By the end of December, 60 grocery stores in Ontario will be selling beer, and there are changes coming to the LCBO and The Beer Store too. It’s exciting news, but like all things related liquor law in Ontario—there are a lot of rules (195 pages of them, in fact).
But now that the dust has settled, we wanted to find out what craft brewers really think of it. So we asked three Canadian craft breweries, big and small, to give us their thoughts. Here they are:
Andy Vanderkaay is a Partner at Niagara region’s Oast House Brewers, a Niagara region operation that specializes in farmhouse-style beer with three styles available in the LCBO seasonally.
Jeff Dornan is President of Oshawa-based Underdog’s Brewhouse, which launched in 2014 with their flagship All or Nothing Hopfenweisse, contract brewed out of Railway City.
Barry Pletch is the Regional Sales Manager for McAuslan Brewing, which was founded in 1989 and produces 11 different brands each year.
It’s pretty simple, more retail space for beer equals more exposure for everyone, big and small.
“Once the agreement is fully implemented we will potentially have access to selling our beer to over 400+ new retail locations. Compare this to the current climate where we only have access to roughly 100 self-serve beer stores,” says Dornan from Underdogs. “This increases our shelf space by over four times. We are thrilled to have access to additional consumer-facing shelf space which will hopefully help all craft brewers sell more beer.”
But the fight for shelf space is on. Vanderkaay from Oast House is hopeful that he’ll win over grocery store owners. “Up until now we’ve had to deal with the ‘big three’ and watch them throw their weight around, lobbying to get their way. Soon, we’ll have the big grocery chains doing the same for us, as they’ll realize that there aren’t any advantages towards carrying lesser (big) brands. They’ll want to stand out and carry great product.”
Ever wonder how much money the Beer Store makes? Craft brewers do, and according to this Globe & Mail story those numbers are huge. But the Beer Store owners continue insist they operate on a break-even basis, simply “recovering the costs” to operate its stores.
Pletch from McAuslan is excited that the new Agreement will force, “the Brewer’s Retail/Beer Store owners aka “The Corporation” to make its’ financial statements available to the public. Finally.”
What will this mean? Greater transparency could arm Ontario brewers with ammunition to advocate for more share in the profits—whether or not they’ll reap the benefits is yet to be seen.
No Craft Beer Stores
The new agreement shuts down the option for brewery retail shops to sell beers from other breweries, even though they already have the operational setup and ideal customer base to do so. We also won’t be seeing an Ontario Craft Beer Store (a la Wine Rack) opening up either.
Pletch was disappointed that craft brewers were denied equal access to owning the beer retail chain (just as the “Big Three” do through the Beer Store): “The OCB could have set up their own craft-beer retail distribution and cost effective network through ‘pooled deliveries’ that would have provided more consumer choice, cross-marketing opportunities and additional destination spots of tourism and commerce (and jobs!) at each brewery,” said Pletch.
20% is not enough
Another agreement across the board is that 20% of shelf space allocated to ‘worldwide small brewers’ at The Beer Store, and on grocery store shelves is too little—and fails to promote Canadian beer specifically. The definition of ‘small brewer’ in the agreement encompasses A LOT of breweries, including Moosehead, Muskoka Brewery, Brick, Big Rock, Beau’s, Central City, Great Lakes, Flying Monkeys and Amsterdam.
“Why not reserve 80% of shelf space for small brewers?” asks Pletch. “ Allow the Big Brewers to fight over the remaining 20% with their multiple-format version of the same product—or better yet, not sell any of the Beer Store owner products in the LCBO and grocery stores.”
Vanderkaay says the agreement is a step in the right direction, but he worries about how much beer the really small brewers will actually be able to sell: “Given that only 60 grocery stores will win the initial lottery, how much product could we really move at the onset? Quite frankly there are a number of things that each of us (brewers) could dissect and not be happy about.”
Sweetheart Deal for The Beer Store
“If the grocery stores succeed to the point of surpassing their “Annual Volume Cap” then the LCBO is on the hook to pay the Beer Store “a cost of service rebate,” says Pletch.
“Imagine this — the grocery store “oversells” six-packs of Heineken, Bud, Bud Light, Corona, Coors Light, Mill Street, Creemore and Canadian. The Beer Store owners make profit on the sale of those products at the grocery store. They reduce their overhead should they have less sales at their own stores thus becoming more profitable, and then receive a bonus cheque from the LCBO to offset the loss of sales at their own stores. Unbelievable. So why not save the Beer Store the grief of “losing sales” of their own products and not allow their products on the competing shelves of grocery stores?”
Bottom line for Ontario beer buyers: a trip to the LCBO (and a few stops at individual brewery stores to grab one-offs, and fill up growlers) is still the only way to access the variety of import and craft beer available in Ontario. Most supermarkets will stock the big brands, and on the bottom shelf, a smattering of craft beer.