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MARKET INDICATOR REPORT | SEPTEMBER 2013 Consumer Trends Wine, Beer and Spirits in Canada Source: Planet Retail, 2012.

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MARKET INDICATOR REPORT | SEPTEMBER 2013

Consumer Trends

Wine, Beer and Spirits in Canada

Source: Planet Retail, 2012.

EXECUTIVE SUMMARY INSIDE THIS ISSUE

PAGE 2

Consumer Trends Wine, Beer and Spirits in Canada

Executive Summary 2

Market Trends 3

Wine 4

Beer 8

Spirits 11

Distribution Channels 15

New Product Launch Analysis

16

New Product Examples by Trend

17

Resources 19

Canada’s population, estimated at nearly 34.9 million in 2012, has been gradually increasing and is expected to continue doing so in the near-term. Statistics Canada’s medium-growth estimate for Canada’s population in 2016 is nearly 36.5 million, with a medium-growth estimate for 2031 of almost 42.1 million. The number of households is also forecast to grow, while the unemployment rate will decrease. These factors are expected to boost the Canadian economy and benefit the C$36.8 billion alcoholic drink market. From 2011 to 2016, Canada’s economy is expected to continue growing with a compound annual growth rate (CAGR) between 2% and 3% (Euromonitor, 2012).

Canada’s provinces and territories vary significantly in geographic size and population, with Ontario being the largest alcoholic beverages market in Canada. Provincial governments determine the legal drinking age, which varies from 18 to 19 years of age, depending on the province or territory. Alcoholic beverages must be distributed and sold through provincial liquor control boards, with some exceptions, such as in British Columbia (B.C.), Alberta and Quebec (AAFC, 2012).

Nationally, value sales of alcoholic drinks did well in 2011, with 4% growth, due to price increases and premium products such as wine, craft beer and certain types of spirits. However, volume sales had slow growth (under 1%) largely due to slow sales of mainstream beer, which is the largest alcoholic drinks category.

Wine performed well in 2011, growing in both value and volume sales, and is expected to continue posting healthy growth. Within Canada, wine has benefitted from growing appreciation among both older and younger consumers. Wines with a higher price have experienced good growth, while Vintners Quality Alliance* (VQA) wines have experienced faster growth than overall wine sales.

New alcoholic beverage launches in the market have mirrored consumer trends demanding unique and specialty products with quality ingredients and processing methods, or interesting flavourings or flavour combinations. From 2011 to 2016, alcoholic drinks are forecast to experience modest volume (0.8% CAGR) and value (2.7% CAGR) growth. This is partly attributable to slowing growth rates within beer sales. While beer is typically a preferred alcoholic beverage, it is also a maturing category. However, craft beers are expected to provide future growth opportunities.

*VQA Ontario is a regulatory agency that is “responsible for maintaining the integrity of local wine appellations” and standards in Ontario (VQA Ontario, 2013), while the B.C. VQA (Wines of B.C. brand) is an “appellation of origin” system that guarantees origin and minimum quality requirements for wines made from B.C. grapes (B.C. Wine Authority, 2013).

Source: Planet Retail, 2012.

PAGE 3

MARKET TRENDS

Source: Euromonitor, 2012. 1 “On-trade” refers to sales of alcoholic beverages through bars, restaurants, cafés, hotels and other catering establishments. Please note that on-trade statistics will only be presented when available, as availability differs by sector/sub-sector. 2 “Off-trade” refers to sales of alcoholic beverages through retail outlets.

In 2011, alcoholic drink sales in Canada grew by 4% in value and under 1% in volume. This represented a market size of C$36.8 billion, or more than 3 billion litres. However, while wine continues to grow in popularity, beer is a mature category experiencing slow overall growth. From 2012 to 2016, alcoholic drink sales in Canada are expected to grow to roughly C$42.0 billion (Euromonitor, 2012). There has been an abundance of new product launches in the alcoholic drinks category, a key strategy for driving sales and growth in a competitive market. These include limited edition or vintage products, new craft beers, new flavours, and new innovative packaging. The largest trends in new product launches from January 2008 to December 2012 were interesting flavours. Lemon/lime flavours have been popular, particularly in the hot summer months. Other new flavour profiles included raspberry and chocolate mint. Reduced-calorie products and health-related claims, including products with no additives/preservatives, low/no/reduced allergens and calories, and natural products (Mintel, 2012, 2013), were other trends observed as consumer demand for quality and variety drove alcoholic sales, particularly in beer products (Euromonitor, 2012). Analysis and examples of recent alcoholic beverage introductions in Canada by trend are provided at the end of this report.

Categories 2006 2007 2008 2009 2010 2011 2012 2016 Alcoholic drinks total 31,152.0 32,867.6 34,241.2 34,486.3 35,396.0 36,865.7 37,897.4 42,068.2 Beer 14,071.1 14,402.6 15,081.6 15,182.1 15,387.0 15,720.4 15,852.7 16,467.4

Dark beer 2,238.5 2,318.2 2,351.1 2,374.5 2,404.4 2,474.4 2,506.5 2,678.8

Lager 11,707.3 11,955.1 12,604.6 12,681.8 12,709.1 12,866.5 12,912.9 13,244.0

Low/non– alcohol beer 7.6 7.3 0.2 0.4 146.0 248.4 300.4 401.7

Stout 117.6 121.9 125.7 125.5 127.5 131.2 132.8 143.0

Cider/perry 90.0 102.2 132.6 145.0 155.2 168.0 179.4 226.3

Ready-to-drink (RTD)/ high-strength premixes

2,479.9 2,565.3 2,580.5 2,279.7 2,250.3 2,344.3 2,409.5 2,659.1

Spirits 7,411.8 7,918.9 8,175.5 8,404.4 8,469.4 8,783.6 8,996.7 10,011.3 Brandy and cognac 314.4 319.8 306.9 288.5 289.1 295.6 298.3 313.3

Liqueurs 1,454.2 1,526.3 1,577.3 1,567.4 1,543.7 1,569.8 1,571.4 1,628.4

Rum 1,390.9 1,461.2 1,531.8 1,607.0 1,616.5 1,660.9 1,678.1 1,748.4

Tequila (and mezcal) 164.2 183.5 196.6 208.4 223.9 248.8 267.9 345.0

Whiskies 2,036.1 2,162.6 2,108.7 2,053.2 2,036.8 2,118.5 2,159.0 2,310.8

White spirits 1,938.8 2,141.6 2,318.3 2,533.1 2,613.6 2,744.0 2,877.2 3,519.7

Other spirits 113.2 124.0 135.9 146.8 145.8 146.1 144.7 145.6

Wine 7,099.2 7,878.6 8,271.0 8,475.1 9,134.1 9,849.4 10,459.1 12,704.1

Fortified wine and vermouth

346.5 366.1 362.1 357.7 357.6 357.7 355.6 346.2

Non-grape wine - - - - - - - - Sparkling wine 363.9 387.5 389.6 364.8 410.4 454.9 490.0 592.3 Still light grape wine 6,388.8 7,125.0 7,519.4 7,752.6 8,366.0 9,036.7 9,613.4 11,765.6

Market Size of Alcoholic Beverages in Canada – Historic/Forecast (On-Trade1 and Off-Trade2 ) Retail Sales Value in C$ Millions

PAGE 4

Historic/Forecast Volume Sales (On-Trade and Off-Trade) of Wine in Canada by Category – Millions of Litres

