Beverages: Why the Canadian and American fall-out is hitting craft beer
- InsightTrendsWorld
- May 30
- 16 min read
Why it is the topic trending:
Geopolitical tensions impacting trade: The growing friction between the United States and Canada is starting to have tangible effects on specific industries, with the craft beer sector being one of the early indicators. This makes the topic newsworthy as it highlights the real-world consequences of international political issues on local businesses and consumers.
Economic impact on a significant industry: The US beer industry is a major contributor to the national economy, generating billions in economic activity and employing a substantial workforce. Any disruption to this sector, especially due to tariffs and trade issues, will naturally attract attention from economic analysts, industry professionals, and the general public.
Shifting consumer behavior: The article points to a change in consumer attitudes, with older generations in both the US and Canada becoming more conscious of the origin of the products they purchase due to geopolitical events. This shift in behavior and its potential impact on various industries makes it a relevant and trending topic for market researchers and businesses.
Challenges for small businesses: The craft beer industry is characterized by numerous small, independent breweries. The article highlights how tariffs and rising costs are threatening the viability of these small businesses, making it a compelling narrative about the struggles faced by local entrepreneurs in the face of broader economic and political forces.
Broader implications for global trade: The issues faced by the US craft beer industry due to US-Canada tensions could serve as a microcosm for the potential disruptions and challenges that other industries might face as a result of increasing protectionism and geopolitical instability worldwide.
Overview:
The US craft beer industry, which has experienced significant growth over the past two decades due to a consumer preference for local and unique offerings, is now facing headwinds from multiple directions. Geopolitical tensions between the US and Canada, manifested in tariffs on key imported materials like aluminum, steel, barley, and malt, are driving up production costs. Simultaneously, changing consumer sentiment, particularly among older generations who are increasingly conscious of product origins due to political events, is leading to shifts in purchasing behavior and even boycotts. These challenges, coupled with a more mature market facing increased competition and rising operational costs, are creating a difficult environment for many small craft breweries, as evidenced by the increasing number of closures. The industry, a significant contributor to the US economy, is at a critical juncture requiring brands to adapt their strategies, emphasize local roots and transparency, and align with evolving consumer values to navigate these turbulent times.
Detailed findings:
Tariffs on imported materials are increasing costs:
The US administration has imposed tariffs on aluminum, steel, barley, and malt imported from Canada, which are key ingredients and materials used by US craft breweries.
Kegs are often imported from Germany, and potential further tariffs on EU imports could significantly raise keg prices, adding to the financial burden on breweries.
Consumer behavior is being influenced by geopolitics:
GlobalData's Q1 2025 consumer survey reveals that a significant portion of the US population, particularly older generations (55% of Gen X and Boomers), are more attentive to the country of origin of products due to political events.
In Canada, an even higher percentage of Boomers (85%) and Gen X consumers (71%) are paying more attention to product origins, leading to some consumers boycotting American products and stores stopping the sale of US goods.
The craft beer market is maturing and facing challenges:
More craft breweries closed than opened in the US in 2023 and 2024, indicating a rapid reshaping of the sector in response to emerging challenges.
The industry is facing falling consumer sentiment for alcoholic beverages among younger generations and increased competition from larger manufacturers.
Transparency and local focus are becoming more important for brands:
Beer brand owners are recognizing the need to communicate their sourcing effectively and align with consumer values to gain a competitive edge.
Craft breweries can benefit from emphasizing their local roots and commitment to quality as consumers increasingly seek authenticity.
Even large beer companies like AB InBev are planning to highlight when their beer ingredients are "US farmed."
The US beer industry is economically significant:
The US beer industry generates US$471 billion in economic activity annually, highlighting its crucial role in the country's economy.
Key success factors of product (trend):
Emphasis on Local Sourcing and Production: Highlighting the use of locally sourced ingredients and the fact that the beer is brewed within the US can resonate with consumers increasingly conscious of product origin and those wanting to support local economies.
Transparency in Supply Chains: Providing clear and detailed information about where ingredients are sourced and how the beer is produced can build trust with consumers who value authenticity and want to make informed purchasing decisions.
Alignment with Consumer Values: Brands that can effectively communicate their values and demonstrate a commitment to issues that resonate with their target audience (beyond just origin, potentially including sustainability or ethical practices) will likely have an advantage.
Focus on Quality and Authenticity: Maintaining high standards of brewing and emphasizing the unique aspects of their craft can help breweries stand out in a mature market and retain customers looking for genuine and flavorful beers.
