Bar taps featuring craft beer.Zach Slootsky
The Beer Store says it will open up ownership opportunities to Ontario craft brewers, but the biggest grievances held by many of the independents have yet to be addressed, most notably an expansion of distribution and a reduction in listing and stocking fees.
In order to get their product on shelves at the Beer Store, which is owned and operated by foreign multinationals, independent breweries essentially pay their competitors for distribution rights. The latest announcement does away with these listing and stocking fees, but only for Ontario brewers who sell fewer than one million litres a year, and it will only allow them to stock two of their brews at five of their local Beer Store locations.
"The listing fee structure they have in place now escalates up to about $80,000 for a channel-wide listing, which is atrocious," said Gary McMullen, president and founder of Muskoka Brewery and former chair of Ontario Craft Brewers (OCB), a trade association representing more than 40 of Ontario's independent breweries. "They feel that's the cost to administer a listing in the Beer Store. If it costs that much there must be something wrong with the way they do things."
Mr. McMullen adds that the OCB has been meeting with an advisory panel established by Ontario Premier Kathleen Wynne and chaired by former TD Bank CEO Ed Clark to address the Beer Store's monopoly on beer sales in the province, but Wednesday's announcement came without any consultation with the OCB or the independent brewing community.
"The owners of the Beer Store don't consult with the people they're allegedly working with and try to shift the public perspective on things without everyone being on the same page," he said. "I think it's a tactic, they're trying to shift the agenda and create a situation where they can say they're doing great things for small brewers in Ontario."
"Today marks a new era for the Beer Store," Molson Coors Canada CEO Stewart Glendinning said Wednesday in a statement, adding the Beer Store is "opening up the system and making it even more transparent."
While the latest changes are steps forward they might not be enough to quell the mounting pressure being levied against the foreign-owned beer retailer.
The Beer Store and LCBO outlets currently stand as the only retail distribution channels for beer in the province of Ontario. Unlike the LCBO — a crown corporation owned by the Ontario government — the Beer Store has, up until the latest announcement, been owned and operated by U.S.-based Molson-Coors, Belgium- and Brazilian-owned Anheuser-Busch InBev, and Japan-based Sapporo.
With the announcement, Molson and Labbatt will retain control of the board with five seats each, and Sleeman will retain control of two, but now the Beer Store will provide two additional seats to larger craft breweries and one designated for small brewers.
Jeff Carefoote, owner of Amsterdam brewing, agrees that more needs to be done to support independent brewers in Ontario, however he is still encouraged by the olive branch extended by the Beer Store.
"Maybe a few more guys will get noticed, but when you think about the general impact it's fairly minimal," he said. "The fact that there's been some recognition that there are some opportunities to work with the smaller breweries is a huge step forward, so I'm happy about that."
But the changes only allow independent brewers to buy into a system that doesn't suit their needs, without addressing the regulatory burdens and red tape that plague the industry, argues David Clement, vice-president of Root and Branch, a political consulting firm that advocates for independent brewers.
"There is a sliver of good in it, in that rather than having a small brewer pay a listing fee to its much larger competitor they could be paying part of that listing fee to themselves, but that's about the only positive to come out of this announcement," he said. "It's not doing anything to solve all of the headaches that small business breweries have to deal with."
Mr. Clement, however, is hopeful that the announcement will draw attention to some of the concerns held by the independent brewing community, and hopes it provides a platform for Ontarians to demand greater access and choice when it comes to their beer.
Like many in the industry, Irvine Weitzman, president of Mill Street Brewing Co., is encouraged by the Beer Store's attempt to engage in productive conversation with the independent brewing community, though he doesn't think the changes are sufficient.
"The Premier set up this method where some of those changes might be achieved in Ed Clark's council, that's where I personally place my greatest hope of real change," he said. "This release today doesn't address directly any of the most important issues for us."