2006 2007 2008 2009 2010 2011 2012 2016 Fortified wine and vermouth 15.6 15.9 15.6 15.4 15.0 14.7 14.4 13.4

Port/oporto 3.3 3.6 3.5 3.5 3.4 3.4 3.3 3.3 Sherry 7.9 7.9 7.7 7.6 7.6 7.4 7.2 6.6 Vermouth 3.7 3.7 3.7 3.6 3.4 3.4 3.3 3.0 Other fortified wine and vermouth 0.7 0.7 0.7 0.7 0.7 0.6 0.6 0.6

Non-grape wine - - - - - - - - Sparkling wine 11.7 12.2 12.3 11.5 12.8 13.8 14.8 17.4

Champagne 0.8 0.9 0.8 0.8 0.8 0.8 0.9 1.0 Other sparkling wine 10.9 11.3 11.5 10.7 12.0 13.0 14.0 16.4

Still light grape wine 347.1 377.6 394.9 407.1 428.9 449.8 474.4 563.7 Still red wine 203.0 227.0 240.0 248.7 261.6 274.7 288.5 334.6 Still rosé wine 11.5 11.7 11.9 11.6 12.3 12.9 13.4 15.2 Still white wine 132.6 138.9 143.0 146.9 155.1 162.2 172.4 213.9

Wine total 374.4 405.7 422.8 434.0 456.7 478.3 503.7 594.5

As one of the most popular alcoholic drinks in Canada, wine saw value sales growth of 8% in 2011, while volume sales grew 5%. There is demand for wine from various brands and regions in the world, with wines from France and Italy being the most popular. New wines from the United States (U.S.), New Zealand, Australia and Latin America have also become popular among consumers. Canadian wines experienced stable growth from 2006 to 2011, with particularly strong demand for wines labelled as VQA, which saw volume growth of nearly 17% in 2011; more than double the growth of total wine sales in the same year (Euromonitor, 2012). Consumer wine preferences in Canada vary regionally. For example, in terms of still light grape wine, consumers across the country, especially in Quebec, prefer reds; however, in B.C., white wine is more popular. The most popular varietals of red wine among consumers include Merlot, Cabernet Sauvignon, and Shiraz, while Chardonnay and Sauvignon Blanc are the most popular white wines, with Pinot Grigio and Malbec also increasing in popularity. Among sparkling wines, consumers appear to be moving away from traditional champagne to try other sparkling varieties, such as Prosecco. Sweet wines, such as Moscato, appear to be a growing trend, particularly among younger consumers (Euromonitor, 2012, Rowe, 2012 , WineAccess 2012). According to Mintel (2011), wine retail unit prices are predicted to rise by 16.6% from 2011 to 2015, to reach an average of C$17.86. Per capita wine consumption is also expected to increase by 10% from 2011 to 2015, to reach 15.62 litres. Euromonitor (2012) reports that manufacturers generally receive a selling margin of 32.3% of the retail value for a typical wine brand, with distributors receiving 19.6%, and retailers 30.1%.

In comparison to other countries, Canada has a fairly small wine industry. Canada’s wine sector is primarily located in Ontario and B.C., followed by Quebec and Nova Scotia. Canadian climate conditions pose a challenge, limiting the size and competitiveness of an industry that is largely supported by a domestic market and a notable tourism sector. However, industry activity has been increasing, with marketing and standards, such as the VQA, aiding in expanding the sector (AAFC, 2012, Jordan, 2011, Statistics Canada, 2013). According to the Bank of Montreal (Jordan, 2011), growth opportunities for Canada’s wine industry include gaining market share both domestically and internationally by targeting markets with rapid income expansion and current low consumption, and highlighting the quality of Canadian wines among consumers. Areas for production development include utilizing grape varieties that are well suited to the Canadian climate, high end-products such as icewine, or technologies that help to counter adverse environmental conditions (Jordan 2011, AAFC, 2012).

WINE

Source: Euromonitor, 2012.

PAGE 5

Canada’s Top Ten Import Sources for Wine Commodity 2204: Wine Of Fresh Grapes, Including Fortified – C$

Partner Country

Import Value % Share % Value Change 2011/2012 2010 2011 2012 2010 2011 2012

World 1,749,766,694 1,894,695,913 1,973,916,142 100.00 100.00 100.00 4.18 France 385,356,611 433,982,756 437,658,616 22.02 22.91 22.17 0.85 Italy 349,753,502 380,347,341 394,581,617 19.99 20.07 19.99 3.74 United States 276,644,460 325,926,231 374,349,312 15.81 17.20 18.96 14.86 Australia 257,795,606 250,266,847 237,724,973 14.73 13.21 12.04 - 5.01 Argentina 102,955,451 99,013,005 106,263,623 5.88 5.23 5.38 7.32 Spain 80,632,297 98,875,258 101,565,173 4.61 5.22 5.15 2.72 Chile 99,853,110 99,250,535 98,870,215 5.71 5.24 5.01 - 0.38 New Zealand 50,324,969 61,074,201 70,954,268 2.88 3.22 3.59 16.18 South Africa 47,341,105 44,094,411 49,615,956 2.71 2.33 2.51 12.52 Portugal 50,189,415 51,438,064 49,165,689 2.87 2.71 2.49 - 4.42 Source: Global Trade Atlas, 2012.

WINE (continued)

Distribution Off-trade (retail) sales account for the vast majority of wine volume sales in Canada (nearly 85%), and increased steadily from 2006 to 2011 to reach 404.2 million litres, representing a CAGR of 5.2%. On-trade (foodservice) sales also grew, with a CAGR of 4.2% from 2006 to 2011, reaching 74.1 million litres. Wine value sales have a slightly more balanced split, with off-trade sales accounting for just over 70% of all wine sales. Both off-trade and on-trade value sales have seen steady increases from 2006 to 2011, with CAGRs of 7.1% and 6.1% respectively (Euromonitor, 2012). Certain regulatory changes and foodservice trends are also expected to drive wine sales and increase distribution, such as Ontario allowing alcohol to be served on patios, restaurants in B.C. serving wines on tap, and the relaxing of interprovincial rules for wine shipments in certain provinces such as B.C., Alberta, Manitoba and Nova Scotia (Euromonitor 2012, Free My Grapes, 2012, Rockwell, 2013). Local promotions such as goLOCAL at the Liquor Control Board of Ontario (LCBO) and The Best of B.C. at the B.C. Liquor Board stores, have helped to drive growth of local/regional wine sales in those provinces. With support from government, liquor boards and associations, local wines are expected to continue growing in the future, although at a slower rate in volume terms (Euromonitor, 2012, Rimerman, 2013). Imported wines continue to provide competition to Canadian wines, and account for an estimated 70% of wine sales in Canada (Euromonitor, 2012). Although France represented the majority of Canada’s wine imports in 2012, imports from other top markets have grown at a faster rate. Imports of French wines increased minimally from 2011 to 2012, while those from New Zealand grew by 16.2%, imports from the U.S. increased by 14.9%, and imports from South Africa increased by 12.5%. Of Canada’s top import sources for wine, Australia experienced the largest decrease from 2011 to 2012, with –5%, followed by Portugal (Global Trade Atlas, 2012). The rising Canadian dollar and increasing competition from international producers have provided challenges for Canada’s wine exports (AAFC, 2012, Jordan, 2011, Rimerman, 2013). However, Canada’s wine exports (HS 2204, 2205) increased steadily from C$21.8 million in 2008 to nearly C$45 million in 2012. The U.S. is Canada’s largest export market for wine, accounting for 39% of Canada’s exports in 2012, followed by China with a 37.2% share (Global Trade Atlas, 2013).