Effective Storytelling: Sharing the brewery's story, its history, its connection to the local community, and the passion behind its beers can create a stronger emotional connection with consumers and foster brand loyalty.
Key Takeaway:
The US craft beer industry is navigating a complex landscape shaped by international trade disputes and evolving consumer preferences. Success in this environment will require breweries to be agile, transparent, and deeply connected to their local communities while also effectively communicating their values and sourcing practices to increasingly discerning consumers.
Main trend:
The main trend is the increasing impact of geopolitical factors and shifting consumer values on the US craft beer industry, leading to challenges related to rising costs, changing purchasing behavior, and a greater emphasis on local sourcing and transparency.
Description of the trend:
Geopolitical Influence on Consumer and Industry: This trend describes how international political tensions and trade policies are no longer abstract concepts but are directly affecting consumer choices and the operational realities of industries like craft beer. The tariffs imposed between the US and Canada are increasing the cost of essential materials for breweries, while simultaneously, consumers are becoming more inclined to consider the origin of the products they buy as a reflection of their political and national sentiments. This creates a dual challenge for the industry: managing rising production costs and adapting to a more origin-conscious customer base.
What is consumer motivation:
Desire to support local economies and businesses: Consumers, especially in the craft beer market, often value supporting local breweries and contributing to their communities. Emphasizing local sourcing aligns with this motivation.
Increasing awareness and concern about political implications of purchases: Geopolitical tensions are making consumers more aware of the political implications of their purchasing decisions. They may choose to support or boycott products based on the producing country's relationship with their own.
Seeking authenticity and quality: Consumers of craft beer are generally looking for high-quality, authentic products with unique flavors and brewing processes. Knowing the origin of ingredients and the brewery's commitment to quality can enhance this perception.
Value alignment with brands: Consumers are increasingly choosing brands that align with their personal values, which can include ethical sourcing, sustainability, and even national pride or solidarity depending on the geopolitical context.
What is driving trend:
Imposition of Tariffs: The direct imposition of tariffs by the US administration on imported aluminum, steel, barley, and malt from Canada is driving up the costs for US craft breweries.
Geopolitical Tensions: The broader political friction between the US and Canada is influencing consumer sentiment and creating a greater awareness of the origin of products.
Maturing Craft Beer Market: The US craft beer market is no longer in a phase of rapid growth and is becoming more competitive, making breweries more vulnerable to external economic pressures.
Changing Demographics and Preferences: Younger generations are showing a potentially lower inclination towards alcoholic beverages, while older generations are becoming more focused on product origin, necessitating adjustments in marketing and branding strategies.
Increased Competition: Larger beer manufacturers are posing a greater threat, and the market is seeing more brewery closures than openings, indicating a need for adaptation and differentiation.
What is motivation beyond the trend:
Patriotism and National Pride: Consumers might be motivated by a sense of patriotism to support domestic industries and products, especially when there are perceived threats or tensions with other nations.
Economic Security and Local Prosperity: By choosing locally sourced or domestically produced goods, consumers might feel they are contributing to the economic well-being of their own country or community, ensuring jobs and prosperity.
Ethical Considerations: Concerns about labor practices, environmental regulations, and overall ethical standards in different countries can influence consumers' decisions regarding the origin of products.
Trust and Perceived Quality: Some consumers might have a higher level of trust in the quality and safety standards of products originating from certain countries, influencing their purchasing choices based on origin.
Description of consumers article is referring to:
The article primarily refers to older generations of consumers in both the United States and Canada, specifically mentioning Gen X (born roughly 1965-1980) and Boomers (born roughly 1946-1964).
Who are they? These are individuals in their mid-40s to late 70s, with established purchasing power and often strong opinions and values shaped by their life experiences, including significant political and economic events.
What kind of products they like? While the article focuses on their beer consumption habits, we can infer that these generations likely appreciate quality and are more likely to have brand loyalties. They may also be more discerning and willing to research the origins and values of the brands they support.
What is their age? Gen X: Approximately 45-60 years old in 2025. Boomers: Approximately 61-79 years old in 2025.
What is their gender? The article does not specify gender preferences for this trend.
What is their income? As established generations, they likely have a range of income levels, but generally, they possess a significant portion of the overall purchasing power.
What is their lifestyle? Their lifestyles are varied depending on their age range, from active working professionals to retirees. However, they are generally more settled in their habits and preferences compared to younger generations.
