TORONTO, May 29, 2025 — The first quarter of 2025 has brought unprecedented challenges for Canada’s beer industry. Traditionally sluggish months like January and February have extended into a persistently weak spring, with beer sales continuing to decline through March. Industry experts cite widespread economic anxieties, including looming recession fears and heightened tariff tensions, as key contributors to the downturn in discretionary spending.
The imposition of new U.S. tariffs has sent ripples through Canadian brewing operations. When former President Donald Trump reinstated a 25 per cent tariff on aluminum imports, the impact on the domestic beer sector was immediate and profound. While much of the aluminum originates in Quebec, the lack of domestic production capacity for finished cans forces Canadian brewers to rely on U.S.-based manufacturers—two companies that dominate the North American market. As a result, the cost of a 473-millilitre can, or tallboy, was set to rise by approximately 10 cents.
With an estimated 9.1 million tallboys needed this year by Toronto-based Steam Whistle Brewing alone, the increased cost translates to an unexpected million-dollar hit. Across the Canadian beer industry, the added burden could total $330 million annually.
Steam Whistle, which also owns Beau’s Brewing Company in Ontario, has had to swiftly adapt. Some of Beau’s products rely on specialized hops and malts not grown domestically, historically sourced from the United States. In response to the tariffs, the company has begun sourcing ingredients from within Canada and Europe. This transition, however, is not straightforward. Reformulating long-established recipes requires months of trial runs, quality assurance testing, and new logistics planning.
“We can’t simply substitute one ingredient for another,” a company insider explained. “Each change involves a rigorous reworking of the brewing process.”
Early testing is underway for a promising Canadian malt, but the rapid shift has placed strain on brewing operations, demanding more personnel, tank space, and unbudgeted expenses. Once suitable ingredients are confirmed, securing a consistent supply poses another challenge, especially as other brewers scramble to do the same. Contracts for hops and malts are typically arranged years in advance—accelerating that timeline comes at a premium.
Production costs for some beers are now expected to rise by three to five per cent. Yet Steam Whistle is resisting price hikes, wary of alienating consumers already grappling with inflation and seeking value. As a premium brand, the company fears losing shelf space if prices rise further.
To mitigate the financial strain, capital expenditures have been suspended. Planned investments in specialized brewing equipment have been put on hold, in part due to added tariff costs on U.S.-sourced machinery. Instead, the company is exploring new domestic sales channels, including retail partnerships with duty-free border shops, Skip the Dishes, and convenience stores.
Efforts are also underway to drive traffic to Steam Whistle’s own taprooms and restaurants through events like trivia nights and happy hours. The buy-Canadian movement has offered some relief; golf courses and vacation properties have increased local beer orders as more Canadians opt for staycations.
A critical break came in May, when Steam Whistle’s U.S.-based canning partner announced it would move tallboy production for Canadian clients north of the border—effectively sidestepping the aluminum tariff.
Beyond beer, Steam Whistle has conducted a sweeping review of its entire supply chain. The company has replaced U.S.-sourced products across its Toronto restaurant menu and operations. A Bavarian pretzel previously imported from Texas, for instance, has been substituted with a high-quality Canadian alternative. Even cleaning supplies are being sourced domestically.
The brewing company’s leadership acknowledges the road ahead remains uncertain. Whether the tariff pressures persist for months or years, executives say the experience has catalyzed a shift toward greater supply chain resilience and domestic partnerships.
While the past few months have tested the company’s endurance, the changes made may yield lasting benefits. The silver lining, leaders note, is a strengthened commitment to Canadian suppliers and a more adaptable business model—one better equipped to navigate future disruptions.
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