Hoppy Beers and Monoculture in Ontario 8

I want to suggest something to you, and it may be something that has crossed your mind if you’re a brewer in Ontario. I think that we’re all aware that large brewers are, if not faltering, then experiencing a period of contraction. This is probably as the result of the ascendance of craft beer in some small part, but it also has to do with shifting preference in packaging and with the economic recession from 2008 to the present. So craft beer is taking off. Why not buy a few bottles of really interesting beer instead of a 24 of lager that might be indistinguishable from its competition?

That’s the important bit: many mass produced lagers are as like their competition as it is realistically possible to be. It’s (and I borrow a term from Jason Tremblay who posted about this on Bartowel.com) a monoculture.

Tremblay went on to suggest that the current growth of craft beer is on the back of hoppy pale ales and IPAs. This seemed somewhat suspect to me, so I decided to crunch some numbers. I like a bit of data-centric research periodically, so what I’ve done is taken two snapshots of LCBO product lists based on their API data and broken down those snapshots into stylistic preference. The first is the earliest record I have access to: January 1, 2011. The second is from April 19th, 2013.

I have included only beers produced in North America. I have not delineated between macro and micro. I have included only one SKU per product, which is to say that while there might be different available formats of something like Budweiser, I have listed only the Budweiser brand as a coverall for those SKUs. If a product has listed itself as a Pilsner, I have simply taken the listing at its word. I hear you say “but Lakeport Pilsner isn’t really a Pilsner.”

Well, true. The data isn’t concrete. What it does is paint a picture of the last 28 months.

For January 1, 2011 there are 10837 existing SKUs of which about a thousand are categorized as beer, 571 of which are produced in Canada and 55 were American imports.

There are, by my count, 45 brands of Lager, craft or otherwise, that don’t differentiate themselves into stylistic subcategories. Basic Light beers count for 20 SKUs. Pale Ales count for 18 SKUs. There were only 5 Canadian produced IPAs. From the USA, the numbers are 9/0/2/4 in those same categories.

It should be noted that this does not mean that they were all on the shelves at the same time. Some were seasonals. Realistically, there were as few as three IPAs on the shelf at any one time.

If you fast forward to the present (or near as dammit) There are 20939 SKUs represented on the LCBO Product list (which goes some way to explaining why people aren’t grumbling about selection as much anymore). Of these 1427 are beer, 856 are produced in Canada and 95 are imports from the USA.

The number of undifferentiated lagers has actually decreased by one over the last couple of years: 44. There are now 22 light beers on offer. Pale Ales have grown to 27 SKUs. Canadian produced IPAs have grown to 22. (This is not to say there are this many on the shelves. Some of them were seasonals). From the USA, the numbers are 13/0/4/7.

Just for the sake of argument, I’ll point out that in January 2011, there had been one Double IPA: Garrison. As of April 19th, 2013, there had been nine from Canada and the USA.

So, this tells us that interest in Lager has waned very slightly and that there is almost no growth in light beer. If you’re a craft brewer, this is a good thing. It also tells us that the Pale Ale category has grown by a factor of 1.5 and that IPA as a category has grown by a factor of 4.4. If you include the American SKUs for those categories, there’s comparatively little change in lager. The growth of Pale Ale rises slightly to a factor of 1.55. The growth factor of IPA shrinks slightly to 3.2.

Now, I’ll point out that one of the nice things about the large brewers is that they tend not to brew a great deal for consumption that excludes mainstream sales channels. That is to say that there aren’t a lot of lagers that are sold exclusively outside the LCBO and The Beer Store.

You may wish to consider, however, the total number of small brewers not represented in the LCBO and the likelihood that basically every single one of those brewers has a pale ale. I don’t have a figure for that, but you have to realize that of the now 112 Ontario breweries reported on Mom and Hops’ directory it is probable that 7/10 of them have a pale ale as a continuing brand. Some will also have IPAs.

There are some pretty significant downsides to this. First of all, it’s just massively unsustainable. Secondly, it means that craft brewers are largely competing for the market segment that defines their expansion. Thirdly, the problem isn’t going away. I can think of at least three new pale ales and IPAs hitting the market next month. As smaller breweries attempt to get into the LCBO it’s more vendors competing for approximately the same slice of the pie.

What I guess I’m saying to you is this: If you ever had a good idea for a beer that you thought would work, now would be the time to diversify. Just because everyone else is making a hoppy ale doesn’t mean that you have to. Plus, the increasing number of American craft beer products coming to the LCBO is probably going to make competition even tougher.

If you’re going to launch a new brewery, you’d do well to do something to differentiate yourself stylistically and find something accessible for drinkers that provides value for money and has a novelty factor. It provides craft beer some genetic diversity and might just put some money in your pocket. Launching a non-descript Pale Ale or IPA that can’t compete against objectively better beers is more or less a recipe for bankruptcy.

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8 thoughts on “Hoppy Beers and Monoculture in Ontario

  • Roger Pettet

    Thank you for scientifically proving whatvI have been complaining of for the past year or so.
    Whilst you might consider my tastes mundane, let’s brew a session beer or two that “carry their weight.” Personally I’m hopped out.

    • Adrian Flude

      Here here Roger! I concur, and perhaps a chart or graph to mull over as a compliment to Jordan’s research, whilst supping an ale or two!

  • Matt Caldwell

    Well from a consumer of craft beer I like the variety of pale ales/IPA’s as I always have one in the fridge and like to vary the brands along with other non-PA/IPA beers. So I agree and disagree….I was getting bored of the days when there were 3-5 choices…..now I can always have something that was not in the fridge for a few weeks.

  • Jeremy

    If you think all pale ales and IPAs are the same that means you are not trying enough of them. While I agree that there is a dearth of flavourful well made session beers, or other traditional styles, I think it is very premature to say that there are too many. There are lots of them, but it has only been VERY recently that there have been a number of regularly produced widely available hoppy beers. I loves me some hops though so I guess I am biased.

    • admin Post author

      Ah, well that’s the thing. I’ve tried all of them at some point or another. Except maybe McLean’s Pale Ale. I don’t remember that one.

      I am frequently wrong, but I think this is the way the market is going. Hoppy beers are actually squeezing out other beers. Take Propeller ESB being replaced by Propeller IPA. Both quality products, by the way. All I’m suggesting is that if I were going to launch a new brewery in Ontario at the moment, with the lead times between founding and getting into the LCBO being what they are, I wouldn’t be doing a pale ale or IPA. By the time a newly founded brewery gets into the LCBO a year and a half from now, the category will be even more competitive.

  • Chris

    I am a homebrewer and am currently brewing simple German style ales. Why? I am just hopped out with brewing so many AIPA’S the last few years. I still like them, but not enough to brew them myself. Our local brewery has a nice IPA whenever I feel the need to drink one.