How Corby is navigating Canadians buying less alcohol

Key Concepts

• RTD (Ready-to-Drink): Pre-mixed alcoholic beverages (e.g., cocktails in a can) that are gaining significant market share.
• Discretionary Spending: Non-essential consumer spending, which is currently under pressure due to economic factors.
• Interprovincial Trade Barriers: Regulatory hurdles that restrict the movement and sale of alcohol between Canadian provinces.
• Market Structural Shift: The transition of RTD from a niche product to a permanent "fourth category" of alcohol alongside beer, wine, and spirits.
• Distribution Expansion: The policy shift in Ontario allowing alcohol sales in a wider variety of retail outlets beyond the LCBO.

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1. Market Trends and Consumer Behavior

Florence Tassero, CEO of Corby Spirit and Wine, notes that while overall alcohol consumption in Canada is seeing a slight decline, the market is undergoing a significant shift in composition.

• Declining Categories: Beer, wine, and, to a lesser extent, traditional spirits are experiencing a downward trend.
• The Rise of RTD: Ready-to-drink products are seeing a "massive pickup." Tassero identifies this as a structural shift rather than a temporary fad, noting that RTDs now account for approximately 10% of the market.
• Drivers of RTD Popularity:
  • Convenience: Portability for on-the-go consumption.
  • Quality: Consumers perceive modern RTDs as higher quality than previous iterations like hard seltzers.
  • Cost: With consumers feeling "stretched" financially, RTDs offer a more affordable entry point to alcohol consumption.
  • Portion/Health Control: RTDs provide clear information on sugar content and alcohol volume, aligning with modern lifestyle preferences.

2. Trade Dynamics and Brand Performance

The ongoing trade tensions between Canada and the U.S. have significantly altered consumer purchasing habits.

• Boycott of U.S. Products: Over the last 15–18 months, consumers have increasingly moved away from U.S.-made alcohol.
• Canadian Whiskey Resurgence: Corby has seen a "spectacular" growth of over 100% in the last 12 months for their Canadian whiskey brand, Lot No. 40. Tassero attributes this to both the quality of the product and a growing sense of national pride.
• Portfolio Strategy: While U.S. products have faced headwinds, other international brands like Jameson continue to perform well, suggesting that consumers are shifting toward diverse, non-U.S. alternatives.

3. Economic Pressures and International Sales

Corby reported a 20% decline in international market sales over the past year.

• Discretionary Spending: Tassero explains that spirits are a "discretionary spend." As household budgets tighten, consumers are cutting back on premium spirits, which contributes to the observed weakness in international sales.
• The "Give and Take": The decline in premium spirits is being partially offset by the growth in the more affordable RTD category.

4. Regulatory Environment and Distribution

• Interprovincial Trade: Tassero advocates for the removal of interprovincial trade barriers. Currently, it is difficult for a producer in one province (e.g., a winery in Niagara) to sell directly to consumers in another (e.g., Vancouver). Removing these barriers would provide better access for both producers and consumers.
• Ontario Retail Expansion: The Ontario government’s decision to allow wine and RTD sales in over 8,000 retail outlets (moving away from the LCBO monopoly) has acted as a "tailwind" for Corby.
  • Note: Spirits remain restricted to LCBO stores, but Corby continues to gain market share in that segment through strong brand fundamentals.

5. Synthesis and Conclusion

The alcohol sector in Canada is currently defined by a shift toward convenience and value. While economic pressures are causing a decline in traditional, higher-cost spirit consumption, Corby Spirit and Wine is successfully navigating this by pivoting toward the RTD category and capitalizing on the "buy Canadian" sentiment triggered by trade tensions. The company views the expansion of retail distribution and the potential removal of interprovincial trade barriers as critical opportunities for future growth, emphasizing that their success is built on a combination of strategic distribution and strong brand loyalty.