Category Archives: Privatization

Articles related to privatization of beer sales in Ontario

Beer Store’s Brew Monopoly Goes Belly Up?

Originally Published in NOW Magazine
Originally Published in Now Magazine, April 17, 2015
Originally Published in Now Magazine, April 17, 2015

War Brewing

Originally published in NOW Magazine
After years of baring its backside to the rest of the brew industry, the Beer Store is suddenly anxious to cover its ass.   The Beer Store has an image problem. And it's not improving, despite a massive PR campaign and last week's offer to open up Beer Store ownership - and access to its shelves - to small brewers. The response from many craft brewers to Beer Store claims that they would stand to benefit was incredulity mixed with indignation.
“War Brewing,” originally published in NOW Magazine

Killing beer, LCBO style

Yeah, it’s a bit blurry, but not illegible. Take a look at the sticker on this bottle and guess why I’m sharing it.

Jolly Pumpkin Calabaza Blanca, at the King / Spadina LCBO
Jolly Pumpkin Calabaza Blanca, at the King / Spadina LCBO

If you didn’t figure it out already, here’s a hint: this photo was taken on October 23rd.

Yes, Jolly Pumpkin bottled this ten months ago.

Over the summer, Calabaza Blanca was my favourite beer. Untappd says I had six of them, but those are just the ones I checked in. I’m sure I consumed at least 10.

Most recently I paired one with my Thanksgiving meal. The lightness of this beer’s body does wonders to brighten up a somewhat dense Tofurky roast. I noticed then, though, that it didn’t taste the same as the ones I enjoyed in the summer. It was less refreshing. Also, despite a few days resting in my fridge door, the carbonation unleashed a fountain on my table when I popped the lid.

Calabaza Blanca, it should be noted, is barrel aged, then bottle conditioned, but at just 4.8% it’s not an obvious choice for cellaring.

Calabaza Blanca in better days, with vegan, black bean tacos, hop shoots, red cabbage sauerkraut and sprouted beans
Calabaza Blanca in better days, with my vegan, black bean tacos, hop shoots, red cabbage sauerkraut and sprouted beans

Unfortunately, the LCBO has its own aging program. It’s called negligence.

Even though Calabaza Blanca is produced year round, the current Ontario stock has been warehoused for too long. It’s not the way this beer is intended to be sold.

To be sure of that, I emailed Jolly Pumpkin. Brewmaster Ron Jeffries sent me this reply:

I don’t really recommend aging our beers, as the wild yeast will continue to work even refrigerated and given enough time the beers will become over carbonated.

That being said, they also continue to sour, and a lot of folks like that, and so do age them.

I, myself, enjoy most of the beers at about eight months in the bottle – or younger. I have had Blanca that was five years old before and it was delicious, but a completely different beer. It was sweeter and rounder with a very strong note of candied orange. I preferred the younger bottles, though, as I found them more refreshing and balanced.

So beauty is in the eye of the beholder. I think other than over carbonation, you’d be pretty safe at one to two years.”

Safe, that is, if it’s properly stored. At last week’s Ontario Craft Brewers Conference, representatives for the LCBO confirmed the warehouse is not refrigerated. That explains why a good portion of my Thanksgiving beer ended up on my table, while the rest tasted less than expected.

Not that I hope for fewer beer options in Ontario (because, fuck…) but I wouldn’t be surprised if Jolly Pumpkin, which has a stellar reputation, chose not to send more. If my Thanksgiving bottle had been my first I’m not sure I would have been so enthusiastic about buying my next. Especially at $9.20 per bottle.

The provincial government continues to insist we, the commoners, are well served by our current retail options. We’re not.

It takes two separate rounds – literally several weeks – of Ontario lab testing delays before a brew gets even approved for sale to the LCBO.  The neglect that follows is just another indication the crown agency clearly doesn’t understand or appreciate beer.

Organized Blabber

I had an interesting chat earlier this week with a couple other beer writers. They’ve been around longer than I have. They have a larger following than I do. They get invited to things I don’t.

One of the perks of being a more established beer writer is getting to attend events like LCBO tasting sessions for its new releases.

According to these writers – each of whom I have no reason to doubt – the LCBO is falling further behind each time it brings in new and (by Ontario standards) exotic labels.

Some of the fall styles, they tell me, have been in Ontario for weeks. Well that makes sense, it’s been autumn for a few weeks. The problem is these bottles still haven’t made it to the stores.