What are their category article is referring shopping preferences? In the context of beer, the article suggests they are becoming more conscious of the country of origin. They might be leaning towards domestic or locally produced options due to geopolitical factors.
Are they low, occasional or frequent category shoppers? The article does not provide specific details on their frequency of beer consumption.
What are their general shopping preferences - how they shop products, shopping motivations? They are likely to be more informed and potentially less impulsive in their shopping habits. Their motivations can be driven by quality, reliability, value for money, and increasingly, alignment with their values and beliefs, including political and national sentiments.
Conclusions:
The US craft beer industry is facing a period of significant transformation driven by a confluence of factors, most notably the impact of geopolitical tensions between the US and Canada and the resulting tariffs on essential materials. This economic pressure is coinciding with a shift in consumer behavior, particularly among older demographics who are increasingly factoring in the origin of products into their purchasing decisions. The combination of rising production costs and potential consumer boycotts of American goods presents a serious threat to the viability of many small craft breweries. To navigate these challenges, breweries must prioritize transparency, emphasize their local roots and commitment to quality, and effectively communicate their brand values to resonate with an increasingly discerning and politically aware consumer base.
Implications for brands:
Need for supply chain diversification or localization: Brands relying on imported materials from countries involved in trade disputes should explore diversifying their supply chains or sourcing more materials domestically to mitigate the impact of tariffs.
Importance of transparent communication about sourcing: Breweries should be proactive in communicating the origin of their ingredients and production processes to address consumer concerns about product origin and to build trust.
Opportunity to emphasize local identity: Craft breweries, especially smaller ones, can leverage their local roots and community connections as a key differentiator and appeal to consumers seeking authentic, domestically produced goods.
Potential for price adjustments: Increased costs due to tariffs may necessitate price adjustments, which brands will need to manage carefully to avoid alienating price-sensitive consumers.
Need to adapt marketing messages: Marketing campaigns should consider the increasing consumer focus on product origin and brand values, highlighting these aspects to connect with their target audience.
Implication for society:
Economic impact on local communities: Closures of craft breweries due to economic pressures can negatively impact local communities through job losses and reduced economic activity.
Potential shift in consumer culture: The increased focus on product origin due to geopolitical tensions could lead to broader shifts in consumer culture, with more emphasis placed on supporting domestic industries and making politically informed purchasing decisions.
Highlighting the interconnectedness of global politics and local economies: The challenges faced by the craft beer industry illustrate how international political events can have direct and tangible consequences on local businesses and the livelihoods of individuals.
Implications for consumers:
Potential for higher beer prices: The increased production costs for breweries due to tariffs may eventually be passed on to consumers in the form of higher prices for craft beer.
Greater awareness of product origins: Consumers, especially older generations, are becoming more conscious of where their products come from and may actively seek out or avoid products based on their country of origin.
More scrutiny of brand values and practices: Consumers are likely to pay closer attention to the values and practices of the brands they support, including their sourcing, environmental impact, and community involvement.
Potential impact on beer selection: If some stores stop stocking American products in Canada, and vice versa, consumers in both countries might see a reduction in the variety of craft beers available to them.
Implication for Future:
Increased volatility in the craft beer market: The combination of trade disputes, changing consumer preferences, and a maturing market suggests that the craft beer industry could face increased volatility and uncertainty in the coming years.
Greater emphasis on domestic production and supply chains: There might be a long-term trend towards breweries focusing on building more resilient and localized supply chains to reduce their reliance on international imports and mitigate the risks associated with geopolitical instability.
Potential for government intervention or support: Given the economic significance of the beer industry, governments might consider implementing measures to support breweries facing challenges due to tariffs or changing trade relationships.
Evolution of consumer behavior towards more conscious consumption: The current trend of consumers paying more attention to product origins could be a harbinger of a broader shift towards more conscious consumption, where political, ethical, and environmental factors play a more significant role in purchasing decisions across various industries.
Consumer Trend:
Origin-Conscious Consumption: Consumers, particularly older generations, are increasingly considering the country of origin of products as a factor in their purchasing decisions, driven by geopolitical tensions and a desire to align their spending with their values and national sentiments.
Consumer Sub Trend:
Support Local/Domestic: Within the broader origin-conscious trend, there is a sub-trend of consumers actively seeking out and preferring locally or domestically produced goods to support their local economies and ensure perceived quality and reliability.