On-Trade Versus Off-Trade Volume Sales of Wine in Canada – Millions of Litres

2006 2007 2008 2009 2010 2011 Off-trade 314.0 339.6 357.5 367.1 386.1 404.2 On-trade 60.3 66.1 65.4 66.9 70.7 74.1 Total 374.4 405.7 422.8 434.0 456.7 478.3 Source: Euromonitor, 2012.

PAGE 6

Key Companies and Brands The Canadian wine industry includes 472 wineries, with two notably large companies that offer a variety of brands across Canada: Constellation Brands and Andrew Peller Ltd. (Statistics Canada, 2012, Rimerman, 2013). Euromonitor indicates that Canada’s still, light, grape wine market, by volume, is dominated by Constellation Brands Inc., which held a 15.7% share in 2011. The other top four companies in 2011 were Andrew Peller Ltd. (11.9% share), Treasury Wine Estates Ltd. (4.2%), Accolade Wines Ltd. (3.9%), and E&J Gallo Winery Inc. (3.5%). The top five still, light, grape wine brands in Canada in 2011 were Jackson Triggs, FuZion, Domaine d’Or, Yellow Tail, and Inniskillin (Euromonitor, 2012). Constellation Brands Inc. dominated the Canadian fortified wine and vermouth market in 2011, by volume, with a 26.0% market share. The other top four companies in the fortified wine and vermouth category in 2011 were Bacardi & Co. Ltd. (17.3% share), Andrew Peller Ltd. (7.3%), Beam Inc. (3.4%), and Campari Milano SpA, Davide (2.9%). The top five fortified wine and vermouth brands among Canadian consumers in 2011 were Bright, Martini, Imperial Canadian Sherry, Andrés, and Noilly Prat (Euromonitor, 2012). Canada’s other sparkling wine market in 2011, by volume, was dominated by Andrew Peller Ltd., which held a 9.1% share. Constellation Brands Inc. had the second largest share (8.5%) in 2011, followed by Freixenet SA (6.6%), Oetker-Gruppe (6.3%), and Bacardi & Co. Ltd. (3.5%). The top five brand shares in the other sparkling wine market in 2011 were Baby Duck, Spumante Bambino, Henkell Trocken, Freixenet, and Martini & Rossi Asti (Euromonitor, 2012). According to Euromonitor, Constellation Brands, headquartered in New York, is an international company with a product mix that includes still light grape wine, sparkling wine, fortified wine and vermouth, and non-grape wine. The company’s share of the world’s wine volume sales was 1.6% in 2011, representing growth of 11.3% that year, with production facilities in Canada, the U.S. and New Zealand. The company focuses on the North American market, which accounts for the vast majority of wine sales. Constellation Brands is the largest wine maker and supplier in Canada with 16 domestic brands, and is a large purchaser of grapes from independent Ontario growers (Euromonitor International, Constellation, June 2012). Andrew Peller Ltd. is a manufacturer and marketer of wines and icewines, focusing on the premium/super premium wine segment, particularly local VQA brands. The Canadian company is based in Grimsby, Ontario, and emphasizes product development and consumer education. The company has been expanding through the acquisition of local wineries, brand range introductions in various regions of Canada, and partnerships with local growers of premium grapes. The company also operates its own independent retail outlets (Euromonitor International, Andrew, January 2012). Bacardi and Co. Ltd., headquartered in Bermuda, is an international company that has a strong presence in North America and particularly Western Europe. The company’s product mix includes still light grape wine, and other sparkling wine and vermouth, with a 0.6% share of global wine volume sales in 2011. Wine sales accounted for 11.4% of the company’s total alcoholic drink sales in 2011, with the majority of wine sales coming from vermouth (Euromonitor International, Bacardi, January 2012).

WINE (continued)

PAGE 7

New Product Examples The following is a selection of Canadian made wine products* available in the Canadian marketplace, through provincially regulated liquor stores or wineries.

*New wine product launches in Canada are not currently tracked by Mintel. As a result, other sources of information were used to compile the product descriptions on this page, and pictures are not available.

Inniskillin Unoaked Chardonnay VQA Company: Inniskillin House Wines Inc. Brand: Inniskillin Niagara Series Date published: October 2012 (available at LCBO) Store: LCBO Store type: Specialist retailer Pack size: 750 ml Price: C$12.95 Description: This VQA product made in Ontario, Canada, is an extra dry white wine that is light and crisp, and is suggested for serving with seafood, creamy soups, and poultry. Source: LCBO, 2013. Pillitteri Gewürztraminer/Riesling VQA Company: Pillitteri Estates Brand: Pillitteri Estates Date published: August 2012 (available at LCBO) Store: LCBO Store type: Specialist retailer Pack size: 750 ml Price: C$12.95 Description: According to the LCBO, this is an aromatic and flavourful white VQA wine made in Ontario, Canada, with a medium sweetness. Source: LCBO, 2013. Field Stone Fruit Wines Cherry Fruit Wine Company: Field Stone Fruit Wines Brand: Field Stone Fruit Wines Store: Alberta Online Wine Shop (Field Stone) Store type: Internet retailing Date published: Unknown Pack size: 750 ml Price: C$17.95 Description: This product is described as an off-dry fruit wine, that is vented from the finest red cherry varieties in Alberta and blended with chokecherries. It has a 0.5 sweetness level, a flavour that is tangy and very fruity, and combines well with pork tenderloin and game meat. This wine was the silver medal winner for both the 2012 Canadian Wine Awards and NorthWest Wine Summit. Source: Field Stone Fruit Wines, 2013.

Coyote's Run Black Paw Vineyard Pinot Noir 2010 Company: Coyote’s Run Estate Winery Brand: Coyote’s Run Estate Winery Date published: November 2012 (available at LCBO) Store: LCBO Store type: Specialist retailer Pack size: 750 ml Price: C$35.95 Description: According to the LCBO, this is an extra dry red wine with dark cherry, black raspberry and earthy notes, made in Ontario, Canada. Source: LCBO, 2013. Stoneboat Vineyards - Piano Brut Company: Stoneboat Vineyards Brand: Stoneboat Vineyards Date published: Spring 2013 Store: Stoneboat Vineyards Store type: Winery Pack size: Unknown Price: C$22.90 Description: A new type of wine, not previously made in B.C. that uses the Charmat method and Pinot Blanc as a base. Piano Brut is described as a “fresh, approachable, fruit-forward sparkling wine, similar to Italian Proseccos” (AAFC, 2013). Sources: AAFC, 2013, Kidd, 2013, Schreiner, 2013. Painted Rock - Syrah 2009 Company: Painted Rock Brand: Painted Rock Date published: unknown Store: B.C. Liquor Store Store type: Specialist retailer Pack size: 750 ml Price: C$39.95 Description: This B.C. VQA red table wine has a 00 sweetness level and was awarded the Lieutenant Governor’s Award for Excellence in B.C. wine. Source: B.C. Liquor Stores, 2013.

