Here’s how much it costs to make a can of craft beer
Craft brewers across Ontario are panning Premier Doug Ford’s buck-a-beer plan to set the minimum price for a beer at $1 by Labour Day. To do it, they say, they would have to reduce the quality of their product and pay their employees less.
Mark Murphy, co-founder of Left Field Brewery in Toronto, said that given the significant equipment investment for a new brewery, rising prices for raw ingredients, operating expenses and paying employees a living wage, selling beer at $1 is almost impossible.
“It’s really so far removed from what’s possible for someone on our scale making more of a premium product,” he said. “We could sell beer for a dollar, but we’d be losing money on every can and that wouldn’t make sense long-term.”
Murphy said the cost for one of its key hop varietals has risen by more than 50 per cent in the last three years alone. His company has no interest in participating in Ford’s experiment, regardless of the incentives like prime spots in Liquor Control Board of Ontario stores and advertising in flyers.
“People are willing to pay money for a good product and no one was selling beer at the prior price floor,” he said. “I’m not sure why anyone would sell beer at the new price floor.”
Left Field sells its Eephus Brown Ale and Maris Pale for $3 per 355ml can or $2.50 per can in a six-pack.
“People, possibly Doug included, just don’t understand our scale and how small we are compared to the larger breweries,” Murphy said. “For example, the Molson brewery near the airport made six-million hectolitres last year and we made about 3,800. A brewery like Steam Whistle might’ve made 80,000 hectolitres.”
On top of production costs, consumers could be paying more for small-batch brews as aluminum prices are set to rise amid a trade war with the U.S.
Here is a look at what costs go into producing a can of beer:
Adin Wener, vice-president of sales for Toronto’s Henderson Brewing Co., said the buck-a-beer plan won’t affect most craft brewers in the province as it would require cutting corners on ingredients, firing employees to reduce labour costs or accept the product as a loss leader to be able to charge a loonie.
It’s something Henderson’s has no interest in pursuing.
“It’s not even on our radar,” Wener said. “I think it’s important that we don’t have a race to the bottom.”
Murphy said while Left Field will pass on the buck-a-beer challenge, he hopes the Ford government is open to making changes to help craft brewers in the province like allowing breweries to open more than two retail stores, selling beer-to-go at Ontario Farmer’s Markets, cross-selling between brewers, and reducing provincial taxes.
“Excise rates on small brewers have doubled in the last eight years. That’s something that is a huge hit,” he said. “Each month, we write a check north of $15,000 to the government and if that was, you know, half maybe where the tax rates used to be, we’d have that much more money to re-invest in our company, hire people and expand.”
WATCH: Peterborough craft brewer reacts to ‘buck-a-beer’ challenge
Barley Days Brewery, where Ford made the announcement, is the sole brewery that will reportedly offer a $1 beer. Canada’s largest breweries Molson Coors Canada, Anheuser-Busch InBev and Moosehead Breweries have not said whether they will participate.
Craft brewers across the province including Muskoka Brewery, Napanee Beer Co., Beyond the Pale, Dominion City Brewing Co., Great Lakes Brewery, Nickel Brook Brewing Co., Hometown Brew Co., Collective Arts, Indie Ale House, Beau’s Brewery, Flying Monkeys, Cowbell Brewing, Blood Brothers Brewing, The People’s Pint, Sawdust City, Steam Whistle and The Publican House have vocally opposed the PCs’ plan.
“We’re a craft brewery. It’s all in the word craft; we make small-batch beers. It’s not a volume business,” Marty Laskaris, president and co-founder of The Publican House Brewery in Peterborough, Ont., told Global News. “We can’t afford to put a can on the shelf or 24 in a box for a buck a can.”
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