Moosehead Secondary Research Assignment

Sheridan Marketing Management

Moosehead Lager Secondary Research AssignmentMatthew Belo

13Fall

Introduction............................................................................................................................. 3

Market Overview..................................................................................................................... 4

Competitors............................................................................................................................. 7

Demographics and Consumer Behaviour..............................................................................11

Social Media.......................................................................................................................... 12

Conclusion............................................................................................................................. 13

Works Cited........................................................................................................................... 14

MKTG 54093 – Matthew Belo of 14

IntroductionMoosehead Lager is the top-selling, flagship product of the

Canadian-based Moosehead Brewing Ltd., a private company,

owned by the Oland family and headquartered in New

Brunswick, Canada. The company was formerly known as

Maritime Brewing & Malting Co. and changed its name to

Moosehead Breweries Limited in 1947. (Datamonitor, Aug

2013, Pa6) Moosehead Lager is now sold globally with its

primary markets residing in the United States and Canada. (Euromonitor, 2013, Distribution).

Despite the companies recent success importing and diversifying it’s product line, the flagship

brew “Moosehead Lager” has fallen off of the ‘Big 10’ list at the beer store (The Beer Store, 2013, ‘Big

10’), and seems to be falling in popularity and sales.

The Moosehead Breweries Ltd. you see today has transformed drastically since its inception. In

1867, when Susannah Oland sailed from England to Nova Scotia with her family with her recipe for a

rather delicious brown October ale (Moosehead, 2013, History). Moosehead still remains today

completely and independently run by the Oland family in Nova Scotia.

The Moosehead Breweries Ltd. will now be in its’ fifth generation of ownership. (Denise Deveau,

Oct 2012, Pa1). Despite the numerous setbacks and boundaries for the Oland family, such as the Halifax

explosion that levelled operations, to the challenges of prohibition, the family has managed to rally and

stand firm to become Canada’s oldest and largest independent brewer (Moosehead, 2013, History).

But despite this rich, deep Canadian heritage, it is surprising to learn that it met some of its greatest

success when it began selling to the United States in 1978. The following was taken from an interview

with Patrick Oland, one of the Oland brothers currently running the company: “We’ve been a fixture in


Saint John since 1919. Up to 1978, we only sold to New Brunswick, Nova Scotia and P.E.I. At that point

we decided to launch Moosehead Lager in the United States. At the time, introducing a premium product

went against the conventional wisdom of selling beer at a cheap price. But it paid off in sales numbers”

(Denise Deveau, Oct 2012, Pa1).

According to company president, Andrew Oland, when he and his brother Patrick took the helm

four years ago they began to explore new directions to ensure the company could hold its own in the face

of increasing competition from multi-national brewers. The Brothers have now opened a new bottling

plant, forged a number of exclusive international partnerships, and are rebranding to appeal to a broader

market base (Denise Deveau, Oct 2012, Pa1).

Moosehead has 10 brands, including domestic and export lines, which include: Moose Light,

Moosehead Pale Ale, Moosehead Premium Dry, Moosehead Dry Ice, Alpine Lager, Alpine Light, Clancys

Amber Ale, Cold Filtered Light and the recently added “craft” beer, Boundary (Moosehead, 2013,

Products).

With their great success down south in the states, it is time for Moosehead to focus back home on

the Canadian market. They can do this if they leverage its reputation as a long time premium and “craft”

brewer to steal some market share from the now stagnating top player in the Canadian beer market,

Molson Coors, and ride the current trends towards specialty and craft brews.

Market Overview

An estimated ten million Canadians drink beer and an estimated 21.9 million hectoliters are produced

annually, making it the number one alcoholic beverage in Canada in terms of both production and

consumption (Government of Canada, Sep 2013, Pa3). That’s a lot of beer! According to DataMonitor


“The Canadian beer market had total revenues of $11,960.1m in 2012, representing a compound annual

growth rate (CAGR) of 0.6% between 2008 and 2012. Market consumption volumes decreased with a

CARC of -0.2% between 2008 and 2012, to reach a total of 2,284.9 million liters in 2012. The

performance of the market is forecast to decelerate, with an anticipated CAGR of 0.3% for the five-year

period 2012 - 2017, which is expected to drive the market to a value of $12,134.3m by the end of 2017”

(DataMonitor, August 2013, Pa1).

Being a privately owned, yet trading their products globally, Moosehead faces some unique

marketing challenges. “Moosehead beer is sold in about 14 countries, 50 American states and all across

Canada” (DataMonitor, August 2013, Pa6). As previously mentioned, Moosehead Lager has had early

breakthrough success in the US market throughout the 80s. But now that business conditions are more

applicable for better penetrating the Canadian market the report will focus more on the Canadian side of

things. However, in order to succeed Moosehead will have to overcome some of the current marketing

challenges.

