In case you are unaware–or you’re like me and were drinking copious amounts of great American craft beer at the annual Craft Brewers Conference in Portland when it happened–last week the province announced some proposed changes to the way beer is sold in Ontario.

Mostly contained in an announcement wherein Premier Kathleen Wynne confirmed that we’d be seeing beer sold in grocery stores (if the Liberal budget is passed, which it will since they have a majority), the full details of the proposed changes were outlined in the report Striking the Right Balance: Modernizing Beer Retailing and Distribution in Ontario.

Given my Portland sojourn, I’m admittedly a little late to the party analyzing the impact of these possible changes, but better late than never.

If you’re interested, Canadian Beer News has a great round up of the various reactions to the report in the major dailies and some blogs. I recommend Dan Grant‘s post for NOW Magazine for some reaction from brewers and Jordan St. John published an interesting post in which he takes a look at how we got here (and gets a terrific visit from a trolling Beer Store employee in the comments section for his efforts!)

In considering the report and its impact, I opted to approach the issue as I do most other things: I cracked a beer and first read what every one else was saying–but then I decided to take a critical look at each of the proposed major changes individually.

Here’s why I think the proposed changes are good, why they might be bad, and why they have me asking “wtf?”

1. Ontario is expanding beer sales to up to an additional 450 grocery stores across the province.

450 grocery stores are now going to carry beer, saving you a trip and offering you more convenience. There are more than 450 supermarkets in Ontario. Who will decide which ones get beer? Supermarkets already operate on a system whereby retailers pay for shelf space. Is the AGCO going to begin enforcing illegal incentivizing of beer sales that already runs rampant in bars? There is no timeline for this plan, except that we’ll start with 150 stores sometime in the next two years.

2. The province’s beer scene will no longer be largely controlled by a foreign-owned monopoly.

The days of The Beer Store being the place where 80% of Ontario’s beer is purchased are clearly over. Consumers will now have choice about where to buy beer and we’ll have an as-yet-unnamed “beer ombusdman” to hear our complaints about the system. Control is largely being handed over to “a complex, multi-channel, many-tiered beast, overseen by Queen’s Park.” What could possibly go wrong? Especially with an as-yet-unnamed “beer ombusdman” here to hear our complaints.Oh yeah, and the Beer Store didn’t actually go anywhere. They’re still here, too. An as-yet-unnamed “beer ombusdman” will be here to hear our complaints.

3. 20% of shelf space in The Beer Store and grocery stores will be dedicated to small brewers.

Hopefully dedicating a set amount of space to small brewers will mean that grocery stores aren’t just another place to buy tasteless industrial lagers and there will be real selection. 20%? I’m no mathemagician, but I think that leaves 80% of the shelves for big companies based out of the country to continue to peddle their watery wares. Why not 50/50 to really support local beer, local jobs, and local manufacturing? I first heard this as 20% will go to “craft brewers” and thought we were opening up one of the oldest, most annoying arguments in beer. It turns out the report actually acknowledges that “Not all small brewers produce craft beer, nor are all craft brewers small.” Well said. I dig it.

4. Beer sold in grocery stores will be prohibited from including inducements or monies from suppliers.

That’s great. Brewers with money shouldn’t be able to buy their way into markets and prevent little guys from having a level playing field. The Liquor License Act already pretty clearly prohibits this and yet it happens every single day in bars across the province. How will this be enforced? Grocery stores already exist on a “pay for shelf space” model. Big brewers allow sales reps huge budgets to improve their brands’ retail presence. How is this possibly going to be enforced? Will the beer ombudsman be armed?

5. Ontario is entering into a new Beer Framework Agreement with the owners of The Beer Store that will open up ownership to small brewers.

Diluting the ownership of the Beer Store monopoly seems like a good way to ensure that the massive retailer doesn’t just represent its owners interests. This, taken directly from page 19 of the report which makes clear these changes will be symbolic at best: “Based on current market shares in TBS, Molson and Labatt will continue to elect a majority of the board.” Didn’t they already do that? Remember when we mocked it until our throats were hoarse?

6. The Beer Store will generate an additional $100 million a year in revenues for the province, phased in over four years.

Extracting money from the Beer Store is a good thing. We live in a province that requires money. This stirs some up. The money is being generated by adding a $1 tax on all 2-4s, not necessarily taking from the Beer Store’s profits and, in all likelihood, just increasing the cost of beer eventually. The plan also notes that beer pricing between the Beer Store, LCBO, and grocery stores will be “uniform.” We’ll see none of the real benefits of actual competition since they’ll all be required to charge the same amount for beer.

7. The industry’s largest brewers have separately committed to comply with the government’s request that they cap price increases to inflation for some of their most popular beer products until May 2017.

Molson and Labatt can’t simply pass the cost of the above mentioned $1 tax onto consumers until May 2017. May 2017 isn’t “never.” This change is basically just an admission that consumers will start paying the above-mentioned $100 million in increased revenues in 2017. The government is extracting more money alright. From your pocket, bro.

8. The government is ordering The Beer Store to improve the experience of its customers and TBS has committed $100-million to modernizing the retail experience.

