Ontario craft breweries struggle with rising costs

Tuque de Broue's last call marked the end of a nearly decade-long adventure for Nicolas Malboeuf and his family.

Speaking to Radio-Canada, Malboeuf described a gloomy atmosphere as the final draughts were pulled Saturday.

"We've been operating for nine years and we've pivoted more than a weathervane," Malboeuf said in French. 

He said the business just couldn't avoid rising costs — even when it focused production on a smaller line of products, costs still went up. He has said packing and shipping costs have been particularly difficult to manage.

Malboeuf said producers like him, who want to focus on their products and not run a restaurant at the same time, will have a hard time surviving.

Cans account for about 10 per cent of craft brewers' input costs, the single largest amount, according to a 2022 report commissioned by the Ontario Craft Brewers (OCB) on the economic impact of craft breweries. 

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OCB president Scott Simmons said aluminum costs have increased about 40 per cent in the last two years, while other key inputs — like cardboard and grains — have seen an even greater rise.

Andy Nita, owner of the Nita Beer Company, said he's constantly keeping an eye on rising costs. He bought a canning machine in 2018 and withstood rising prices and a shortage of cans during trade disputes with the United States. There's talk of tariffs on some aluminium imports again.

"It makes us ask the hard question: how much more price variation will we absorb before we increase our prices?" he said.

Nita said brewers are facing headwinds as consumer tastes shift to ready-to-drink cocktails and low-or-no alcohol beverages. He said the best margins for breweries come from people buying on-site, so he's expanding the food he offers at his Colonnade Road taproom and parking lot patio.

"Initially, I was hoping that I could hide back here, make beer, can beer, drink beer and everything would sort itself out. But that's not the way the industry has sort of gone or shifted," said Nita, who is approaching a decade of brewing. 

"[We] get some food on the table or some snacks available so they're not here for one or two beers, maybe you can keep them here for three or four."

Simmons said the increase in the cost of packaging is hitting brewers whether they own their own canning equipment or use a mobile canning service.

"The cost increases have also hit the suppliers. Whether you're using a mobile service or you're supplying your own line, all those costs have gone up," Simmons said.

Simmons said entering grocery and convenience stores in September is a welcome opportunity. The industry association is continuing to press the Ontario government to accelerate its review of alcohol taxes, which it says leave Ontarians paying the highest taxes on craft beer.

Simmons said craft brewing are coming off of a decade of massive growth in Ontario and now number about 340 breweries.

"It's very sad to see breweries close but I don't think it's indicative of an industry that's on the downslide or the decline."