WINE (continued)

PAGE 8

The growing health trend in Canada appears to be having an impact on beer sales. Within retail, light/no/low alcohol beer dominates, accounting for 72.5% of volume sales, followed by strong/premium beer (11%), extra strong/super premium beer (9.0%) and standard beer (7.5%) (Mintel, 2011). Lager is by far the most popular type of beer sold, and quality is increasingly important to consumers, who are also moving toward premium variations. While beer is a mature category, craft beers have been performing better than the overall category, and are expected to provide opportunities for further growth. These craft beers cater to consumer demand for quality and variety, and may also benefit from the trend toward local products. Craft breweries are increasing across Canada, with microbrewery beers from the U.S. and large players such as Molson Canada investing in craft breweries. From 2011 to 2016, beer sales are expected to grow slightly in value (0.9% CAGR) from C$15.7 billion to C$16.5 billion. Per capita beer consumption is expected to grow by 1.9% from 2011 to 2015 in volume terms, to reach 85.5 litres (Euromonitor, 2012, Mintel, 2011). New product development is key for driving sales in this mature market. In addition to the appearance of new flavours, areas for growth may include catering to specific demographic groups, such as women. New products related to health and wellness have also been appearing, such as Molson Canada’s Molson Canadian 67, which is a low-alcohol beer marketed as low-calorie. Light beers have had rapid value growth, increasing 66% from 2010 to 2011 (Euromonitor, 2012, Mintel, 2011, 2012).

Distribution The vast majority of beer sales (nearly 80%) occur in off-trade retail channels. Both retail and foodservice channels saw positive CAGR value sales from 2006 to 2011, with a slight CAGR decline in on-trade volumes (Euromonitor, 2012).

Source: Euromonitor, 2012.

BEER

On-Trade Versus Off-Trade Volume Sales of Beer in Canada – Millions of Litres

2006 2007 2008 2009 2010 2011 Off-trade 1,780.7 1,787.8 1,867.8 1,872.3 1,871.0 1,866.8 On-trade 489.5 485.0 497.6 491.5 489.2 487.2 Total 2,270.1 2,272.7 2,365.4 2,363.8 2,360.2 2,354.0

Historic/Forecast Volume Sales (On-Trade and Off-Trade) of Beer in Canada by Category – Millions of Litres

2006 2007 2008 2009 2010 2011 2012 2016 Dark beer 262.8 251.8 252.2 250.6 249.9 249.6 250.0 252.4

Pale ale 71.5 71.8 71.3 70.7 70.6 70.6 70.7 71.7 Other dark beer 191.4 179.9 180.8 179.9 179.2 179.0 179.3 180.7

Lager 1,995.0 2,008.7 2,102.8 2,102.9 2,076.2 2,054.6 2,044.9 2,020.4 Premium lager 313.5 338.8 375.5 376.6 374.7 374.7 379.1 394.0

Domestic premium lager 74.4 81.9 87.7 89.6 92.1 95.1 97.9 108.1 Imported premium lager 239.1 256.9 287.7 287.0 282.6 279.6 281.2 285.9

Standard lager 1,183.5 1,180.7 1,188.3 1,182.4 1,176.1 1,172.8 1,175.1 1,187.7 Domestic standard lager 1,183.5 1,180.7 1,188.3 1,182.4 1,176.1 1,172.8 1,175.1 1,187.7 Imported standard lager - - - - - - - -

Economy lager 498.1 489.2 539.0 543.9 525.4 507.1 490.7 438.7 Domestic economy lager 495.5 486.8 536.6 541.4 522.8 504.5 488.1 436.0 Imported economy lager 2.6 2.4 2.5 2.5 2.6 2.6 2.6 2.7

Low/no alcohol beer 2.1 1.9 0.1 0.1 24.0 39.7 48.2 60.8 Low-alcohol beer 2.1 1.9 0.1 0.1 24.0 39.7 48.2 60.8 Non-alcoholic beer - - - - - - - -

Beer total 2,270.1 2,272.7 2,365.4 2,363.8 2,360.2 2,354.0 2,353.2 2,343.8 Stout 10.2 10.3 10.3 10.2 10.1 10.1 10.1 10.2

Source: Euromonitor, 2012.

Source: Euromonitor, 2012. *Global Brand Owner (GBO).

PAGE 9

In 2012, Canada imported C$594 million of beer made from malt. The value of imports has fluctuated over the past few years with a decrease of 10.8% from 2010 to 2011, followed by an increase of 6% from 2011 to 2012. Of the top ten countries Canada sourced from in 2012, only imports from Belgium and Ireland decreased. In terms of exports, the U.S. accounts for essentially all of Canada’s exports of beer made from malt (Global Trade Atlas, 2012).

Key Companies and Brands Canada’s beer market is dominated by Labatt Brewing of Anheuser-Busch InBev NV and Molson Canada of Molson Coors Brewing Co., together comprising more than 79% of beer sales. Global brand owners, Anheuser-Busch and Molson Coors Brewing Company, each had a 41.0% retail market share by volume in 2010. Beer production in Canada was 2.3 billion litres in 2011, a 6-million litre decrease from 2010, with domestic beer sales accounting for 86% of the market. Manufacturers generally receive a selling margin of 33.9% of the retail value for a typical beer brand (Euromonitor, 2012, Mintel, 2011). According to Euromonitor, Anheuser-Busch InBev is the world’s leading brewer, accounting for 18% of world beer volumes in 2011. The company has experienced volume declines in developed markets, where opportunities for growth appear limited. Molson Coors Brewing Co., headquartered in Montreal, Canada, is among the world’s ten largest brewer’s with a significant presence in mature markets such as Canada. However, Canada may present some value opportunities in premium lager, dark beer, and low alcohol beer (Euromonitor,2011, 2012).

Canada’s Top Ten Import Sources for Beer Commodity 2203: Beer Made From Malt - C$

Partner Country

Import Value % Share % Value Change 2011/2012 2010 2011 2012 2010 2011 2012

World 628,363,886 560,224,951 593,563,196 100.00 100.00 100.00 5.95 United States 133,738,159 122,276,282 135,472,341 21.28 21.83 22.82 10.79 Netherlands 134,894,830 132,924,368 134,107,061 21.47 23.73 22.59 0.89 Mexico 115,505,925 77,002,367 81,145,711 18.38 13.74 13.67 5.38 Belgium 64,490,608 61,179,243 57,762,012 10.26 10.92 9.73 - 5.59 United Kingdom 48,187,560 35,387,938 41,813,151 7.67 6.32 7.04 18.16 Ireland 36,122,726 40,551,034 39,637,349 5.75 7.24 6.68 - 2.25 Germany 32,734,101 29,080,019 31,916,387 5.21 5.19 5.38 9.75 Denmark 11,960,236 12,051,413 14,477,376 1.90 2.15 2.44 20.13 France 10,713,117 11,773,266 14,337,868 1.70 2.10 2.42 21.78 Czech Republic 6,661,583 6,915,482 7,008,915 1.06 1.23 1.18 1.35 Source: Global Trade Atlas, 2012.

BEER (continued)

Brand Shares of Beer in Canada by Company % Breakdown Based on Total Volume Sales (On-Trade and Off-Trade) Brand Company Name (GBO) 2008 2009 2010 2011 Budweiser Anheuser-Busch InBev NV 12.0 12.5 12.4 12.6 Coors Light Molson Coors Brewing Co. 11.3 11.8 11.8 11.4 Molson Canadian Molson Coors Brewing Co. 7.6 6.8 6.8 6.8 Labatt Blue Anheuser-Busch InBev NV 5.7 5.0 4.9 4.9 Bud Light Anheuser-Busch InBev NV 3.4 5.0 5.0 4.9 Carling Molson Coors Brewing Co. 4.1 4.3 4.2 4.1 Lucky Lager Anheuser-Busch InBev NV 3.2 3.3 3.1 3.0 Molson Dry Molson Coors Brewing Co. 3.1 2.7 2.5 2.5 Corona Extra Modelo SA de CV, Grupo 2.6 2.6 2.6 2.5 Heineken Heineken NV 2.3 2.3 2.3 2.4 Others Others 44.6 43.8 44.5 44.7

PAGE 10

New Product Examples The following is a selection of new beer products introduced to the Canadian marketplace from January 2008 to December 2012, from Mintel’s Global New Products database.