The Canadian beer market marginally expanded between 2009 and 2012. The market is forecast to

continue expanding at meager rates, with volumes contracting throughout the period. “Demand for beer in

Canada remained low in 2012 as the shift towards other alcoholic beverages continued, including wine

and various spirits areas, many of which are undergoing significant product development and marketing

activity” (Euromonitor, Sep 2013, Beer in Canada Pa2).

Despite the falling demand for Beer, some areas recorded good volume growth, such as imported

and premium beer as well as craft beer. “’Craft inspired’ or ‘faux craft,’ depending on one’s perspective,

offerings from the industry’s behemoths have already began making waves. As an initial incubation

period now comes to an end, 2013 will see big beer players invest in more complex and stratified specialty

portfolios at the same time that price competition inevitably intensifies further” (Malandrakis, Feb 2013,


Pa1). Moosehead has already developed an answer to the craft brew trend with the introduction of their

newest product: “Boundary Ale”

‘“We’re not a craft brewery, but we wanted to develop a product that had a more diverse and

complicated flavour profile for that consumer,” said Katie Kennedy, director of marketing for

Moosehead. “We feel there’s nothing else like it in the Canadian marketplace”’ (Powell, June 2013, Pa5).

This product will not rely on traditional marketing and instead be promoted by beer-tastings and word of

mouth. While Moosehead may no longer be small local brewer, they have long been marketed and

perceived as a “faux-craft”, premium beer. Using their mass distribution while being privately run opens

a unique opportunity to be a mass-produced craft brew, with easy access to North American and Global

markets. And, “given their generally higher price points [craft beers], these products also help to maintain

value growth in beer overall (Euromonitor, Sep 2013, Beer in Canada Pa3). “The premium lager segment

was the market's most lucrative in 2012, with total revenues of $4,557.6m, equivalent to 38.1% of the

market's overall value. The standard lager segment contributed revenues of $4,219.0m in 2012, equating

to 35.3% of the market's aggregate value.” (DataMonitor, August 2013, Pa4)

Here is a list provided by Ontario-based The Beer Store’s current top 10 products (The Beer Store, 2013,

The ‘Big 10’ Brands):

1. Coors Light

2. Molson Canadian

3. Budweiser

4. Blue

5. Bud Light

6. Carling Lager

7. Busch

8. Alexander Keith’s

9. HeinekenMKTG 54093 – Matthew Belo of 14

10. Lakeport

CompetitorsThe most direct competition to Moosehead Breweries is Molson Coors and Anheuser-Busch InBev, the

leading 2 beer producers in Canada. Both companies sell products internationally, and focus on a global

market. Both of these companies are now run out of the United States. (Datamonitor, Aug 2013, Pa20)

According to the 2012 Annual Report for Molson Coors: “We are Canada's second-largest brewer

by volume and North America's oldest beer company. Our approximate market share of the Canada beer

market in 2012 was 39%. We brew, market, sell and distribute a wide variety of beer brands nationally.

Our portfolio has leading brands in all major product and price segments. Our focus and investment is on

key owned brands, including Coors Light, Molson Canadian, Carling, Molson Dry, Molson Export,

Rickard's, Pilsner, Creemore Springs and Granville Island and strategic distribution partnerships,

including those with Heineken, Modelo and SABMiller. In 2012, Coors Light had an approximate 14%

market share and was the top selling beer brand in Canada, and Molson Canadian had an approximate 8%

market share and was the third top selling beer in Canada” (Molson Coors, 2012, Item 1)

These are certainly numbers that can’t be ignored by Moosehead Brewery Ltd. Molson Coors has long

been the Canadian behemoth when it comes to beer. However, much of the success of both Molson-Coors

and Anheuser-Busch is based on their choice to shift their focus to global markets, leaving ample

opportunity for Moosehead Lager to swoop in and grab some of those individuals switching brands inside


the Canadian market.

While these competitors continue to experience successful growth, they are forced to expand into

new brands and new markets, while their historically popular and powerful brands slowly lose popularity.

“The decline has been as swift as it has been deep. In 2000, Blue and Canadian held an estimated 10-11

and 11-12 per cent of the national market, respectively, according to a former senior beer industry

marketing executive. Molson and Labatt are now part of larger international companies, and that’s part of

the problem, said Kincaid. In both cases — Molson-Coors and AB InBev, respectively — the companies

seem determined to focus on a few big international sellers, rather than any Canadian brand. In the case of

Molson-Coors, it’s Coors Light. With AB InBev, it’s Budweiser, Bud Light and Stella” (Rubin, Dec 2010,

Pa10).


