coaches polo shirts Why Ontario craft brewers want a Beer Store alternative
In 1984, Jason Fisher was a grade 10 student trying to come up with a better idea for a science project than throwing something off a roof.
It was at a Zellers where he and his lab partner found three John Bull homebrew kits one red, one green, one blue. They chose the red box, an ale, and set to work convincing their teacher at Toronto Waldorf School of the educational merits of a couple of teenage boys making beer. Their teacher a “pretty cool” guy, Fisher said told them they could go ahead as long as they emphasized the chemistry of beer instead of the drinking.
In turn, the pair tried to compensate by making a bulletin board display about the chemistry of brewing the life cycle of yeast, how sugar is converted to alcohol to satisfy their instructor.
“Of course we drank the beer,” said Fisher.
“It was probably by today’s standards pretty terrible, but for a 16 year old, it was amazing.”
Nearly 30 years and one science degree later Fisher is the owner of the Indie Alehouse in west end Toronto, which has become the outlet for his lifelong passion for brewing. “There’s a major science component to it, but if it was just science, robots would make beer,” Fisher says. Philosophically, however, craft beer is artistry in a pint glass. Last year the pub brewed 48 different styles of beer, 38 of which were one off experiments. Fisher flavoured one beer with smoked coconut; another, a sour ale, he aged with raspberries. He used 10 different kinds of hops to make a single imperial India pale ale, which packed an 11 per cent alcohol wallop.
Indie Alehouse owner Jason Fisher gives a tour of his brewery in Toronto west end. (Graham Runciman/Postmedia)
Indie Alehouse is one of an estimated 150 small brewers in Ontario who have been brewing a liquid smorgasbord of inventive flavours, like the spice of white pepper, or a sweet hit of watermelon, or a refreshing splash of green tea.
But to enjoy the products of Fisher’s imagination you have to be a patron of the Indie Alehouse, because like many other inventive brews in Ontario, you can’t find them all on store shelves.
Unlike other provinces, The Beer Store is Ontario only sanctioned private outlet for beer and that provincial blessing has netted them 80 per cent of Ontario beer sales. The remainder comes from government run LCBO stores, which mostly deal in wine and spirits. Craft brewers can also sell their own, but only at their own retail space, and only if it’s attached to the physical brewery.
Although Ontario craft beer industry is rapidly growing, brewers say the rigid retail environment creates unfair expense, stifles innovation and discourages the sort of growth that could put the province on par with other craft soaked markets.
The beer selection at Indie Alhouse in Toronto. (Graham Runciman/Postmedia)
In the industry, craft brewers are defined as those who produce a maximum of 160,000 hectolitres or enough to fill more than six Olympic size swimming pools. There’s a joke in the industry that the big guys spill more beer in a day than a craft brewer makes in a year.
In British Columbia, the market share of craft beer is pushing past 20 per cent based on tax revenue, according to the BC Craft Brewers Guild. In craft crazy Portland, Oregon, it nearing 50 per cent. While the sales of domestic beer from the big three Molson, Labatt and Sleeman have eroded, craft beer has experienced consistent growth across the country. Even those who aren’t craft connoisseurs are likely to have heard of Steam Whistle, Mill St. or Alberta’s Big Rock, all independently owned small brewers who hit the big time.
The demand is certainly there. According to the LCBO,
Ontario government run liquor stores, Ontario craft beer sales grew by 575 per cent between the 2006 and 2013. Craft beer is the fastest growing category at the Beer Store and sales in the system have increased 67 per cent over the last five years. Even with thisboom in both new breweries and sales, Ontario’s industry has found itself playing catch up. The market share by volume sold in Ontario was three per cent as of a year ago, according to a 2013 report from Ontario Craft Brewers.
And yet, brewers say, the system in Ontario that has been in place since the 1920s, is hindering their craft.
Both the LCBO and Brewers Warehousing Company Ltd. were born in 1927 in the tense afterglow of failed prohibition. Although private enterprise, Brewers Warehousing Company Ltd. monopoly status meant the province could still cool temperance tempers while appeasing brewers. At first a co op, brewers bought out the retail side of the business in 1940, becoming Brewers Retail, now better known to Ontariansas The Beer Store.
Some 74 years later and after a series of mergers and acquisitions, the Beer Store ownership now lies outside not just the province, but the country.
Molson and Labatt each hold a 49 per cent stake in The Beer Store, and although both still brew in Canada, neither is based here. Molson merged with American brewer Coors in 2005 and is now incorporated across the border. Labatt was bought by Belgium Interbrew in 1995, which in 2004 merged with Brazil AmBev, which then merged with America Anheuser Busch in 2008 to create the current incarnation of Anheuser Busch InBev. The last remaining Canadian holdout, with just two per cent ownership, was Guelph, Ont. Sleeman, which was purchased by Japan Sapporo in 2006.
These three big brewers have control of how the majority of Ontarians get their beer, but they’re quick to downplay their grasp.
of the biggest myths about the Beer Store is the notion that the Beer Store is a monopoly, said Jeff Newton, Beer Store spokesperson and president of Canada National Brewers, the group that represents the interests of Molson, Labatt and Sleeman.
Newton says a monopoly who gets in to the market and they control price. And the Beer Store doesn’t do either of those. interpretation is debatable, but he right in that any brewer, big or small, can be stocked at the Beer Store in as many locations as they desire for a price. This is how it breaks down: For every brand a brewer wants listed, there a $2,800 flat fee up front, plus about $225 per store they want that beer sold in (that fee drops after the first 130 stores). After that, there a service fee. Unlike the listings fees, the service fee is on a sliding scale based on volume sold, so small brewers get a break.
It’s a bit like Ford having to sell their cars in a Toyota dealership
To put that in perspective, a craft brewer with an IPA and a wheat beer is looking at more than $28,000 to sell just those two brands at 50 of the Beer Store 447 locations, before service fees.
Beer Store is not a natural partner for craft beer, said Mike Gurr, operations manager for Kensington Brewing Company.
“It’s fair in a sense that you’re able to [get in] but they set the bar extremely high in terms of cost and the barrier of entry is very high for smaller breweries.”
Currently a contract brewer, Kensington Brewing is working on building its own brewery in their namesake neighbourhood, Toronto Kensington Market. They been selling through Ontario bars and the LCBO, but are about to launch their Watermelon Wheat beer at 45 Beer Store locations as a trial run of sorts.
Even if the Beer Store system is open, there a hesitancy to enter among some craft brewers,
and it a matter of trust.
it’s odd because we’re forced to kind of pay our competition for the right to sell in their stores. Doesn’t take a rocket scientist to see how it’s a bit of a strange arrangement.