Whiskey Jack Ale Beer Company: The Whistler Brewing Co. Brand: Whistler Brewing Company Store: B.C. Liquor Store Store type: Specialist retailer Date published: August 2011 Pack size: 6 x 330 ml Price: C$10.95 Description: Whistler Brewing Company Whiskey Jack Ale Beer contains no additives or preservatives. The product claims to be full of personality, with just the right amount of hop and warm copper colour, and has a well-rounded mouth-feel with subtle bittering. Seasonal Sampler Company: Mill Street Brewery Store: B.C. Liquor Store Store type: Specialist retailer Date published: July 2012 Pack size: 2,178 ml Price: C$13.25 Description: Mill Street Brewery’s Seasonal Sampler consists of five 341-ml bottles and one 473-ml can in the following varieties: Walker’s Blueberry Wheat Beer, Lemon Tea flavoured wheat beer (infused with orange pekoe and Earl Grey teas), Original Organic Lager, Amber de la Chaudière, Tankhouse Ale, and Stock Ale. Ice Tea Beer Company: Brasserie Licorne Brand: Boris Store: Loblaws (in the province of Quebec) Store type: Supermarket Date published: September 2012 Pack size: 6 x 250 ml Price: C$8.49 Description: Boris Ice Tea Beer is a tea-and-lemon- flavoured alcoholic malt beverage, retailing in a recyclable pack that features a Facebook logo. This product is also available in cans of 473 ml, and a Peach Ice Tea Beer variety is also on the market.

Craft Beer Sampler Company: Bowen Island Brewing Brand: Bowen Island Store: B.C. Liquor Store Store type: Specialist retailer Date published: August 2011 Pack size: 12 x 355 ml Price: C$16.99 Description: The Bowen Island Brewing Craft Beer Sampler contains a Westcoast Craft Brewed Lager, Extra Pale Ale, Honey Brown Lager, and a Hemp Blonde Ale. These beers are all natural and contain no preservatives or additives. The product retails in a pack with recyclable cans and a limited edition hak-a-sak. Flavoured Beer Patio Pack Company: Mountain Crest Brand: Peelers Store: Sobeys Spirits Wine Cold Beer (in the province of Alberta) Store type: Specialist retailer Date published: September 2011 Pack size: 8 x 330 ml Price: C$19.59 Description: The Peelers Flavoured Beer Patio Pack is comprised of the following varieties: Mojito, Ice, Orange Squeeze and Acai-Pomegranate. New Grist Beer Company: Lakefront Brewery Brand: Lakefront Brewery New Grist Store: B.C. Liquor Store Store type: Specialist retailer Date published: August 2011 Pack size: 6 x 355 ml Price: C$14.24 Description: Made from sorghum, rice and hops, this crisp and refreshing drink is kosher-certified and contains no gluten. The product retails in a pack made from 100% recycled carton with 35% post-consumer content, at minimum.

BEER (continued)

Source for all: Mintel 2013.

PAGE 11

Spirit sales grew slightly in both value (3.7%) and volume (0.5%) terms from 2010 to 2011. While a number of categories experienced declining volume in 2011, value growth was positive for all categories. Irish whiskey was, by far, the fastest growing category, with value growth of 21% and volume growth of 17.4%. Vodka remained popular among consumers in 2011, particularly among younger generations. Premium and standard products performed well, while flavoured vodka also remained popular. From 2006 to 2011, spirit sales have seen a value CAGR of 3.5% and a volume CAGR of 1.2%. Sales of spirits are expected to continue growing from 2011 to 2016, with a CAGR of 2.7% in value and 1.4% in volume (Euromonitor, 2012).

According to Mintel, per capita volume consumption of spirits is predicted to grow 3.6% from 2011, to reach 4.7 litres in 2015. Per capita consumption of whiskey is expected to decrease 3.6% from 2011, to 1.2 litres in 2015, while vodka consumption is forecast to grow 20.7% to reach 1.5 litres. Retail unit prices of spirits have been on the rise and are expected to continue growing over the next several years. Retail unit prices of spirits are forecast to grow 10.8% from 2011 to 2015, with whiskey prices increasing 16.7%, and vodka prices 3.8% (Mintel, 2011). Of new spirit launches in the Canadian market from January 2008 to December 2012, flavoured alcoholic beverages represented the most launches (136 products), while there were 28 vodka launches, and 21 new liqueur products. Six whisky and three dark rum products were also launched, while two products each for white rum and flavoured rum were introduced to the market, as was one gin product. Among new spirit launches, interesting and non-traditional flavours appeared to be popular, such as Saskatoon berry, rhubarb, ginger, marshmallow, and spicy, while there was also a focus on environmentally friendly packaging and premium products/ingredients (Mintel 2013). Distribution The large majority (85%) of spirit volume sales occurred off-trade in 2011, which grew at a faster CAGR of 1.3% than on-trade volume sales which grew at 0.4% from 2006 to 2011. In terms of value, off-trade accounted for 58% of all spirit sales in 2011, and grew at a CAGR of 3.6% from 2006 to 2011, slightly higher than on-trade value sales. Recovering consumer spending in foodservice aided in fuelling value growth for on-trade sales in 2011 (Euromonitor 2012).

Source: Euromonitor, 2012.

Source: Euromonitor, 2012.

SPIRITS

On-Trade Versus Off-Trade Volume Sales of Spirits in Canada – Millions of Litres

2006 2007 2008 2009 2010 2011 Off-trade 122.4 127.4 129.3 131.3 130.2 130.7

On-trade 23.0 23.8 24.0 23.7 23.3 23.5 Total 145.5 151.2 153.3 155.1 153.5 154.2

Categories 2006 2007 2008 2009 2010 2011 Spirits total 145.5 151.2 153.3 155.1 153.5 154.2

Brandy and cognac 5.6 5.6 5.4 5.1 5.0 5.0 Liqueurs 22.5 23.3 23.8 23.4 22.6 22.3 Rum 27.4 28.2 29.0 29.7 29.3 29.2 Tequila (and mezcal) 1.8 1.9 2.0 2.0 2.1 2.3 Whiskies 43.9 44.8 43.0 41.4 40.6 40.9 White spirits 41.8 44.7 47.4 50.4 50.9 51.7

Other spirits 2.4 2.6 2.8 3.0 2.9 2.9

Historic/Forecast Volume Sales (On-Trade and Off-Trade) of Spirits in Canada by Category – Millions of Litres

2016 165.2

5.0 22.0 29.2 2.9

42.1 61.1

2.8

2012 156.3

5.0 22.2 29.3 2.4

41.2 53.5

2.8

Gin 6.9 7.0 7.1 7.1 7.0 7.0 6.9 6.8 Vodka 34.8 37.7 40.3 43.3 43.8 44.7 46.5 54.4

Liqueurs and cordials, whiskies, and vodka were Canada’s three largest spirit imports in 2012 by value.

