Should one be so minded, Carlsberg’s Canadian announcement today could really get one’s juices flowing: After all, the acquisition of Waterloo Brewing in Ontario marks the debut for Carlsberg production-wise in North America.
Does the move represent the start of the next round of beer wars on the continent? Should Anheuser-Busch InBev and Molson Coors Beverage Co be worried?
From Carlsberg’s perspective, at least, this is big news. Historically, so superfluous has North America been to the Denmark-based group that it hasn’t even warranted its own reporting region in quarterly results. And, while the brewer’s brands are entrenched in Canada, the securing of domestic production of the likes of Carlsberg, Tuborg and Kronenbourg 1664 provides synergistic appeal.
Taking a broader position, however, let’s not get too excited.
Growth-wise, Canada has little to write home about. In the most recent figures from trade association Beer Canada, the market has demonstrated a steady decline: In 2016, 77.1 litres of beer were consumed per capita with the figure sliding five years later to 69.3 - A compound annual growth rate of -2.1%
The downward trend - typical of a mature beer market - is confirmed by sales volumes, both for domestically-brewed products as well as for imports [although the latter segment could be described as having been in flux over the five-year period].
The purchase, then, is unlikely to move the growth needle for Carlsberg. Rather, the reasoning for such a move can more probably be traced back to almost exactly three years ago, when the two companies signed a "co-pack contract" for Carlsberg's Somersby cider brand.
There's a confluence of two factors that help make sense of the move: The first is this production agreement, which highlights a sizable string to Waterloo's bow in the form of contract manufacturing.
The other is that Carlsberg's current owned presence in the country - the Canadian division numbers around 60 employees - is limited to sales and marketing operations for imported beers including Kronenbourg 1664, Tuborg and the namesake brand. By securing brewing control in-market and - judging by Waterloo's share price of late - at a relative steal, today's news will mean more in Copenhagen than it does to those on the outside, looking in.