The Beer Store shopping experience is profoundly shitty and has been roundly mocked on this blog and elsewhere. Any improvements to dusty wall of labels and conveyor belt ambiance would be a plus. It’s still the Beer Store. A $100 million silk hat a on a pig doesn’t make that sow the prom queen. Besides, I don’t really skip TBS because of the infamous wall of little labels, I skip it because it doesn’t provide a fair market to independent brewers. Being able to see the beer they stock won’t change my mind about that. This is at least the third retail makeover for Brewers Retail Inc. At some point you just need to admit you’re ugly and be OK with it. Like your cousin.

9. The LCBO will start selling growlers.

Growlers are pretty cool, I guess. Growlers are mostly cool as a thing to fill up directly at the brewery and retain to be filled again. Buying a full growler at the LCBO just means you have a big thing to lug home and you pretty much have to drink it all a few days after buying it. Are there going to be fill stations at the LCBO now? Is the LCBO getting into draught beer or are there going to be chunky bottles crowding already crowded shelf space?

10.Small restaurants and bars will be able to buy beer from TBS at the same retail prices as consumers.

TBS’ owners will no longer be able to gouge restaurant and bar owners who opt to provide patrons with brands like Canadian and Blue, which traditionally have been sold to licensees at a higher rate for no reason. I really don’t care about a small bar that stocks copious amounts of Labatt Blue. When craft beer is literally cheaper to buy to provide your customers, why are you still serving Labatt fucking Blue? Also, current legislation dictates that licensees have to buy their beer from the The Beer Store. Beer will be in the LCBO and gorcery stores, but licencees are still legally obligated to buy from the store owned by three foreign companies? Why is this discount only afforded to “small” restaurants? The way the change is written, just under half of all licensees won’t enjoy a change in pricing, probably the half that are big businesses hawking bottles of lager to customers. TBS is welcome to keep gouging franchises and bigger restaurants? Cool.

11. Small and mid-size brewers will see the price of listing products at The Beer Store fall by about 5% to 10%

Less overhead for small brewers is a good thing. Proposed reductions mean small brewers won’t be paying TBS employee pension obligations. Small guys have thinner margins and paying less to get in the door where most people in the province buy beer is a good thing. Paying 10% less to the biggest brewers in the world just to sell your products in the store they are allowed to own is small consolation when you’re still not allowed to own your own store yourself. Paying your pimp 10% less probably doesn’t make you feel like less of a ho. If your brewery gets big enough, and you want to sell beer at The Beer Store, you will get bumped into a category that requires you to pay into the pensions of the employees working in a store owned by AB InBev and Molson Coors even though the dude manning your onsite brewery retail store probably does not have any pension at all.

12. The LCBO will conduct a 10-store pilot study to explore the viability of offering 12-packs with an option to expand to 60 stores

Pilots are fun…? This is going nowhere. Could this be more couched in non-specific language? A 10 day pilot to explore viability? *fart noise* There is already limited shelf space in the LCBO for beer. Where exactly are these 12 packs going to go? Next to all the growlers? Out in the parking lot?

13. The Alcohol and Gaming Commission of Ontario (AGCO) will allow brewers with two production facilities to have an on-site retail store at each facility for the sale of their products only, regardless of the production size of their facilities.

This one is just plain good. If you have two working breweries, you should be able to sell beer at both of them. This helps out Toronto’s Bellwoods Brewery and Ottawa’s Beyond The Pale, and any other brewery entertaining the idea of a second brewery in order to meet demand. Good recommendation. I see no downside to this. Why did this insane rule ever exist in the first place?

Conclusion



This may come as a surprise given that I found something to complain about for virtually all the major points listed above, but overall I think these are good proposed change. It’s definitely not perfect and given the province’s history with alcohol legislation you could be forgiven for approaching these announced changes with a healthy dose of cynicism, but let’s be honest: this is at least something.

As the report itself states, this is the biggest change in beer distribution in Ontario since prohibition. Indeed, this is probably the first big change to the way beer is sold in Ontario that most readers of this blog will have ever seen in their lifetimes. So yes, it’s fun to piss all over every new announcement related to beer that is unveiled (hey, I’m often pisser number one!) but let’s not fail to give credit where it’s due. I’m not going to weigh in on the sale of Ontario Hydro, which many critics are claiming is linked to the beer announcement as a means to distract us, but I think Premier Kathleen Wynne deserves a lot of credit for even attempting to take on the issue of alcohol distribution in this province. It’s a messy topic with so much baggage to opine that it has arguably given birth to an entire cottage industry of ranty bloggers and media pundits. That a sitting politician opted to wade into the muck and do something–anything–ought not be ignored.

And yes, of course there is weirdness here.

Politicians have more interests to consider than just people who make and drink craft beer (Thankfully: We need roads and healthcare and stuff, too), so no change is going to be perfect to everyone–certainly not at first.

But this change undeniably means craft beer will be in front of more Ontario consumers, making it harder for them to ignore it, and as anyone who has been converted to interesting beer can attest, once you start drinking well-made beer made by independent companies, it’s hard to go back to the industrial lagers. So yes, there’s some “wtf” elements to these changes, but the more the craft beer market share grows, the more conversations we’ll have about improving the way beer is made and sold here. And that’s a good thing.

And until then, the “wtf” gives us something to blog about.