To best position themselves against sluggish demand and rising input costs over the next few years, North American brewers need to focus on growth in emerging markets and increased demand for craft, specialty and premium products in mature markets.
That’s a key message in a breweries report released this morning by BMO Capital Markets Economics.
The report notes that production in the breweries industry in both Canada and the U.S. has been on a long-term downward trend due to declining consumption and growing competition from foreign producers.
It notes that during the recessionary years of 2008 to 2010, Canada’s beer production fell10%.
But the report emphasizes that craft beers produced primarily by smaller, domestically owned and oriented companies are enjoying strong demand relative to the industry’s more mainstream products.
It notes, for example, that in the U.S., the number of small breweries has risen to more than 1,600 in 2010 from 10 in the early 1980s.
It emphasizes that brewers can capitalize on demand for higher-end, niche products.
“In mature markets, brewers are likely to focus on product development in order to reflect traits addressing health concerns, novelty, sophistication, convenience and cultural diversity,” the report said.
The report also noted that consolidation is expected to continue in the market, driven by brewers’ needs to cut costs, extend geographic reach and invest in innovation.
A spokesman from BMO was not available by press deadline.
Jenny Wagler
Twitter: JennyWagler_BIV