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Headwinds for Craft Beer Blow North


Big Picture Report: March 2024
Bernadette Wiltz-Lang, SUSTA

Canadian regulations relax to spur growth

The growth in craft beer has been a notable trend in the SUSTA region, with Southern brewers earning awards, accolades, and customers far and wide. However, as the domestic market is saturated, brewers are showing an interest in testing export markets. Likewise, more of our member state Departments of Agriculture were looking to promote their states’ brews. That is why in 2018 SUSTA added craft beer to its Canada Initiative. Maintaining a focus on craft brewers is a way to provide support to the region’s small and medium sized companies looking to expand their sales, and the results have been positive.

Export results continue to grow for Southern craft beers into Canada, with more than $2 million worth of exports resulting from SUSTA’s strategy. To be sure, the regulatory structure for importing alcohol into Canada is not without its challenges, and approval from a provincial control board can take longer than a program year. However, many SUSTA brewers have pioneered new business in Canada.

Which is why recently announced changes to the distribution and retail system in the Province of Ontario could lead to more opportunities for Southern U.S. craft beers hitting retail shelves in Ontario, the largest province in Canada, and the entry point of 51 percent of all of Canada’s beer imports, a national market of about $USD 80 million.

Under the new regulation going into effect on January 1, 2026, sales of beer – as well as wine, hard cider, and low-alcohol ready to drink beverages, like wine coolers and hard seltzers – will be allowed in all the province’s grocery stores, convenience stores and big box retailers. Currently, about 450 grocery retailers are licensed to sell beer and cider, with about 225 of those also permitted to sell wine. This new, more open market would add an estimated 8,500 new retail outlets to sell beer, wine, and other alcohol-containing beverages. Spirits would still be limited to provincial liquor retail outlets, however.

Additionally, the new plan would eliminate regulations of pack sizes; currently, for example, only government authorized retailers can sell a 24-can case of beer. In announcing this reform, a joint press statement from the Office of the Premier of Ontario and the office of the Finance Minister noted, the new plan “will offer consumers an extensive array of choices, including domestic and imported products.”

This development has the potential to open Ontario to more craft beers from the SUSTA region and is something we will be watching as we continue to strive to help small and medium-sized Southern companies expand their international reach.

SUSTA is planning a Canada trade mission to Kentucky and Tennessee this fall for the beer and spirits industries. The trade mission will include 1-1 meetings with beverage alcohol agents from provinces across Canada. When possible, we will coordinate site visits to breweries and distilleries. If you are interested in participating, you do not have to be based in Kentucky or Tennessee. Any eligible company in our region can register.