Big Social Trend:
Rise of Economic Nationalism: The increased focus on product origin and potential boycotts reflect a broader societal trend of economic nationalism, where consumers and businesses prioritize domestic economic interests and are more influenced by national identity in their economic decisions.
Worldwide Social Trend:
Geopolitical Polarization Impacting Consumer Choices: The influence of geopolitical tensions on consumer behavior is not limited to the US and Canada but represents a wider global trend where international political dynamics are increasingly shaping consumer preferences and trade patterns across various regions.
Social Drive:
Belonging and Identity: Consumers' purchasing decisions based on origin can be driven by a sense of belonging to a nation or community and a desire to express their national identity through the products they consume.
Learnings for brands to use in 2025:
Prioritize Supply Chain Resilience: Evaluate current supply chains and explore options for diversifying sources or increasing domestic sourcing to minimize disruptions from potential future trade issues.
Enhance Transparency Initiatives: Be open and clear with consumers about where ingredients are sourced and the brewing process. Consider using labels or digital platforms to provide this information readily.
Strengthen Local Community Ties: Emphasize connections with the local community through events, partnerships, and highlighting local sourcing efforts in marketing.
Monitor Consumer Sentiment Closely: Track evolving consumer preferences and sentiments related to product origin and geopolitical events to adapt messaging and strategies accordingly.
Invest in Storytelling: Craft compelling narratives around the brewery's history, values, and commitment to quality, emphasizing the local aspects and the people behind the beer.
Strategy Recommendations for brands to follow in 2025:
Conduct a "Source to Sip" Audit: Thoroughly analyze the entire supply chain, from raw materials to distribution, to identify potential vulnerabilities related to tariffs and geopolitical issues.
Develop Multi-Tiered Sourcing Strategies: Explore having backup suppliers in different regions or focusing on developing relationships with domestic suppliers for critical ingredients.
Implement Clear Origin Labeling: Ensure that product labels clearly indicate the origin of key ingredients and the location of brewing. Consider adding storytelling elements related to sourcing.
Engage in Value-Based Marketing: Center marketing efforts around the brewery's commitment to local communities, sustainability (if applicable), and the quality of domestically sourced ingredients.
Build Direct-to-Consumer Relationships: Explore opportunities to sell directly to consumers through online platforms or taprooms to better control the customer experience and communicate brand values directly.
Final sentence:
In 2025, the US craft beer industry must navigate the headwinds of geopolitical tensions and evolving consumer preferences by prioritizing transparency, emphasizing their local identity, and building resilient supply chains to not only withstand current challenges but also to foster stronger connections with origin-conscious consumers.
Final Note:
Core Trend: Geopolitical Influence on Consumer and Industry: International political tensions and trade policies directly impact consumer choices and the operational realities of industries like craft beer.
Core Strategy: Emphasize Localism and Transparency: Breweries should highlight their local roots, community connections, and the origin of their ingredients to resonate with consumers.
Core Industry Trend: Maturing Market Under Pressure: The craft beer market is facing increased competition and economic pressures, requiring adaptation and resilience.
Core Consumer Motivation: Origin Consciousness: Consumers, particularly older generations, are increasingly factoring in the country of origin when making purchasing decisions.
Final Conclusion:
The confluence of rising costs due to tariffs and a growing consumer preference for products based on their origin presents a significant challenge, but also an opportunity, for the US craft beer industry in 2025. Breweries that can adapt by focusing on their local strengths, being transparent about their sourcing, and effectively communicating their values will be best positioned to weather the current storm and build long-term loyalty with consumers who are increasingly making purchasing decisions that reflect their broader beliefs and sentiments.
Core Trend Detailed:
The core trend, "Geopolitical Influence on Consumer and Industry," signifies a notable shift where international political events and trade policies are no longer peripheral factors but are actively shaping both the operational landscape of industries and the purchasing decisions of consumers. In the context of the US craft beer industry, this trend is manifested through the imposition of tariffs on imported materials, which directly increases production costs for breweries. Simultaneously, it is reflected in a growing segment of the consumer base, particularly older generations, who are becoming more conscious of the origin of the products they buy, driven by awareness of geopolitical tensions and a desire to support domestic industries or align their purchases with their national identity. This creates a complex environment where breweries must not only manage increased expenses but also cater to an evolving consumer mindset that prioritizes product origin and brand values in ways that were less prominent in the past.
Key Characteristics of the Core trend:
Direct Impact of Government Policies: Tariffs imposed by governments on imported goods directly translate to increased costs for businesses that rely on those imports.
