Beer will likely get more expensive in Canada soon

Canada | The ongoing tariff rift between Canada and the US is set to raise the price of beer cans on both sides of the border. Industry group Beer Canada expects Canada’s beer industry to take a CAD 330 million (USD 230 million) hit this year.

Canada provides about 70 percent of the US’s primary metals like aluminium, but it is mainly US manufacturers which turn the metal into cans, particularly the popular 473-ml tallboy cans. Because Canada’s retaliatory tariffs on US goods include aluminium products, beer cans will likely be hit with tariffs at least twice before making it to Canadians’ fridges.

The direct impact of the 25 percent US import tariff on Canadian primary aluminium is estimated at about CAD 165 million across the CAD 3.7 billion in aluminium cans Canadian brewers use annually. On a per-can basis, the added cost is about CAD 0.05. The equivalent Canadian 25 percent retaliatory tariff on American finished cans will double the cost impact to CAD 330 million.

Beer in cans

The 25-year-old craft brewery Steam Whistle from Toronto, which uses more than 9 million tallboy cans per year, expects its packaging costs to rise by about CAD 1 million.

Some 85 percent of beer in Canada is now sold in cans. With the cost of raw aluminium and finished cans going up, Canadian beer drinkers are likely to see price hikes – especially from smaller breweries that have less wiggle room to absorb the extra cost.

The tariffs renewed craft brewers' calls for the province of Ontario to review its tax reforms for the craft beer industry. Ontario breweries pay eight times more tax compared to Alberta, as small brewers pay just shy of CAD 78 (USD 55) in tax on their first hl of beer, compared to just under CAD 10 (USD 7) in Alberta.

The average tax load on beer in Canada already typically represent 46 percent of the retail price.

That is why brewers are hoping that the government will speedily remove the archaic inter-provincial trade barriers for booze, a move that could provide brewers with some new business and help offset the extra can costs.