A few weeks ago there was a discussion on our blog about the deregulation of alcohol sales in Ontario. The issue is extremely divisive to say the least. While most agree that the current regime is flawed, there doesn’t seem to be a consensus as to what the ideal retail system would look like. In my post I provided some support for the LCBO which creates, in my opinion, a relatively level playing field for brewers.
For me the discussion of how we can or should sell beer is about fairness. What I dislike about an open system is the barrier for those without the established purchasing power, marketing budget or political clout to participate in a culture of “discounts” and “co-branding programs” (kickbacks). I’m not asking for a nanny state to dictate each and every move of our industry, but for them to facilitate equal opportunity.
One issue that Brock and I discuss often is the desire to sell KBCo products in our own retail store. This would be great for consumers and for business, but there are a number of roadblocks. The AGCO states that a “brewery retail store must be located on the same parcel of land as the production site of the manufacturer that holds the brewery retail store authorization”, meaning that you can only sell beer where it’s brewed. This means, for example, that we can only sell our products at the brewery or through approved retail locations (LCBO, TBS, licensed establishments). We are not, in other words, permitted to open our own specialty beer store. It is also forbidden to pair with other breweries to sell our products in a co-operative retail environment. Unless you’re The Beer Store.
The Beer Store is a 100% foreign-owned Brewers Retail group that dominates the retail beer market in Ontario. Co-owners Labatt Brewing Company (AB InBev), Molson Coors Brewing Company and Sleeman Breweries (Sapporo) are the three biggest producers of beer in Canada. They also sell the most beer in Ontario through their chain of well over 400 different locations. However, last time I checked your neighborhood Beer Store was not physically attached to a brewery.
Hmm. I’m confused. The AGCO clearly states that a retail store is permitted only when it is “located on the same parcel of land as the production site of the manufacturer that holds the brewery retail store authorization”. Why is it, then, that three private companies, foreign-owned no less, have been granted the exclusive rights to sell their alcohol in a physical location separate from their manufacturing facilities?
Now, I know what you’re thinking. Every brewer has the option to sell their products in The Beer Store. But just think of the logic here: craft brewers have to pay (exorbitant) fees to a private company, their competition in a sense, for the right to sell beer in their store. For that listing fee, which most small breweries can’t afford to begin with, they receive a small square on a giant black board. Premium retail space will continue to be occupied by the biggest brands (read: brands belonging to ownership) through their “Big 10″ wall and fridge sections, when available. This doesn’t make sense to me. Why the hell can SABMiller operate a retail chain when independent brewers can’t?
The easiest way to create a level playing field would be to allow craft brewers to open up their own retail locations away from the brewery. This would provide them with an opportunity to offer a specialized product at an affordable price. This is going to increase the diversity of available products, create jobs and help strengthen the craft beer industry. The larger breweries in Ontario – Amsterdam, Steamwhistle, etc. – would likely open up a number of satellite retail stores immediately. Small breweries, like those in the 2011-2012 cohort (us included) would have an opportunity to share retail space. This opens up a huge number of really interesting opportunities for small breweries to grow while providing a great service to the public. Win Win.
I’m interested to see what people think about this idea. Please feel free to leave your thoughts in the comments section below.
Cheers, and Drink Good Beer!