Business Conditions

There have been numerous external business factors when it has come to the Brewery. One significant

change in the market that applied specifically to Moosehead was The Agreement on Internal Trade

(AIT). This Canadian agreement, signed by both the federal government and the provinces in 1994 to

facilitate inter-provincial trade, resulted in the reduction of some trade barriers between provinces,

particularly in western Canada. (Government of Canada, Sep 2013, Pa1). This further paved the way for

a more unified Canadian market, which underwent major restructuring of production during the period

1995 to 2005. Moosehead, being one of the Larger Canadian Brewers but based out of Nova Scotia,

greatly benefitted from this shift. Moosehead, as well as other major breweries across Canada “were able

to achieve greater economies of scale during this period by closing smaller plants and consolidating

production in fewer but larger establishments” (Government of Canada, Sep 2013, Pa1). In fact,

Moosehead original used to sell only in the maratimes up until about 1978 when it started selling to the

United States. It has only begun selling to the Western provinces since the agreement was put in place.

As of January 2000, import duties on all foreign beer were removed, creating an additional

challenge to the domestic brewery industry. This, in turn, lead to reductions in trade barriers to imports

accompanied by the development of a more global beer industry have increased competition in the

Canadian beer market. According to industry experts, the fluctuating value of the Canadian dollar can

place pressure on Canadian exporting competitiveness, which in turn could result in multinationals

reassessing their continued manufacturing in Canada (Government of Canada, Sep 2013, Pa17). A

weaker U.S. dollar adds to the potential of increased competition from imports in the future.

With the great shift in beer demand, and therefore new methods to market these brands there is

bound to be unique business challenges to deal with. Although craft beer continues to record healthy

gains, it also continues to face challenges in what is a highly competitive environment, with retail


distribution being controlled in most provinces and major breweries taking-up significant shelf

space. (Euromonitor, Sep 2013, Beer in Canada Pa5)

In addition, being an independent brewer going up against large publically traded corporations,

and trying to break the market with a small “craft” brewed product can seem like a David and Goliath

story. According to Andrew Oland, President at Moosehead Breweries “The competition is tougher and

large independent brewers are disappearing. We compete against large, multi-national brewers 50 to 100

times our size. While we can’t do that on some levels, one of the things we have been able to do is engage

in product innovation. Part of that is expanding the group of beers we import. These brands are nice

additions to our portfolio and we have managed to acquire exclusive import and distribution rights for

them” (Denise Deveau, Oct 2012, Pa5).

There have additionally been some external conditions that have affected sales of beer in the past

few years: “Problems with NHL negotiations and resulting ice hockey game cancellations (one of the

drivers of demand) continued to slow sales in 2012. While total current value sales increased by a modest

2% to reach C$16 billion, total volume sales remained flat at 2.3 billion litres in 2012” (Euromonitor, Sep

2013, Beer in Canada Pa2). Hopefully, with the NHL season back in place this season the beer industry

should see some growth.

Demographics and Consumer BehaviourThe Canadian brewery industry has an overriding challenge in terms of an aging and slow-growing

population, which is more concerned about health, and increasing cultural diversity in Canada. As

previously mentioned, there seems to be the trend towards other alcoholic beverages, especially with the

aging baby-boomer population: “Demand for beer in Canada remained low in 2012 as the shift towards

other alcoholic beverages continued, including wine and various spirits areas, many of which are

undergoing significant product development and marketing activity” (Euromonitor, Sep 2013, Beer in

Canada Pa2). These changes are said to contribute to declining per capita consumption and in order to


counteract the change, increases in exports will be needed to maintain and build the performance of this

industry (Government of Canada, Sep 2013, Pa1). It should be noted that while there is ample opportunity

to penetrate new markets in Canada using novel marketing for the Moosehead Lager product, Moosehead

breweries Ltd. should still continue conducting business on the global scale to keep up with competition.

While targeting a new demographic of beer drinkers, there needs to be a slight shift in marketing to

how we get across to these consumers: ‘“The drinker we’re going after is not as influenced by marketing,”

said Kennedy. “They want to learn about beer on their own and experience it in a very natural state.

Because more people are trying things on their own right now, we feel it’s unique enough that we’re going

to get some natural word of mouth”’ (Powell, June 2013, Pa5).