Shifting Consumer Priorities: A segment of consumers is now weighing the country of origin as a significant factor alongside price, quality, and brand reputation when making purchasing decisions.
Increased Awareness of Global Interconnectedness: Geopolitical events, amplified by media and technology, are making consumers more aware of the interconnectedness of global politics and local economies.
Potential for Economic Nationalism: This trend can fuel a sense of economic nationalism, where consumers actively choose domestic products over imports as a way to support their national economy.
Need for Business Agility and Adaptability: Businesses must be prepared to adjust their supply chains, pricing strategies, and marketing messages in response to changing geopolitical dynamics and consumer sentiment.
Market and Cultural Signals Supporting the Trend:
Government Implementation of Tariffs: The US government's decision to impose tariffs on aluminum, steel, barley, and malt from Canada serves as a direct market signal of the impact of geopolitical tensions on trade.
Consumer Survey Data: GlobalData's Q1 2025 survey revealing that a significant portion of US and Canadian consumers are paying more attention to product origin due to political events is a strong cultural signal of changing consumer behavior.
Examples of Consumer Boycotts: Reports of Canadian consumers boycotting American products and some stores ceasing to stock them illustrate the tangible impact of geopolitical tensions on purchasing decisions.
Strategic Adjustments by Large Companies: AB InBev's plan to highlight "US farmed" ingredients on their labels indicates that major players in the industry are recognizing and responding to the growing consumer interest in product origin.
Increased Media Attention on Trade and International Relations: Ongoing media coverage of trade disputes and international political tensions keeps the issue of product origin and economic nationalism in the public consciousness.
How the Trend Is Changing Consumer Behavior:
Increased Scrutiny of Product Labels: Consumers are likely to pay more attention to where products are made and where their ingredients come from.
Preference for Domestic or Locally Sourced Products: When given a choice, some consumers will actively opt for products that are produced in their own country or local region, even if it means paying a slight premium.
Potential Boycotts of Products from Certain Countries: Geopolitical tensions can lead to consumers boycotting goods originating from countries with which their own country has strained relationships.
Greater Engagement with Brand Values: Consumers are increasingly interested in the values and ethical practices of the companies they support, which now includes considerations about sourcing and the broader geopolitical context.
Influence on Social Media Discussions: Conversations about product origins and the political implications of purchasing decisions are likely to become more prevalent on social media platforms, further shaping consumer attitudes.
Implications Across the Ecosystem:
For Brands and CPGs:
Increased pressure to be transparent about supply chains and sourcing practices.
Opportunity to market and emphasize local or domestic origins as a competitive advantage.
Potential need to adjust pricing strategies due to tariff-related cost increases.
Importance of aligning brand messaging with consumer values related to origin and economic nationalism.
For Retailers:
Need to be aware of consumer preferences for product origin and potentially adjust inventory accordingly.
Opportunity to highlight and promote locally sourced or domestically produced items.
Potential challenges in managing supply chains if trade disruptions occur.
Risk of consumer boycotts affecting sales of products from specific countries.
For Consumers:
Potential for higher prices on goods, especially those relying on imported materials.
More information available about product origins, potentially leading to more informed purchasing decisions.
Possible limitations in product variety if retailers choose to reduce or eliminate products from certain regions.
Empowerment to make purchasing decisions that align with their political and national sentiments.
Strategic Forecast:
Continued Emphasis on Local and Domestic: The trend of consumers valuing locally and domestically produced goods is likely to continue and possibly strengthen, especially as geopolitical tensions persist.
Increased Demand for Supply Chain Transparency: Consumers will increasingly expect brands to be open and honest about their sourcing and production processes.
Potential for Further Trade Disruptions: Depending on the evolution of international relations, there is a risk of further tariffs and trade barriers being implemented, which could have broader impacts on various industries.
Growth of "Made In" Marketing: Brands that can genuinely and credibly claim local or domestic production will likely leverage this in their marketing efforts to appeal to origin-conscious consumers.
Rise of Consumer Advocacy Around Sourcing: Consumer advocacy groups may increasingly focus on issues related to product origin, ethical sourcing, and the impact of international trade on local economies.
Final Thought:
The intertwining of geopolitics and consumer behavior is creating a new reality for industries like craft beer. Success in this evolving landscape will hinge on a brand's ability to be authentic, transparent, and deeply connected to the values and sentiments of its customer base, particularly regarding the origin and economic impact of their purchasing choices.
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