Canada: Trouble is Brewing: Beer Industry Faces Numerous Challenges

Originally published October 2005

Recent press reports suggest that the Canadian beer industry is in trouble. A shrinking consumer base1, depressed prices2, smoking by-laws and industry consolidation are just some of the long-term threats faced by brewers. Short-term factors such as the NHL lockout and unseasonably cold temperatures have also contributed to disappointing recent quarterly results.

Brewers must also contend with the perception that beer is a carb-rich and waist-expanding beverage in comparison to wine, a substitute alcoholic product that is associated with good health and longevity. Indeed, much like the mature Western European market, statistics indicate that Canadians are drinking slightly less beer3 and significantly more wine4.

Hard liquor manufacturers have also captured a portion of the traditional beer-drinking target market. The success of the hard liquor manufacturers can be attributed to a proliferation of new product lines (e.g., flavoured vodka), catchy advertisements and aggressive promotional campaigns at points-of-sale.

One response adopted by brewers to address these challenges is to increase advertising and promotional activities. Many brewers reverted to a standard beer-advertising theme of featuring nubile young women to captivate the 19-35 year old male audience. Comparative advertising has also remained a staple in the beer advertiser’s toolbox. Last summer, several brewers duelled over who produced the coldest beer. One major manufacturer introduced a draught tower that stores beer at sub-zero temperatures. Another product was branded as the "ice cold" beer, much to the chagrin of some critics who questioned the plausibility of such a statement. Indeed, the major breweries have been criticized for their ‘congenital arrogance’, ‘money-is-no-object’ ineptitude and lack of innovation.5

Only time will tell how the breweries will respond to these criticisms.Whatever the future holds, it is important to remember that marketing beer in Canada requires compliance with a web of rules that includes federal legislation, provincial legislation, common law principles, provincial advertising guidelines and federal codes of conduct. Therefore, marketing plans and/or specific marketing tactics should be reviewed by legal counsel in each province or territory to ensure compliance with the various regulatory regimes. The following overview highlights some of the important legal issues to consider before developing a new beer marketing campaign.


Some breweries have run contests that offered prizes such as Las Vegas vacations and golfing getaways. Promotional contests must be conducted within the limits set out by the Criminal Code, the Competition Act and provincial alcohol advertising regulations. Here are a few rules to remember in structuring a contest:

  • Only contests involving skill or a mix of skill and chance are permitted. Contests involving chance alone are prohibited by the Criminal Code.
  • Games of mixed chance/skill are prohibited if participants are required to pay money or give valuable consideration in order to participate.
  • The Competition Act requires adequate and fair disclosure of such matters as the number and value of the prizes, the geographical scope to which they relate, and any fact within the knowledge of the advertiser that materially affects the chances of winning.6


Breweries may use celebrities to endorse their products. However, provincial liquor advertising guidelines restrict the use of celebrity endorsements, especially if there is a chance that children would consider the celebrity to be a role model. The celebrity endorsement must also comply with the Canadian Radio-television and Telecommunications Commission’s Code for Broadcast Advertising of Alcoholic Beverages ("CRTC Code") and must not violate anyone’s trademark, copyright, or personality rights. Breweries considering the use of a celebrity endorsement must therefore ensure that legal counsel has conducted due diligence and, if necessary, drafted consents and licenses to use the celebrity in the advertisement.7


Product giveaways represent a potentially lucrative marketing tool for brewers. For example, breweries have recently included products ranging from sleeves of golf balls to coupons for two steaks as gifts upon the purchase of a case of beer. Before embarking on a product giveaway promotion, care must be taken to ensure compliance with several advertising guidelines:

  • Product Acceptability – Not all items are acceptable as giveaways and several provincial liquor authorities have reserved the right to deny their use. Some provinces require the giveaways to meet tests of appropriateness and good taste.
  • Approval by Liquor Authorities – Some provinces require beer manufacturers to submit applications or product examples to the relevant liquor authority. In some cases the application must be filed at least 90 days prior to the anticipated start of the campaign.
  • Value Restrictions of Promotional Items – Product giveaways are restricted in many provinces (including Ontario) to a maximum dollar amount or maximum percentage of the purchase price of the beer. Providing consumers with a chance to win the item is one method that can sometimes be used to tackle the maximum value restrictions, subject to compliance with contest laws.
  • No Purchase Necessary Option – The CRTC Code requires a "no purchase necessary" option for promotions, contests and premium offers. This option should permit participation without purchase of the product and without cost to the participants. The purpose of the "no purchase necessary" option is to avoid the allegation that the promotion is attempting to influence non-drinkers to purchase beer. It also may have other effects with respect to the retail value of value-added products.
  • Language – Both French and English are official languages in Canada but some provinces have rules respecting the language labelling requirements for products sold within their boundaries.


