoline prices may help to some degree.”
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