New Beer Store policy results in little change for local breweries

The Beer Store is in the news following proposed changes in their corporate and operating structure. According to the company, the changes are meant to open up ownership for Ontario craft brewers and increase their access to customers, but according to critics of the organization, the changes are simply a public relations move in the face of mounting criticism and threats to The Beer Store’s structure. What do these changes mean to students and how are local members of the craft brewing industry reacting to them?

The Beer Store was founded at the end of prohibition in 1927 as a wholesale operation for Ontario breweries. It is one of the few entities in Ontario legally allowed to sell beer: only the LCBO, The Beer Store, and breweries (but only at the location where the beer is produced) have that privilege. Although the LCBO is a crown corporation, The Beer Store is privately owned, and though it’s owners were Canadian corporations at The Beer Store’s inception and much of its history, the three owners are now subsidiaries of foreign corporations. Molson Coors — an American company ­— and Belgian Anheuser-Busch InBev — the world’s largest brewer — each own 49 per cent of the company (through Molson and Labatt, respectively), and the last two per cent is owned by Japanese brewer Sapporo through Guelph, Ontario’s Sleeman.

The recently announced changes affect board structure and stocking fees for smaller brewers at nearby The Beer Store locations. The corporation’s board of directors will open up two spots for board members representing larger craft brewers, and the smallest operators will have one representative. Breweries producing over five million litres annually will have to pay $1,000 a year for a “preferred share” (effectively that portion of a board seat) and smaller breweries will have to pay $100 for the same.

Breweries that purchase the share can stock their beers in The Beer Store for the same stocking fees as under the current ownership, which is less than what they currently pay. The smallest breweries (breweries under one million litres annually) will be able to stock their beers on The Beer Store shelves for free at the five nearest locations.

Waterloo Region’s craft beer industry is now well established and quickly growing. There are a number of local brewers that are currently only selling beer on tap at restaurants and bars, or at their own brewery locations. LCBO stocking fees are rather expensive for smaller brewers, and up until the new changes, The Beer Store fees were similarly high. Most of these brewers aren’t very close to campus or bus routes, but LCBO and The Beer Store locations are closer to students. The new structure could increase the availability of local craft beers to students, but that’s assuming that those brewers want to be involved with the company.

“I think it’s just to placate the craft brewers and I don’t think it’s done a good job,” said uptown brewpub Abe Erb’s brewmaster Robert Cundari, “I don’t think any real change will happen until the LCBO allows craft brewers, or any other type of store is created that could sell liquor or beer … Until that happens it will remain the same.” 

This sentiment was mirrored in comments from St. Jacobs’ Block Three Brewing co-founder Graham Spence, and Innocente Brewing founder and brewmaster Steve Innocente, who both see the changes as a blatant public relations move. “They’re just trying to fight to keep that monopoly,” said Spence. “Hoping that the government doesn’t make changes to the system … Their ownership [change] is a complete joke.”

The Beer Store’s relationship with brewers will likely be very difficult to reform, if at all. “We all know we’re getting it up the you-know-what with The Beer Store,” said Cundari.

The preference of system differed between the brewers. “I don’t know if from our business standpoint that grocery stores and convenience stores are the way to go,” said Spence. “It creates a logistical nightmare for us to distribute product.” Innocente, meanwhile, expressed desire for a larger change: “To me, there’s only one way forward, and that’s privatize everything … I would envision small mom and pop stores where people are passionate about their beer.”

Unlike Innocente’s calls for a complete overhaul of Ontario’s liquor laws and sales system (grocery or convenience store sales, boutique shops or the creation of beer store competitors) Cundari hopes that reform can start within the current system. “I think that because the infrastructure is already in place, I think we need to work within it. But I think there’s more leeway for the LCBO or the AGCO [Alcohol and Gaming Commission of Ontario] to provide licenses for specialty stores. It will require Ontario Craft Brewers, it will require The Beer [Store] owners, to really come together to talk and sit down and have proper meetings instead of The Beer Store saying, ‘Here, have some scraps.’”

Though they differ in opinions of how beer should be sold in the province, the brewers all agree that the current system isn’t working. They seem to share one other sentiment too.

“Support local beer. Block Three, Innocente, Abe Erb. even Brick … Don’t neglect those guys,” said Cundari.“If you’re a student in Ontario or a beer fan in Ontario, go support your local breweries,” said Spence. “There’s some really great products being brewed all over the province. Just try stuff,” Innocente said. “I think now students are really starting to wake up and are enjoying more craft beer. It’d be nice to see it at places like the Bombshelter.”