Ireland was Canada’s top import source for liqueurs and cordials in 2012, representing 35.8% of Canada’s total liqueur and cordial imports. Of Canada’s top five import sources in 2012, only imports from Ireland and the U.S. increased. While Canada’s imports from Mexico increased 9.0% in 2011, they decreased by 11.7% in 2012. The United Kingdom was Canada’s largest source of whisky in 2012, accounting for 71% of Canada’s whisky imports, and representing an import value increase of 6.1% from 2010 to 2012. Canada’s imports from its top five whisky sources all increased from 2011 to 2012, as did vodka imports from Canada’s top two vodka sources, the U.S. and France. Canada’s global exports of liqueurs and cordials increased by 29.3% in 2012, vodka by 46.2%, and whisky by 12.6%, with the vast majority destined for the U.S. (Global Trade Atlas, 2013).

PAGE 12

Canada’s Top Five Import Sources for Liqueurs and Cordials, Whiskies, and Vodka - C$

Partner Country Import Value % Share % Value Change

2011/2012 2010 2011 2012 2010 2011 2012 Liqueurs and cordials World 169,225,580 172,401,599 170,073,663 100.00 100.00 100.00 - 1.35 Ireland 60,172,116 59,640,690 60,909,155 35.56 34.59 35.81 2.13 France 25,226,690 26,396,085 25,757,231 14.91 15.31 15.14 - 2.42 United States 20,833,629 21,562,672 24,894,734 12.31 12.51 14.64 15.45 Italy 18,444,585 19,562,652 18,974,007 10.90 11.35 11.16 - 3.01 Mexico 12,297,032 13,406,117 11,833,664 7.27 7.78 6.96 - 11.73 Whiskies World 142,026,976 154,506,326 168,405,668 100.00 100.00 100.00 9.00 United Kingdom 102,662,436 112,524,907 119,327,458 72.28 72.83 70.86 6.05 United States 31,582,269 30,787,032 33,287,127 22.24 19.93 19.77 8.12 Ireland 5,968,644 7,475,909 9,664,452 4.20 4.84 5.74 29.27 India 384,398 256,193 456,082 0.27 0.17 0.27 78.02 Japan 265,210 246,805 319,724 0.19 0.16 0.19 29.55

World 115,330,293 126,624,458 140,706,926 100.00 100.00 100.00 11.12 United States 28,440,300 31,442,067 35,431,698 24.66 24.83 25.18 12.69 France 25,727,140 30,042,583 34,582,031 22.31 23.73 24.58 15.11 Sweden 27,704,851 29,086,151 29,167,444 24.02 22.97 20.73 0.28 Poland 8,694,898 10,332,753 11,587,419 7.54 8.16 8.24 12.14 Russia 12,460,142 9,105,047 8,986,990 10.80 7.19 6.39 - 1.30

Vodka

SPIRITS (continued)

Canada’s Import Statistics from the World - Spirits - C$ HS*

Code Description

Import Value % Change 2011/2012 2010 2011 2012

220870 Liqueurs and cordials 169,225,580 172,401,599 170,073,663 -1.35 220830 Whiskies 142,026,976 154,506,326 168,405,668 9.0 220860 Vodka 115,330,293 126,624,458 140,706,926 11.12

220890 Other spirits (with <80% alcohol content by volume)

94,381,584 96,367,561 106,453,882 10.47

220840 Rum and tafia 84,215,466 81,736,719 88,383,725 8.13 220820 Grape brandy 52,953,383 51,689,465 54,412,797 5.27 220850 Gin and geneva 26,706,193 29,033,678 31,198,952 7.46

Source for both: Global Trade Atlas, 2012. *Harmonized System (HS).

PAGE 13

Brand Shares of Spirits in Canada by Company - % Breakdown Based on Total Volume Sales (On-Trade and Off-Trade)

Brand Company Name (GBO*) 2008 2009 2010 2011 Smirnoff Diageo Plc. 7.7 7.5 8.0 8.5 Bacardi White Bacardi & Co. Ltd. 5.2 5.2 5.2 5.2 Crown Royal Diageo Plc. 3.9 3.6 3.6 3.6 Baileys Irish Cream Diageo Plc. 2.6 2.6 2.8 3.0 Absolut Vodka Pernod Ricard Groupe 2.4 2.6 2.8 2.9 Alberta Vodka Beam Inc. - - - 2.4 Canadian Club Beam Inc. - - - 2.2 Captain Morgan White Rum Diageo Plc. 2.2 2.3 2.2 2.1 Wiser's De Luxe Pernod Ricard Groupe 1.9 1.9 2.0 2.0 Polar Ice Pernod Ricard Groupe 1.8 1.8 1.8 1.9 Canadian Club Fortune Brands Inc. 2.4 - - - Alberta Vodka Fortune Brands Inc. 2.3 - - - Others Others 67.5 72.5 71.6 66.1 Source: Euromonitor, 2012. *Global Brand Owner (GBO).

Key Companies and Brands Within spirits, market share in volume terms is dominated by the company Diageo Plc., which held a 26.2% share of the market in 2011, followed by Pernod Ricard Groupe (22.9%), Bacardi & Co. Ltd. (9.4%), Beam Inc. (7.9%), and William Grant & Sons Ltd. (3.0%) (Euromonitor, 2012). Manufacturers generally receive a selling margin of 32.3% of the retail value for the typical spirits brand (Mintel, 2011). According to Euromonitor, Diageo Plc. is the world’s leading spirits company (2011) with spirit volumes of 20 billion litres, representing a 4.6% international market share. The company is the world leader for liqueurs and vodka, and is a leading company for gin, rum and whiskies. Headquartered in London, United Kingdom, Diageo is an international company that relies largely on mature markets such as North America, Western Europe, and Australia. However, the company has been growing market share and investments in emerging markets such as the Asia Pacific region, in order to diversity and grow. Diageo’s production facility in Manitoba, Canada, produces all of the company’s Canadian whisky brands, which include Crown Royal and Seagram's (Euromonitor International, Diageo, 2011). Euromonitor International indicates that Pernod Ricard Groupe was the world’s second-most leading spirits producer in 2011. Headquartered in Paris, France, the company is active in all regions of the world and, like Diageo, held a 4.6% global spirits market share by volume. The first quarter of 2012 resulted in rapid growth for the company in Canada where further growth may result from the trend toward premium drinks (Euromonitor International, Pernod, 2011). Headquartered in Bermuda, Bacardi is said to be the sixth-largest spirits company in the world, with a portfolio that includes rum, vodka, blended Scotch, tequila, cognac and liqueurs. The company held a 1.6% world share of spirit volume sales in 2011, but had minimal growth that year. It has a particularly strong presence in North America, followed by Western Europe, with plans to increase its presence in emerging markets (Euromonitor International, Bacardi, 2012).

SPIRITS (continued)

PAGE 14

New Product Examples The following is a selection of new spirits and flavoured alcoholic beverages introduced to the Canadian marketplace from January 2008 to December 2012, from Mintel’s database.