The CRTC Code specifically applies to all alcohol advertisements in Canada and is enforced by Advertising Standards Canada ("ASC") who, in turn, publishes periodic Ad Complaints Reports. The 2004 Ad Complaints Reports revealed that a majority of the complaints lodged with the ASC last year were related to beer ads.8 Additionally, there are statutes, policies, and alcohol advertising guidelines that apply in the various provinces and are enforced by the provincial alcohol commissions.

The CRTC Code and provincial regulations cover a wide spectrum of advertising tactics including, among other things, attempts to influence non-drinkers to consume alcohol, advertisements directed at minors, associating the product with an activity that involves danger or risk, the time of day that the ads are displayed and as mentioned above, the use of celebrity endorsements.


Brewers may offer sales promotions to differentiate their products on price factors. However, brewers (especially of so-called "discount beers") should be aware that the Competition Act requires that a significant volume of the product must be sold for a significant length of time at the regular price of the product in order for a company to claim that a product is being sold at a "sale price". The Competition Bureau has shown an increased focus on "regular price" advertising over the past few years, with several Canadian companies receiving widespread negative publicity and substantial monetary penalties for violating this law.

In order to avoid liability under ‘ordinary price laws’, don’t refer to a regular price in an ad unless a substantial volume of the product has been sold at its regular price and the product has been offered for sale at the regular price for a substantial period of time. Don’t artificially inflate the regular price of the product in order to make the sales price appear to be more attractive. Finally, don’t run a sale for extended periods of time, or repeat a sale week after week (in which case the Competition Bureau might consider the sale price to be the regular price).9


Provincial craft brewers in Ontario have recently organized and combined resources in an attempt to reduce the advertising power advantage held by the larger breweries. Governments have supported craft brewers in various ways including tax incentives offered to some smaller operators, which helps them to compete against some of the larger manufacturers. Craft breweries are able to offer differentiated brands that appeal to their market, in part aided by strong word-of-mouth advertising and sometimes by fostering a "root for the little guy" sentiment from loyal customers10. For example, Steam Whistle BrewingTM has developed a strong grass-roots appeal through catchy online ads, brewery tours, community events, event sponsorship and a feel-good company history.

Other encouraging signs exist for the future of the beer industry. Dozens of twists on traditional beer products have proliferated including imports, speciality beers, microbrews, discount beers, low-carb beers, draft in a can and caffeine additives that might expand the size of the beer drinking market to new demographics. There’s even talk of flavoured-GuinessTM hitting the market soon. Some beer advertisements such as the Bud Light InstituteTM have won acclaim for their hilarious and catchy television commercials.


The last quarter of 2005 and the first quarter of 2006 will hopefully be more promising to the beer industry thanks in part to the return of the NHL. However, breweries should not rest their hopes on hockey alone, as wine, hard liquor and negative consumer trends remain viable threats to the overall health of the industry. In combating these threats, breweries must ensure that they comply with both alcohol-specific and general marketing laws. In order to prevent a hefty fine or the negative publicity associated with a sanction, legal counsel should review your marketing plan or specific marketing tactics for compliance with the laws in each province and territory where the campaign will be executed.



1. There are 325,000 fewer Canadian males between the ages of 20-34 then there were 15 years ago. (ROB Magazine, September 2005).

2. Discount beers account for 30% of the market. (ROB Magazine, September 2005).

3. Twelve years ago, the average Canadian adult consumed 10.7 cases of beer. Today, the average Canadian drinks 10.3

cases of beer: a subtle but significant change. (ROB Magazine, September 2005). 

4. Wine sales have increased 32% in Canada in the last 12 years. (ROB Magazine, September 2005).

5. Source: the_work/article.jsp%3Fcontent=20050523_68806_68806.

6. For more information on how to run a promotion that complies with Canadian contest laws, please see: "Making Your Contest a Winner"

7. For more information on celebrity endorsements, please see: "Cult of Personality: Using Celebrity Images in Advertising" by Jeff Scanlon.

8. One sexually-themed television commercial for a beer product resulted in 113 complaints to the ASC. The beer manufacturer issued an apology for airing the commercial too early in the evening , during a program that included many children among the viewing audience.

9. For more information, please see the article "Ordinary Price Claims: Misleading Discounts Will Cost You!", available online at:

10. The Ontario Craft Brewers are also generating interest by attempting to set a standard of approval in the same vein as the wineries in Ontario with the VQA label. 

The foregoingprovides only an overview. Readers are against making any decisions based on this material alone. Rather, a qualified lawyer should be consulted.

© Copyright 2005 McMillan Binch Mendelsohn LLP 

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.