6 tips microbreweries can adapt to an evolving market

4 min read

Creating an economically sustainable microbrewery has become increasingly challenging. Fluctuating ingredient costs, tariffs and shifting consumption trends are just a few of the barriers that microbreweries face. The Canadian Craft Brewers Association says that in 2023-2024, 70 Canadian breweries closed, resulting in 875 jobs lost and $170 million in lost economic output.

FCC Senior Economist Amanda Norris notes that Canada has two large brewers capturing approximately 80% of revenue, leaving 20% to share among many smaller brewers. Consumers seek experiences, both in the taste profile and in the environment where they consume their beverages.

“The competition for that 20% is really difficult,” Norris says, adding it’s a tough environment not just for microbrewers, but also for alcohol producers and breweries in general. This increased competition requires microbrewers to closely examine their overall productivity to manage costs and improve their bottom line.

According to Statistics Canada , Canadians of legal drinking age consume the equivalent of 3.4 standard bottles of beer per week, or 53 litres per capita, which marks the eighth consecutive annual decline in beer sales by volume. A decrease in discretionary spending, compounded by a greater focus on wellness, is contributing to the decline in consumption. The result is a move away from alcohol in favour of low or non-alcoholic beverages. to the decline in consumption. The result is a move away from alcohol in favour of low or non-alcoholic beverages.

An additional hurdle for microbrewers is brand loyalty. Consumers who are typically drawn towards them, says Norris, are attracted to the diversity in them. These consumers seek experiences, both in the taste profile and in the environment where they consume their beverages. It’s an opportunity for microbreweries to create both products and spaces that retain consumers.

Remaining relevant: 6 tips to adapt to an evolving market

1. Have a strong brand platform

Understanding the heart and soul of your operation, including what makes you unique and drives consumers to your brand, is critical.

Collective Arts Brewing, located in Hamilton, Ont., strived to break the mould from being solely a local brewery to becoming more global. Their core principles focus on bringing creativity to the craft brewing space, including using their platform to bring art closer to consumers. They’ve worked with approximately 2,500 artists, paying close to $1 million for their work.

“We are constantly co-creating our packaging with artists,” says Toni Shelton, vice- president, brand and strategy. “They're really the grassroots community that has helped us build the brand that we have today.”

2. Expand your product line beyond craft beer

Maximize existing facilities by using production lines to package a diverse product line. Expanding product offerings to meet diverse needs gives potential customers multiple opportunities to engage with your brand.

To thrive in this industry and stay connected with your core consumer base, evolve the business to meet their shifting needs. The key is to identify the gap in the market and create a product line or experience that addresses it.

Collective Arts Brewing offers a variety of drink experiences, including craft beer, ciders, cocktails, non-alcoholic beers, mocktails, wellness beverages, and energy drinks, in response to evolving consumer needs and market trends.

3. Offer non-alcoholic or health-focused alternatives

Tap into the low-alcohol and alcohol-free markets to create opportunities to enter emerging categories and increase brand awareness. An additional benefit of adding non-alcoholic options to the line-up, Norris says, is that breweries can participate in non-licensed events to foster relationships with potential customers and partners.

There continues to be a growing opportunity in the non-alcoholic space. However, creating a beautifully crafted non-alcoholic beer or mocktail can be expensive and laborious.

“There’s a lot of work that went into making sure that the mocktails weren’t just juice, and that the experience we offer is complex and tastes exactly like the cocktail,” Shelton says. “Because we’re all adults and we don’t just want a juice box.”

4. Embrace the flexibility of small batches

Retain your customers' attention by adding new offerings to your menu, whether seasonal beverages or a new product launch.

"Make it a little bit more exclusive, and people may be interested in it, especially if they can only get it for a few months of the year," Norris says. Brewers can use these smaller runs to adapt to changing consumer trends or address market gaps. Shelton advocates that brewers connect with their established consumer base to understand what they like and identify potential gaps the company can address.

5. Remember your roots

The craft brewery market is primed for innovation; however, Shelton cautions brewers not to cut corners as they chase new products.

“There needs to be quality in the liquid, quality in the brand and quality in the experience that you give,” Shelton says.

Another challenge with innovation is that it’s easy to get so engaged with the new ideas that the core of the business gets pushed aside.

"If you want to do a couple of flavour changes, test them out in a smaller batch, make it exclusive, but don't change your core,” Norris says. “If there's a product that everybody loves, don't lose sight of that.”

6. Lean into craft beer tourism

Enter craft beer tourism for an opportunity to create multiple streams of revenue, while also creating a space for guests to linger and enjoy their drink. Host pop-up events such as comedy shows, trivia nights, or farmers' markets to attract a variety of guests to the brewery and its products.

The demographic that tends to gravitate towards microbreweries is looking for more than an alcoholic beverage. Innovation is essential, and craft brewers will benefit by actively creating multiple points of contact with potential consumers, including offering diverse experiences and products to retain existing consumers and attract new ones to their brand.

“This is a really great time because there are so many people and retailers that are looking for Canadian products,” Shelton says. “There’s so much room to grow and develop the consumer experience.”

Consumer Trends & Innovation