SPIRITS (continued)

Premium Vodka Cocktail Company: Breuvage Urbanite Beverage Brand: Urb'nlili Store: Liquor Control Board of Ontario (LCBO) Store type: Specialist retailer Date published: August 2011 Pack size: 4 x 300 ml Price: C$13.95 Description: Designed for women, this product claims to not be too sweet and is made with real juices and herbal extracts such as green tea, ginseng, ginkgo biloba and guarana. The product is non-carbonated and retails in a recyclable pack with recyclable bottles. Cosmocran, Menthalime, and Lychee varieties are also available. Premium Ginger Apple Flavoured Cider Company: Okanagan Cider Brand: Okanagan Store: B.C. Liquor Store Store type: Specialist retailer Date published: May 2012 Pack size: 6 x 355 ml Price: C$8.49 Description: This premium product is a new variety/range extension. Also available in the range is a Premium Orchard Peach Flavoured Cider, which is said to be made from the finest ingredients available, retailing in a pack of 6 x 330 ml glass bottles. Vodka Company: Alberta Distillers Brand: Alberta Pure Store: Sobeys Spirits Wine Cold Beer Store type: Specialist retailer Date published: August 2011 Pack size: 375 ml Price: C$11.99 Description: Alberta Pure Vodka is triple distilled for ultimate purity, using glacier-born rocky mountain water and Canadian prairie grain.

Creamy Iced Cappuccino Martini Company: Cocktails at Home Enterprise Brand: Sinsations Store: Liquor Control Board of Ontario (LCBO) Store type: Specialist retailer Date published: February 2011 Pack size: 750 ml Price: C$16.95 Description: This product is made with a double shot of the finest Italian espresso and fresh cream frothed to perfection. This premium, all-natural, coffee blend is then flash chilled and laced with pure vodka. It is ready to drink and just needs to be chilled before serving, and is best poured over ice and sipped slowly. Maple Syrup Cream Liquor Company: Domaine Pinnacle Brand: Coureur des Bois Store: Société des alcools du Québec (SAQ) Store type: Specialist retailer Date published: July 2010 Pack size: 750 ml Price: C$27.35 Description: This product is Canadian-made using a premium Quebec maple syrup, fresh cream and a mix of grain alcohol and rum. Kentucky Straight Bourbon Whiskey Company: Pocketshot Brand: Pocket Shot Store: Sobeys Spirits Wine Cold Beer Store type: Specialist retailer Date published: February 2012 Pack size: 50 ml Price: C$2.69 Description: This product has been aged for four years, and retails in a pocket pouch that is 50 ml. A vodka variety is also available.

Source for all: Mintel 2013.

PAGE 15

DISTRIBUTION CHANNELS

Retail Industry (Off-Trade) The off-trade retail industry accounts for the majority of alcoholic drink sales in Canada, with government-controlled provincial liquor boards being the largest alcohol retailers in Canada, and the sole distributors/retailers in most provinces. These liquor boards control Canada’s imports of alcoholic drinks, sales, and trade across provinces, with Ontario’s LCBO being one of the largest alcohol retailers in the world. As a result, specialist retailers comprised more than 85% of off-trade alcoholic drink sales in 2011. Duty-free stores at borders and airport stores also exist, but have low volume sales that do not significantly impact the industry. Liquor stores are privatized in the province of Alberta, while B.C. has both a public and private system. In Québec, beer and certain wines (those bottled in Quebec) can be sold at convenience and grocery stores with liquor licenses. As a result, the majority of grocery retailers’ small share of alcoholic drink sales is from the province of Québec. In Ontario, wine can also be sold at winery stores, as well as The Beer Store, which is a joint venture between Molson Canada, Sleeman and Labatt Brewing. There are also ten LCBO Express stores/kiosks planned to open in major grocery stores in Ontario in 2013 and 2014 (Bliss, 2012). In 2011, off-trade channels accounted for C$21.8 billion or 59.2% of alcoholic drink value sales in Canada. However, a strengthening economy over the next several years is expected to result in slightly stronger growth in foodservice than in retail. Price increases are forecast for both foodservice and retail, but with less of an impact at retail due to promotions and multipacks. Regulations that ease distribution restrictions may aid local beer and wine sales, such as 2011 amendments in Ontario that allow licensed liquor delivery services to buy directly from small craft breweries and wineries. Despite this, Canada’s retail landscape is not expected to change dramatically over the next five years. However, marketing efforts are focusing more on specific consumer groups. For example, The Beer Store has introduced a Beer Boutique which emphasizes craft beer and targets young, urban consumers who are beer aficionados (Euromonitor 2012). Hotel and Restaurant Industry (On-Trade) On-trade establishments saw alcoholic beverage volume and value sales increase in 2011. A strengthening economy, warm summer, and growth in wine bars contributed to this growth. In 2011, on-trade establishments accounted for C$15.0 billion or 40.8% of alcoholic drink value sales in Canada. Bars and pubs are a common type of establishment in Canada. However, with wine growing in popularity, wine bars are a growing presence in the market. Excise taxes on domestic products are equal to the import duties of foreign products. Per litre of absolute alcohol, taxation is as follows: C$0.62 for wine containing more than 7% absolute ethyl alcohol, and C$11.696 for spirits containing more than 7% of absolute ethyl alcohol. Per hectolitre, excise taxes are charged as follows: C$31.22 for beer containing more than 2.5% absolute ethyl alcohol and company annual production of more than 75,000 hectolitres (Canada Revenue Agency, 2010). There is also a federal Value Added Tax (VAT), and Goods and Services Tax (GST) imposed on products, as well as provincial levies/markups (Euromonitor, 2012). For full details on excise taxes for alcoholic beverages, please visit the Canada Revenue Agency’s Rates of Excise Duty webpage.

Leading Specialist Retailers for Alcoholic Drinks in Canada in 2011

Retailer Store Name Number

of Outlets Liquor Control Board of Ontario

LCBO 613

Société des Alcools du Québec

SAQ 413

B.C. Liquor Board B.C. Liquor Store 197

The Beer Store (Ontario)

The Beer Store 440

On-Trade Versus Off-Trade Sales of Alcoholic Drinks in Canada in 2011 – % Breakdown

Value Share Volume Share Off-trade 59.2 80.6 On-trade 40.8 19.4 Total 100.0 100.0 Source for all: Euromonitor, 2012.

Off-Trade Value Sales of Alcoholic Drinks in Canada by Distribution Channel – % Breakdown Channel 2009 2010 2011 Discounters 0.3 0.3 0.3

Food/drink/tobacco specialists

86.8 87.0 87.1

Hypermarkets 2.0 2.1 2.0

Small grocery retailers 3.1 2.8 2.8

Supermarkets 7.5 7.5 7.5 Internet retailing 0.3 0.2 0.2

PAGE 16

While new product examples are provided in each alcoholic beverage category of this report, this section examines all alcoholic beverage launches in Canada as a whole, and highlights key trends in Canada’s market using new product examples. *This data is provided by Mintel’s Global New Products Database, which does not track new wine introductions in Canada. As a result, the following analysis does not contain wine products. According to Mintel, there were 405 new alcoholic beverage products introduced to the Canadian market from January 2008 to December 2012, from a variety of manufacturers. Completely new products accounted for more than half of alcoholic beverage launches (57.3%), while new variety/range extensions were also common (30.9%), followed by products with new packaging (11.6%), and one re-launch. Beer, the most popular alcoholic drink category in Canada, had the most product introductions from January 2008 to December 2012 with 176 (43.5% of launches), followed by flavoured alcoholic beverages with 136 launches (33.6%), and vodka with 28 (6.9%). These were followed by cider with 25 product launches (6.2%), liqueurs with 21 (5.2%), and whisky with six (1.5%). The remaining categories (dark rum, white rum, wines, flavoured rum liqueurs, and gin) each had three or fewer launches. Environmentally friendly claims were, by far, the most commonly used claim among new alcoholic beverage launches in Canada. This is due to the large number of recyclable packaging claims, particularly among beer launches. Premium was the next most commonly used claim. This claim was featured on a number of beer products that highlighted high-quality attributes such as natural or specialty ingredients, products, or production techniques, as well as limited availability. Premium claims were also popular among ciders and flavoured alcoholic beverage launches, based on ingredients, packaging, and marketing. Health-related claims (such as no additives/preservatives, all natural and organic) were also notable among the new introductions, many of which also tied in with premium product claims.

