1) Case: Beer and the Canadian Economy
For many Canadians, beer is a poplar alcoholic drink that has become associated with fun
social pastimes such as hanging out with friends or watching a hockey game. But did you
know for every dollar spent on beer in Canada $1.12 goes back into the Canadian
economy? According to a 2013 Conference Board of Canada report, “From Farm to
Glass – The Value of Beer in Canada,” beer is considered to be the most consumed
alcoholic beverage in Canada, making up 8.1 per cent of household spending in food and
beverages. What does this mean? According to the report, Canadians bought an average
equivalent of 235 bottles of beer per person whether at beer stores, liquor agencies,
airports, trains, sports bars or restaurants.
For retailers this means good business; for the government, this means great tax revenue.
While the beer industry in Canada consists of any business that sells beer, the beer
economy is much broader on a whole. The beer economy consists of retail sales,
wholesale distribution, transportation, and, of course, the agricultural products
themselves that beer depends on. In 2013, it was estimated that the beer economy made
up 1 out of every 100 jobs in Canada, which meant 163,000 jobs were related to
producing, transporting or selling beer. Today, many breweries are located in Ontario,
Quebec, Nova Scotia, New Brunswick and British Columbia while other parts of Canada
produce grains, electricity, transportation and packaging materials.
The Atlantic provinces, for instance, have more than 10,000 jobs in the beer economy.
Paperboard manufacturing and transportation are two examples of how they contribute to
the economy.
Central Canada, on the other hand, is the home of the brewing hub of the country. The
three largest Canadian brewers are located here: Labatts, Molson and Sleeman. Similarly,
financial firms, such as insurance companies provide support to the industry. In Central
Canada, 87,000 jobs are related to beer in Ontario and Quebec.
The three Prairie provinces provide support functions as well. Water, energy and grains
for production are three examples. Distribution and warehousing activities also contribute
to the industry. In the Prairies, this means about 20,000 jobs.
The report estimates average annual beer sales to be $12.3 billion annually. The beer
economy, however, contributes to $5.8 billion in annual tax revenues for the various
levels of government. Through the beer economy, the Canadian government collects
personal income tax from individual wages in the beer industry, as well as corporate and
sales taxes on beer-related sales.
In Canada, the largest consumers of beer are in the Yukon. Newfoundland ranks second
according to the report.
While it is a profitable industry, some consumer and government officials wonder if it
could be more competitive in Ontario. The province of Ontario is unlike many of the
other Canadian provinces which strictly regulates the sale of beer through the Liquor
Control Board of Ontario. Currently, beer is mainly sold through The Beer Store, which
is foreign-owned by the U.S.-based Molson-Coors Brewing Company, Sapporo of Japan
and Anheuser-Busch InBev of Belgium. While beer is available in some liquor stores,
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, many call this a ‘near-monopoly’ which has resulted in higher prices compared to other
provinces where beer is also available in grocery and convenience stores.
In a research study, University of Waterloo economic professor Anindya Sen found that
the cost of 24-pack of beer was $35.56 in Ontario ($9.50 more or 27% higher) when
compared with two main Quebec grocery stores. Here, a 24-pack was only $25.95.
According to Sen, “[The study] raises the important question of whether through
modernizing retailing the Ontario government could be benefiting more – and capturing
more revenue – particularly in a period of large government deficits.”
CEO Dave Bryans of the Ontario Convenience Stores Association said “adding private
retailers, like convenience stores, who can work with the LCBO wholesale system would
benefit the provincial government, and Ontarians would benefit from improved choice
and convenience.”
The Ontario Convenience Store Association has been lobbying the government for the
right to sell beer in convenience stores. However, not everyone agrees. Some interest
groups, like MADD, Mothers’ Against Drunk Driving, argue that increased access and
availability of alcohol with private retailers may result in more alcohol-related fatalities,
since convenient store owners may be more concerned about making a profit, than
checking vigilantly for proper ID.
Read the case on Beer and the Canadian Economy and answer the following questions:
How is beer important to the Canadian economy?
Answer:
Beer is important to the Canadian economy in several ways:
Provides Jobs - In 2013, it was estimated that the beer economy made up 1 out of
every 100 jobs in Canada, which meant 163,000 jobs were related to producing,
transporting or selling beer. The Atlantic provinces, for instance, have more than
10,000 jobs in the beer economy. In the Prairies, this means about 20,000 jobs. In
Central Canada, 87,000 jobs are related to beer in Ontario and Quebec.
Contributes profits to other industries (besides the beer industry) - The beer
economy consists of retail sales, wholesale distribution, transportation, and, of
course, the agricultural products themselves that beer depends on. To sell beer,
inputs required include grains, electricity, transportation and packaging materials.
This helps increase the country’s overall gross domestic product (GDP).
Provides tax revenue to all government levels - The report estimates average
annual beer sales to be $12.3 billion annually.
