culture A Tale of Two Options: Selling Beer in Ontario

For small breweries looking to make a buck in this province, now is not the best of times.

Last week Glutenberg Brewery, the award-winning Montreal outfit known for its selection of above-par gluten-free beers, launched an IndieGoGo campaign to bring its beer to Ontario. In their summary of the campaign, Glutenberg owners David Cayer and Julien Niquet note that despite their beer being available in 14 U.S. states, Italy, Brazil, and most of Canada, Ontario has been a difficult province in which to sell their product.

“When a brewery wants to distribute its beers in Ontario, it has two options,” says the IndieGoGo description, “the LCBO and The Beer Store. After many failed attempts with the LCBO (to our great disappointment), we decided to give the second option a try.” Glutenberg’s crowdfunding goal is $50,000—money they plan to spend on stocking 50 Beer Store locations with their India pale ale and blonde offerings. Additionally, Glutenberg plans to put some funds into a province-wide marketing campaign, and some into making good on their campaign donation rewards, which include gift certificates, a signed copy of Taste Buds and Molecules: The Art and Science of Food With Wine by Francois Chartier, and an evening with the owners themselves.

This is just the latest iteration of a too-common problem that small breweries face in Ontario. The Beer Store, which is owned by Molson-Coors, AB InBev, and Sapporo, offers a one-time listing fee of $2,880 per product plus a fee of $230 per product per store. While these fees are nothing for big companies like Molson-Coors, they can be a big burden for small brewers.

But the Beer Store is the only viable option for many Ontario breweries constrained by the LCBO’s numerous restrictions, which range from strict packaging guidelines to limited shelf space for particular styles. While the LCBO has significantly increased their beer selection, with sales of Ontario craft beer reaching $50.2 million in the past year, critics believe there should be more options available when it comes to regional distribution, and more privately run outlets selling beer (including convenience stores).

Last month in a Huffington Post article, Green Party of Ontario leader Mike Schreiner proposed a “Craft Beer Store” model, which would allow Ontario breweries to sell their products just as wineries sell theirs through The Wine Rack. In a statement released in April, Schreiner opined that the current laws pertaining to beer sales for smaller breweries are “a waste of time and money, and it creates an uneven playing field for local craft brewers.” He added, “The Beer Store’s monopoly needs to be broken up to create a fair playing field, foster local jobs in the craft brewing industry, and offer more choice to consumers.”

Premier Kathleen Wynne, meanwhile, under the advisement of TD Bank CEO Ed Clark, has expressed an interest in more effectively milking The Beer Store’s monopoly by charging additional franchise fees or raising taxes on beer, without passing costs on to customers. If The Beer Store is unable to pay those fees, Clark told reporters in November, “Well, then that means you’re really saying is that this franchise that you have is worthless. Would you then give it up?”

For all that’s going on, Ontario liquor lovers are not necessarily cognizant of the difficulties small or international breweries, wineries, and distillers face in getting shelf space in Ontario stores. That’s why filmmakers Peter Lenardon and AJ Wykes created the documentary Straight Up: The Issue of Alcohol in Ontario. “We approached this project from the point of view of craft beer lovers who wanted to know why the system works the way it does,” Lendardon says. “Why is the price of products so high in Ontario compared to Michigan, or almost anywhere else in the U.S.? Why can’t we buy in Ontario many of the great products we see in other parts of the world? We didn’t have any dreams about changing the system, but we thought we could put the relevant information in a digestible format so people could draw their own conclusions.”

The documentary, which features interviewees such as Jason Fisher of Indie Ale House, Allan Schmidt of Vineland Estates Winery, and Dave Bryans of the Ontario Convenience Stores Association, delves into the origins and evolutions of the LCBO and The Beer Store, and breaks down the fees and mark-ups that are a part Ontario’s liquor sales structure. The documentary also discusses to what extent the two organizations are willing to defend themselves. The Beer Store, for example, has resorted to what critics call fearmongering. The LCBO, meanwhile, is often quick to point out the revenue it generates for the province.

“Sure, it’s nice that this money goes into government coffers to buy the services we want every day, but we are presented with this false choice between the status quo and death and destruction,” says Lenardon. “Having a few hundred well-regulated private retail stores where Ontario producers can sell their products outside of the LCBO, the Beer Store, and the private wine stores will most likely increase government revenue.”

Straight Up: The Issue of Alcohol in Ontario is available to view for free on the Homebrew Pictures Vimeo site, as well as on Ontario beer news site Mom ‘n Hops.