Beer, cannabis and tariffs: John Sleeman on the future of Canadian beer
The founder of one of Canada’s biggest breweries says his company will take a “sizeable hit” from tariffs on aluminum introduced by the U.S. and Canada in the cross-border trade war.
John Sleeman, founder and chairman of Sleeman Breweries, told BNN Bloomberg that the company’s beer can prices are going to increase because of the White House’s 10 per cent tariff on aluminum imports. .
“When I started in this business, people drank beer in bottles. People have switched over the years - now over 50 per cent of the beer consumed in this country is in aluminum cans,” he said in an interview with BNN Bloomberg’s Amanda Lang on Tuesday.
“So, we’ve got a tariff on the aluminum going into the states, where it is then made into cans and then shipped back to us [in Canada]. So, it’s millions and millions of dollars.”
Sleeman estimates that nearly 50 per cent of the company’s beer brands are sold in aluminum cans.
“It is a sizeable hit. That’s going to be a lot of money for our company,” he said. “We don’t have any intention of making political comments, but we sure hope this gets sorted out soon.”
Trade tensions between Canada and the U.S. hit a fever pitch at the end of May after the Trump administration announced that Canada would no longer be exempt from tariffs on imported steel and aluminum as of June 1st.
The Trudeau government hit back with tit-for-tact retaliatory tariffs which will kick in this weekend on July 1st.
JOBS BACK TO CANADA
Meanwhile, Guelph, Ont.-based Sleeman Breweries, which was bought by Japan’s Sapporo Breweries in 2006, recently announced plans to expand in Canada, bringing production back to the country that it had outsourced to the U.S.
In March, the company said it would invest more than $6.6 million, along with $422,000 in funding from the Ontario government, to boost production at its brewery in Guelph.
“We had been planning to bring production back to Canada, because we prefer to control production and we just couldn’t expand our business fast enough to keep up with demand,” Sleeman said.
“We had some folks in the states make some brands and in certain package sizes for us and we just decided that it would be better to spend the money in Canada with the government’s help.”
Sleeman added that he was still eyeing the U.S. market for sales, despite not being able to make enough beer to meet demand in Canada.
“We have talked about selling Sleeman beer in the U.S. or Japan, or other places,” Sleeman said. “There could well be some advantages, but right now we’re at capacity. We’ve got three breweries across the country, they’re all full.”
‘SHAKEOUT’ IN CANNABIS
When asked if he was worried about competition that the beer industry could see from the legalization of recreational marijuana in Canada later this year, Sleeman said beer continues to be the most popular alcoholic beverage, but he is watching developments closely.
“There’s been cannabis usage in Canada for many years, [even though] it isn’t yet legal. So, there’s been a choice for consumers for many years,” he said.
“There’s still a lot of interest in beer beverage alcohol, but people in the industry like Molson and Labatt and many others I suspect are looking at the cannabis space to see if they should be looking at it more closely.”
Sleeman added that he was quite content to sit on the sidelines right now and see what happens next.
“Our personal opinion is that there’s probably going to be a shakeout in the cannabis sector – not everyone is going to be large and successful,” he said.