Top Claims Used Number of Launches

Ethical - environmentally friendly package

124

Premium 81 No additives/preservatives 58 Seasonal 32 Limited edition 24 All natural product 22 Ease of use 12 Organic 10 Not pasteurised 9 Low/no/reduced calorie 9 Other 214 Total claims 595

NEW PRODUCT LAUNCH ANALYSIS

Source for all: Mintel, 2013. *Mintel does not track wine introductions in Canada. As a result, the following analysis does not contain wine products.

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New Alcoholic Beverage* Introductions to the Canadian Market

from January 2008 to October 2012 by Top Companies

PAGE 17

The following is a selection of new alcoholic beverage products introduced to the Canadian marketplace from January 2008 to December 2012, from Mintel, highlighting key trends in this market.

Premium, High Quality Trends Many products using these types of claims focused on the use of quality ingredients or production methods. An emphasis on health was also incorporated, as well as ethical factors, such as recyclable packaging. Real Apple & Cranberry Beer

Company: Les Brasseurs du Nord Brand: Cuvée Boréale Pack size: 4 x 347 ml Price: C$8.99 Claims: Ethical - environmentally friendly package, limited edition, low/no/reduced sugar, no additives/preservatives, social media. Craft Beer Variety Pack

Company: Okanagan Cider Brand: Okanagan Spring Pack size: 12 x 341 ml Price: C$22.53 Claims: All natural product, ethical - environmentally friendly package, limited edition, seasonal. Ruby Red Citrus Premium Vodka Beverage

Company: Soca Sprintz Beverage Co. Brand: Soca Vodka Spritz Pack size: 4 x 330 ml Price: C$10.99 Claims: Gluten-free, low/no/reduced allergen, low/no/reduced calorie, no additives/preservatives, premium. Dry Premium Cider

Company: Growers Cider Brand: Growers 1927 Pack size: 6 x 473 ml Price: C$9.99 Claims: Premium. Details: Naturally fermented with 100% all natural flavours.

Health-Related Trends A variety of health-related trends were present in alcoholic beverage introductions, with a particular emphasis on products that are all natural or contain no additives or preservatives. There were also claims for no/low/reduced ingredients, such as calories, fat, and gluten. Iced Tea Flavoured Light Beer

Company: Molson Canada Brand: Coors Light IcedT Pack size: 4 x 473 ml Price: C$10.99 Claims: Ethical - environmentally friendly package, interesting packaging, no additives/preservatives. Gluten-Free Beer

Company: Better Bitters Brewing Brand: Nickel Brook Gluten Free Pack size: 473 ml Price: C$2.95 Claims: Gluten-free, low/no/reduced allergen, no additives/preservatives. Details: Said to be Ontario's first wheat-free beer alternative. Light Irish Cream Liqueur

Company: T.J. Carolan & Sons Brand: Carolans Pack size: 750 ml Price: C$22.95 Claims: Low/no/reduced fat. Details: Is 50% lower in fat than regular Carolans Irish cream. Flavoured Alcoholic Beverages

Company: Mike’s Hard Lemonade Brand: Mike’s Pack size: 12 x 330 ml Price: C$27.99 Claims: All natural product. Details: Made with all natural ingredients.

NEW PRODUCT EXAMPLES BY TREND

Source for all: Mintel 2013.

PAGE 18

New Flavour Trends In a saturated and competitive market, flavours and flavour combinations are being used to differentiate products. This was particularly evident in the beer category. Lemon and lime flavours were especially prominent. Lemon Flavoured Light Beer

Company: Miller Brewing Brand: Miller Chill Pack size: 6 x 355 ml Price: C$9.99 Claims: Ethical - environmentally friendly package, no additives/preservatives. Details: Said to have a refreshing taste of lemon. Cheakamus Chia-Maple Ale

Company: The Whistler Brewing Co. Brand: Whistler Brewing Co. Pack size: 650 ml Price: C$5.75 Claims: No additives/preservatives. Details: Made with real maple syrup that is added directly to the mash, and a trace of chai tea added during the filtration process, creating a highly complex, mildly spicy palette. Saskatoon Berry Flavoured Sparkling Cider

Company: Growers Cider Brand: Growers Pack size: 6 x 330 ml Price: C$8.49 Claims: Ethical - environmentally friendly package. Details: A sweet and refreshing blend of deep purple prairie berries and traditional orchard apples. Prairie berries are described as tasting similar to a combination of blueberries and cranberries. Iced Lemon Tea Vodka Mixed Drink

Company: Waterloo Distillery Brand: Seagram Pack size: 6 x 355 ml Price: C$10.95 Claims: Ethical - environmentally friendly package, no additives/preservatives. Details: Made with pure Canadian spring water and natural lemon flavour, for a refreshing, not too sweet taste.

Ethical and Environmental Trends These types of claims were particularly used in new beer introductions, due to the use of recyclable materials, followed by flavoured alcoholic beverages, cider, and vodka. Beer Assortment

Company: Keith’s Brewery Brand: Alexander Keith's Brewmaster Collection Pack size: 15 x 341 ml Price: C$25.99 Claims: Ethical - charity, ethical - environmentally friendly package, premium. Details: Offers consumers the chance to win an "Eco-Adventure", and a donation in their name to an environmental cause. Lager Beer

Company: Molson Coors Brand: Molson Canadian Red Leaf Project Pack size: 4 x 473 ml Price: C$11.75 Claims: Ethical - charity, ethical - environmentally friendly package, no additives/preservatives. Details: According to the manufacturer, 10 cents from this bottle will go toward helping make a park in the area even better. Passionfruit Hibiscus Oasis Spritz

Company: Palm Bay Brand: Palm Bay Pack size: 6 x 355 ml Price: C$8.99 Claims: Ethical - charity, seasonal. Details: Features the breast cancer survivors logo. Alcohol Free Red Wine

Company: MADD Brand: MADD Pack size: 750 ml Price: C$9.99 Claims: Ethical - charity. Details: According to the manufacturer, 10% of net sales go to Mothers Against Drunk Driving (MADD) Canada.

NEW PRODUCT EXAMPLES BY TREND (continued)

Source for all: Mintel 2013.

PAGE 19

RESOURCES

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Consumer Trends: Wine, Beer and Spirits in Canada © Her Majesty the Queen in Right of Canada, represented by the Minister of Agriculture and Agri-Food (2013). ISSN 1920-6615 AAFC No. 12050E Photo Credits All photographs reproduced in this publication are used by permission of the rights holders. All images, unless otherwise noted, are copyright Her Majesty the Queen in Right of Canada. For additional copies of this publication or to request an alternate format, please contact: Agriculture and Agri-Food Canada 1341 Baseline Road, Tower 5, 4th floor Ottawa, ON Canada K1A 0C5 E-mail: [email protected]

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