FROM FARM TO GLASS: The Value of Beer in Canada Glen Hodgson Chief Economist and Senior Vice President, The Conference Board of Canada November 5, 2013 conferenceboard.ca Economic Footprint of Beer. • Report investigates size and scope of beer economy. • Breweries are a large manufacturing industry, but there is more to the story. • Beer has a long supply chain and is retailed in stores and consumed in bars, and restaurants. • Therefore, beer’s contribution to Ca n adi an GDP i s m uch larger than brewers themselves. 2 Beer is the preferred alcohol choice. (volume of Canadian sales in absolute alcohol content; millions of litres) Spirits Wine Beer 140 120 100 80 60 40 20 0 Sources: Statistics Canada; The Conference Board of Canada. 3 Putting the industry into perspective. Canadian breweries industry: • Smaller than forestry and logging • About the same size as the postal service • Larger than wineries and distilleries, soft drink manufacturing, and many others. 4 Putting the industry into perspective. (2012 real GDP for selected Canadian industries; 2007 $ millions) Forestry and logging 3,729 Pharmaceutical and medicine manufacturing 3,451 Postal service 3,179 Breweries 3,166 Radio and television broadcasting 3,081 Dairy product manufacturing 2, 866 Coal mining 1,666 Soft drink and ice manufacturing 1,168 Fishing, hntinghunting, and trapping 1, 127 Wineries and distilleries 889 Sources: Statistics Canada; The Conference Board of Canada. 5 What is the “Beer Economy”? It’s more than just breweries… When you drink a bottle of beer, you support: 1. Direct Impacts: The brewing industry 2. Supply Chain Impacts: 6 What is the “Beer Economy”? It’s more than just breweries… 3. Induced Impacts: Employees of breweries and the supply chain spend their earned income on goods and services. 4. Fiscal Impacts: • Corporate taxes • Income taxes of employees of breweries and supply chain industries • Product taxes: includes GST, PST/HST, remittances from liquor authorities to provincial governments, fuel transport taxes, etc. 7 Beer’s economic footprint. (Annual average, 2009-2011) • Accounts for 0.9% of Spending on beer (billions, real $) 12.3 total GDP. • Every $1 spent on (billions, real $) Real GDP 13.8 beer generates $1.12 Economic multiplier 1.12 in real GDP. Jobs 163,200 • Beer economy supports 1 out of every 100 jobs in Taxes (billions, nominal $) 585.8 Canada. Sources: Statistics Canada; The Conference Board of Canada. 8 Economic footprint of beer, by industry. (GDP annual average over 2009-2011; real $ billions) 2.2 Manufacturing 3.1 Retail trade Accommodation and food services 2.2 Finance, insurance, an d rea l estate 1.0 Wholesale trade 1.2 Other 1.7 Source: The Conference Board of Canada. 9 Prominent Commodities in Beer Supply Chain. 10 Regional Supply Chains: Atlantic Canada. • Long brewing traditions: Moosehead, Oland Brewery, etc. • There are 22 breweries in Atlantic provinces. • The region supplies beer, electricity, paperboard containers and much more to the national beer economy. • Beer consumption across Canada supports10,349 jobs in the Atlantic provinces. 11 Beer Consumption Across Canada Supports LlJbLocal Jobs. Number of jobs supported as a result of beer consumption in various regions. Provincial consumption Central Canada consumption Other Atlantic consumption Prairie consumption B.C. & North consumption Newfoundland & Labrador Prince Edward Island Nova Scotia New Brunswick 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada. 12 Regional Supply Chains: Central Canada. • Brewing hub of Canada, home to the three largest breweries in the country. • Quebec and Ontario account for 71% of brewing activity in Canada. •Supplies beer , and head-office and financial services to the national beer economy, among other things. • Beer consumpppp,jtion across Canada supports 86,913 jobs in Central Canada. 13 Beer Consumption Across Canada Supports LlJbLocal Jobs. Number of jobs supported as a result of beer consumption in various regions. Provincial consumption Other Central Canada consumption Atlantic consumption Prairie consumption B.C. & North consumption Quebec Ontario 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada. 14 Regional Supply Chains: Prairie Provinces. • Not large brewers relative to other regions. • Very important region for the supply chain of beer. • Supplies many inputs into production: malting barley, energy, water, etc. • Large transportation and warehousing activity. • Beer consumppppjtion across Canada supports 20,394 jobs in the Prairies. 15 Beer Consumption Across Canada Supports LlJbLocal Jobs. Number of jobs supported as a result of beer consumption in various regions. Provincial consumption Other Prairie consumption Central Canada consumption B.C. & North consumption Atlantic consumption Manitoba Saskatchewan Alberta 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada. 16 Regional Supply Chains: B.C. & the North. • B.C. has an active brewing industry, with 72 large, medium, and small breweries. • One brewery in Whitehorse: Yukon Brewing. • Tourism boosts beer consumption, and supports a sizable accommodation and food services industry. • Beer consumption across Canada supports 18,967 jobs in B.C. and the North. 17 Beer Consumption Across Canada Supports LlJbLocal Jobs. Number of jobs supported as a result of beer consumption in various regions. B.C. & North consumption Prairie consumption Central Canada consumption Atlantic consumption B. C. & the North 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Sources: Statistics Canada, 2009 Interprovincial Input-Output Model; The Conference Board of Canada. 18 Fiscal Impact of Beer Economy. ($ billions; annual average, 2009-2011) Corporate profits before tax 4.3 • Beer economy supports corporate profits and Primary household income 7.2 household income. Personal income tax 1.0 • These incomes help to CtCorporate income tax 101.0 generate sizeable contributions to federal, Taxes on products 3.8 provincial, territorial, and Total taxes 5.8 municipal revenues. • Every $1 spent on beer generates $0.44 in Source: The Conference Board of Canada. tax es (nominal). 19 Economic Contribution of Beer Exports. • Growing global demand for beer from developing countries. –China is currently world’s biggest beer market. • Can ada ex port s l ess th an $300 milli on of beer /year. • Increasing Canadian beer exports by $10 million would: –support 70 jobs (26 at breweries) , –add $10.54 million to domestic GDP, and –contribute $$,327,000 to taxes on p roducts. 20 Conclusion Measuring the beer economy • BilBeer is a large manu ftiidtbthfacturing industry, but much more. • The beer industry has a long and integrated supply chain across CdCanada. • It supporting nearly 1 per cent of Canada’s GDP and 163,000 jobs. • Growing global demand offers an even brighter future. 21 conferenceboard.ca.