Social Media Molson Coors current strategy is to focus on the environmental community-based side of things, flooding

their twitter feed with tweets promoting their “Our Beer Print” campaign, promoting the Company’s more

environmentally conscious and community friendly events and fundraisers (Molson Coors, Sep 2013,

Twitter Feed) Their real presence seems to lie on Facebook, where they promote many of their different

brands, and link many of their sponsored events. (Molson Coors, Sep 2013, Facebook Feed). The

Anheuser-Busch brand isn’t very strong online, as the company brand itself is rather weak, relying on its

many individual brands. Where Molson-Coors has a united page behind all of their products, the

Anaheuser-Busch doesn’t work as effectively in social media due to it not being a household brand name

(it relies heavily on marketing the Budweiser line of beers, which alternatively has some of the best social

media, sponsoring a plethora of events and advertising them via twitter and Facebook. Moosehead also

has an adequate online presence via twitter and Facebook, but in order to break the market and establish

Moosehead Lager and Boundary as craft beers, they need to step it up and host or sponsor more beer-

tastings or beer related events.


ConclusionOn the business end of things, it seems clear that Moosehead needs to continue shipping it’s products

internationally and focusing on the global economy to increase profits. However, there is a huge

opportunity for the marketing team to develop a strategy that seizes the stagnant Canadian beer-drinking

consumer base. As President Andrew Oland himself said, the biggest means to competing with the big

guys is product innovation. Many of the biggest and most powerful beer brands are falling from grace, and

Moosehead Lager really needs to reinforce the brand it has already somewhat established, being an

independent premium lager, and ride the wave of the “Craft” beer-drinking crowd. While the introduction

of Boundary is definitely an intelligent choice, having a product that directly competes against other craft

brews, Moosehead has always been to set itself apart through the green bottle, premium price, and the fact

its independently owned and run out of Canada. Now with these unique business conditions, the shift in

demographics to craft drinkers, and the fall of some of the mightiest brands, Moosehead truly has the

opportunity to seize the spot as Canada’s independently-owned, homebrewed, craft beer, sold to a mass

market. This is the best means to gain control of the Canadian beer market.


Works Cited@MolsonCoors (Producer). (2013, Oct 2 2013). Official Twitter feed of Molson Coors Brewing. Retrieved from https://twitter.com/MolsonCoors

Government of Canada (2013). The Canadian Brewery Industry. Web: Retrieved from http://www.agr.gc.ca/eng/industry-markets-and-trade/statistics-and-market-information/by-product-sector/processed-food-and-beverages/the-canadian-brewery-industry/?id=1171560813521.

Molson Coors. (Producer). (2013). Facebook. Retrieved from https://www.facebook.com/MolsonCoorsBrewingCompanyUkLtd?rf=106067262765716

Datamonitor. (2013). Canada - Beer (Market Research). Available from Gale Infotrac Sheridan College General BusinessFile ASAP. (A342417792). Retrieved Sep 30 2013, from Gale http://infotrac.galegroup.com.library.sheridanc.on.ca/itw/infomark/839/757/14162163w16/purl=rc1_GBFM_0_A342417792&dyn=6!xrn_1_0_A342417792?sw_aep=ko_acd_shc

Deveau, D. (2012). Moosehead Breweries battles the big guys with new initiatives, Financial Post. Retrieved from http://business.financialpost.com/2012/10/29/moosehead-breweries-battles-the-big-guys-with-new-initiatives/?__lsa=b8f7-d570

Euromonitor. (2013). Beer in Canada (Analysis). Euromonitor Retrieved Sep 30 http://www.portal.euromonitor.com.library.sheridanc.on.ca/Portal/Pages/Statistics/Statistics.aspx

Malandrakis, S. (2013). Beer: Identifying the Key Trends for 2013 (Senior Analyst - Alcoholic Drinks). Available from Euromonitor International Euromonitor Retrieved Oct 1 2013, from Euromonitor International http://www.portal.euromonitor.com.library.sheridanc.on.ca/Portal/Pages/Search/SearchResultsList.aspx

MolsonCoors. (2012). 2012 Annual Report on Form 10-K (U. S. S. a. E. Commission, Trans.) (Vol. 10-K, pp. 3-4).

Moosehead. (2013). History Retrieved Sep 28, 2013, from http://moosehead.ca/timeline/

Powell, C. (2013). Moosehead Establishes New Boundary for Craft Segment. Marketing Mag.

Rubin, J. (2010, Dec 10 2010). ‘Sniff of death’ taints iconic beer brands, The Star. Retrieved from http://www.thestar.com/business/2010/12/10/sniff_of_death_taints_iconic_beer_brands.html

TheBeerStore. (2013). THE 'BIG 10' BRANDS Retrieved Oct 10, 2013, from http://www.thebeerstore.ca/beers/big-10-brands


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