2) Case: Beer and the Canadian Economy
For many Canadians, beer is a poplar alcoholic drink that has become associated with fun
social pastimes such as hanging out with friends or watching a hockey game. But did you
know for every dollar spent on beer in Canada $1.12 goes back into the Canadian
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
For many Canadians, beer is a poplar alcoholic drink that has become associated with fun
social pastimes such as hanging out with friends or watching a hockey game. But did you
know for every dollar spent on beer in Canada $1.12 goes back into the Canadian
economy? According to a 2013 Conference Board of Canada report, “From Farm to
Glass – The Value of Beer in Canada,” beer is considered to be the most consumed
alcoholic beverage in Canada, making up 8.1 per cent of household spending in food and
beverages. What does this mean? According to the report, Canadians bought an average
equivalent of 235 bottles of beer per person whether at beer stores, liquor agencies,
airports, trains, sports bars or restaurants.
For retailers this means good business; for the government, this means great tax revenue.
While the beer industry in Canada consists of any business that sells beer, the beer
economy is much broader on a whole. The beer economy consists of retail sales,
wholesale distribution, transportation, and, of course, the agricultural products
themselves that beer depends on. In 2013, it was estimated that the beer economy made
up 1 out of every 100 jobs in Canada, which meant 163,000 jobs were related to
producing, transporting or selling beer. Today, many breweries are located in Ontario,
Quebec, Nova Scotia, New Brunswick and British Columbia while other parts of Canada
produce grains, electricity, transportation and packaging materials.
The Atlantic provinces, for instance, have more than 10,000 jobs in the beer economy.
Paperboard manufacturing and transportation are two examples of how they contribute to
the economy.
Central Canada, on the other hand, is the home of the brewing hub of the country. The
three largest Canadian brewers are located here: Labatts, Molson and Sleeman. Similarly,
financial firms, such as insurance companies provide support to the industry. In Central
Canada, 87,000 jobs are related to beer in Ontario and Quebec.
The three Prairie provinces provide support functions as well. Water, energy and grains
for production are three examples. Distribution and warehousing activities also contribute
to the industry. In the Prairies, this means about 20,000 jobs.
The report estimates average annual beer sales to be $12.3 billion annually. The beer
economy, however, contributes to $5.8 billion in annual tax revenues for the various
levels of government. Through the beer economy, the Canadian government collects
personal income tax from individual wages in the beer industry, as well as corporate and
sales taxes on beer-related sales.
In Canada, the largest consumers of beer are in the Yukon. Newfoundland ranks second
according to the report.
While it is a profitable industry, some consumer and government officials wonder if it
could be more competitive in Ontario. The province of Ontario is unlike many of the
other Canadian provinces which strictly regulates the sale of beer through the Liquor
Control Board of Ontario. Currently, beer is mainly sold through The Beer Store, which
is foreign-owned by the U.S.-based Molson-Coors Brewing Company, Sapporo of Japan
and Anheuser-Busch InBev of Belgium. While beer is available in some liquor stores,
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 1
, many call this a ‘near-monopoly’ which has resulted in higher prices compared to other
provinces where beer is also available in grocery and convenience stores.
In a research study, University of Waterloo economic professor Anindya Sen found that
the cost of 24-pack of beer was $35.56 in Ontario ($9.50 more or 27% higher) when
compared with two main Quebec grocery stores. Here, a 24-pack was only $25.95.
According to Sen, “[The study] raises the important question of whether through
modernizing retailing the Ontario government could be benefiting more – and capturing
more revenue – particularly in a period of large government deficits.”
CEO Dave Bryans of the Ontario Convenience Stores Association said “adding private
retailers, like convenience stores, who can work with the LCBO wholesale system would
benefit the provincial government, and Ontarians would benefit from improved choice
and convenience.”
The Ontario Convenience Store Association has been lobbying the government for the
right to sell beer in convenience stores. However, not everyone agrees. Some interest
groups, like MADD, Mothers’ Against Drunk Driving, argue that increased access and
availability of alcohol with private retailers may result in more alcohol-related fatalities,
since convenient store owners may be more concerned about making a profit, than
checking vigilantly for proper ID.
Read the case on Beer and the Canadian Economy and answer the following questions:
How is beer important to the Canadian economy?
Answer:
Beer is important to the Canadian economy in several ways:
Provides Jobs - In 2013, it was estimated that the beer economy made up 1 out of
every 100 jobs in Canada, which meant 163,000 jobs were related to producing,
transporting or selling beer. The Atlantic provinces, for instance, have more than
10,000 jobs in the beer economy. In the Prairies, this means about 20,000 jobs. In
Central Canada, 87,000 jobs are related to beer in Ontario and Quebec.
Contributes profits to other industries (besides the beer industry) - The beer
economy consists of retail sales, wholesale distribution, transportation, and, of
course, the agricultural products themselves that beer depends on. To sell beer,
inputs required include grains, electricity, transportation and packaging materials.
This helps increase the country’s overall gross domestic product (GDP).
Provides tax revenue to all government levels - The report estimates average
annual beer sales to be $12.3 billion annually.
2) Case: Beer and the Canadian Economy
For many Canadians, beer is a poplar alcoholic drink that has become associated with fun
social pastimes such as hanging out with friends or watching a hockey game. But did you
know for every dollar spent on beer in Canada $1.12 goes back into the Canadian
Test Bank for Karakowsky and Guriel, The Context of Business, 1e
Copyright © 2015 Pearson Canada Inc. 2
