The race heats up to win over Canadian beer drinkers

By Roger Mittag
July 16, 2013
The race heats up to win over Canadian beer drinkers

The North American beer industry is in a great deal of flux these days. Craft brewers are reporting double digit growth while mainstream beers are shrinking just as rapidly. There is a lot to take into consideration when thinking about the impact on your beer portfolio.

While we have heard a lot recently about the increase in sales of wine, we need to fully appreciate that beer makes up 78 per cent of the total alcohol beverage market in Canada, according to the Brewers Association of Canada. In equivalent drink standards (12 ounces of beer, 1.5 ounces of spirits and five ounces of wine), beer still has a whopping 52 per cent share. The relevance of these statistics shows that beer is a vital and crucial part of the total beverage alcohol mix for licensees.

Fifteen years ago, the hospitality sector garnered 30 per cent of all beer sales in Canada – today, it is down to 20 per cent and is really showing no signs of rebounding. It is common sense to believe that economic recession, an aging baby boomer population and more stringent drinking-and-driving laws are continuing to influence where consumers are drinking beer.

Storm is brewing

Combine these factors with a drop in draught beer percentage (as a whole of beer volume) from 12 to nine per cent and one can easily see a potential problem. Draught beer can be one of the best beer experiences for a consumer but it can also be the worst. Draught lines need to be cleaned every three to four weeks. However, according to estimates provided at the 2005 Global Draught Beer Conference, at least 30 to 40 per cent of all draught lines may be contaminated with bacteria. Combine this with poor pouring techniques and a lack of training and execution on the delivery of beer to the guest and you can see a perfect storm brewing.

The future of beer in Canada is being driven by the small brewers who have been growing at a steady pace since 1984 but have been rapidly accelerating in the past two years. While the total of the micro market is still about five to six per cent of the total beer industry, it is the one that is garnering the most attention. We are seeing more and more micro beers in the retail marketplace and naturally that translates into more visibility for small brewers in hospitality. There are some locations that are going with 100 per cent local beers on tap (not something I recommend, however). The interesting part of this equation is the drive toward creativity. While we have approximately 65 traditional beer styles globally, the micro market is expanding that to hundreds based on hybridization and blending of traditional beer categories.
In Canada, 85 per cent of the beer consumed here is brewed here. Surprisingly to some, imported beers only make up 15 per cent of the market. This is a vast difference from the 20-25 per cent that was predicted by brewing giant Interbrew (now part of Anheuser-Busch InBev ) just 10 years ago. The micro market is going to solidify that trend.

Beer in hospitality

As previously stated, the publican and restaurateur are under constant pressure to deliver a great experience – both with beer and food. It has become vital to understand the new beer consumer and provide an experience that will satisfy their thirst for knowledge and differentiation.

The beer portfolio, then, should reflect the Canadian market; local beers are hot but there always will be a place for imports and domestic mainstream beers.

The need for proper training in product knowledge and sales techniques (or customer service) is taking hospitality providers in a new direction. It is important to understand that approximately 70 per cent of consumers will order their usual brand when entering the pub or casual dining location (according to UK Genesis Research 2002). As suggested by the same study, the licensee has the ability to change the mind of the consumer (34 per cent of pub customers and 22 per cent of casual dining patrons are willing to change their choice if prompted). Furthermore, approximately 56 per cent of all consumers will take a server’s recommendation.

Better training needed

The flip side of this last statistic is that only 17 per cent of consumers report receiving a recommendation. This means that many full service establishments are employing order takers instead of sales people. This is where training comes in – providing your staff with insights as to consumer behaviour is crucial when creating the memorable beer experience. For example, when a consumer asks what beers are available on draught, the best response would be to ask a question such as, “What kind of beer do you normally drink?” or “Are you interested in trying some of our local beers?” The standard recitation of the beer list is thoughtless and doesn’t sell the customer on trying a different beer.

Beer can be very profitable for the licensee. You must be encouraged to look at beer differently and to analyse the line-up or portfolio to enhance total sales and margins.

Price segmentation

Draught and bottled beer should be segmented into at least three pricing strategies – domestic, premium and import. Pricing should be created based on volume and margin.

In order to fully appreciate the impact of pricing, the licensee needs to examine the amount of beer actually poured into each glass. This means that if suppliers are providing branded glassware, the bar owner should rightfully measure each glass for volume.

Pouring strategies indicate the standard amount of foam is three imperial ounces in every glass regardless of size. This means a 20-ounce glass should have 17 ounces of beer and three ounces of foam. Usually, the brewer/supplier has provided a glass with a pour line. If this is not the case, the objective should be to aim for the top of the brand logo.

An example using a domestic beer (58.6 litres) shows the following

Serving sizeGlasses per kegSelling priceFood costKegs per yearProfit
17 ounces121$6.5027%100$50,000
20 ounces103$6.5031%100$40,000

You can see by this demonstration that you can easily increase your profitability by $10,000 simply by training your bartenders to pour properly.

Pouring techniques

Many bartenders are trained at serving the customer but not trained properly in the correct methods of pouring for profit. They can commit errors which result in lower draught profits. There is a proper order of service – red wine, mixed drinks, white wine and draught beer. Beer that is poured too early often loses the valuable foam collar at the top of the glass resulting in the bartender topping up the beer – this results in adding at least one to two ounces to each beer.

Draught systems need to be properly calibrated and maintained in order for the bartender to be able to pour profitably. Foamy beer will result in lower profit (through waste and over-pours) while beer that pours slowly and without foam is equally as unprofitable. Quite often, the first pour of the day is very foamy (system issues) resulting in many ounces being wasted. Proper maintenance may prevent these issues.

Any good operator has a handle on the numbers. The biggest mistake I have seen over the past 15 years is establishment owners assuming that selling beer is easy. It can easily become one of the most profitable parts of your business and in addition, it is a very hot product right now that is driving interest in the hospitality sector. By focusing more on beer, you will provide new opportunities for improving your business.

See also:


About the author

Roger Mittag, a professor at Humber College’s School of Hospitality, is also the founder of Canada’s leading beer education company Thirst for Knowledge. A consultant to several breweries, Mittag recently created Prud’homme Beer Certification, a sommelier-style program for beer and the first such program in Canada.

< Back
Copyright © RestoBiz. All rights reserved.