Most beer, as you probably know, doesn’t age well. In fact it can degrade fairly quick. The Amager Kåååd Spring IPA (6% ABV) that was imported from Denmark in March, yet continues to linger on several LCBO shelves… I’d be wary of that one.

Kåååd Spring IPA
Downtown LCBO locations still selling a well-travelled beer that’s sat around for eight months.

At last year’s Ontario Craft Brewer’s Conference, the head of one of the more respected Toronto-area breweries mentioned he had just taken control of his own delivery because the LCBO was doing such a poor job moving his beer. The government agency, according to many, simply can’t keep pace with industry growth.

In July, I asked the LCBO directly if it was fair to say the agency lacks the capacity to handle all the new craft beer coming to market. The response explained several ways the LCBO has supported Ontario’s craft brewers, but ducked the actual question.

I guess the Ontario Public Service Employees Union isn’t aware of these worsening conditions because it’s now suggesting the LCBO should take on more responsibility. The labour union, Wednesday, published a media release insisting the province should strip away a lucrative line of business from those small enterprises that currently sell beer and wine in markets where there is no government liquor store.

OPSEU figures the LCBO could make extra cash by expropriating the agency stores’ share of the alcohol trade, keeping the income that currently goes to private, mostly independently-owned businesses.

Related: What's Stopping Ontario's Convenience Stores from Selling Booze?

“The best way to increase the LCBO’s dividend to government without increasing the social harm caused by alcohol is to rein in the LCBO’s Agency Stores Program,” claims OPSEU Majordomo Smokey Thomas. “Contracting in of existing sales” (read: “taking back what was already given”) would bring in an additional $50 million, he says “without increasing the social costs associated with drinking.”

If the labour union is genuinely concerned about siphoning more revenue from alcohol without increasing the risk of social harm, why wouldn’t they focus their attention on the Beer Store instead? Unlike agency stores, which generally serve a population that lives nowhere near LCBO shops, the Beer Store is often located quite close to government real estate. Taking away the Beer Store’s licence to sell would give the LCBO a near-monopoly on urban beer sales in Ontario.  Just imagine the earnings.

Hey, it might even save a few kids. OPSEU also figures “the LCBO model of public ownership is still the best way to minimize the net cost to society of alcohol.” Why it thinks that, I don’t know. It’s not stated in the release, nor does it stand up to unbiased surveys of other jurisdictions. Fact is though, the not-publicly-owned Beer Store has more locations than the agency stores, so by some Smokey kind of logic they’re probably doing more harm.

I’m not saying I believe the government should shutter the Beer Store, just that it’s a more logical target for this seemingly altruistic group. But of course the Beer Store is unionized, so there’s that.

Let’s be clear, what OPSEU wants is fewer outlets that demonstrate how well the non-unionized workforce retails alcohol. More convenience and accountable customer service – these are what OPSEU does not want you to experience. Its motives are so thinly veiled they’re pornographic.

This is the same organization – speaking of matters indecent – that successfully overturned the dismissal of six employees for using government computers to surf and spread porn. That happened while I was a member of the OPS, so you see why it’s really fucking difficult for me to take my former dues collector’s social conscience seriously.

OPSEU chose to attack small business. It did so while proposing more tasks for an organization that continues to fall behind, despite its remarkable advantage in dictating market conditions. The union’s position on stripping revenue from small town employers while claiming moral high ground is as absurd as it is pathetic. If Smokey and Co. can’t be useful in the ongoing discussion of alcohol sales in Ontario, they could at least be honest about their motives.

Beverage Alcohol System Review (BASR) Highlights

My latest article for NOW Magazine appears in print today.   Familiar whine (I don’t pick the headlines) recalls an Ontario government-sponsored report that recommended the province rid itself of the LCBO to allow for a more robust, competitive, private system that would actually deliver substantially more revenue to the provincial treasury.

Because the article devotes much of its space to explaining the review, many of the more compelling quotes found in the Strategy for Transforming Ontario’s Beverage Alcohol System aren’t included.

The Liberal government spent more than half a million taxpayer dollars funding a four-person, expert panel, led by no less than a former LCBO Vice-Chair and featuring the then-Commissioner of the OPP.   A whole hell of a lot of consultation and careful consideration went into this.  It deserves a better fate than it received.

Ontario Ministry of Finance Website
It’s all there… if you search for it

For your reading enjoyment, some highlights of what the most seemingly unbiased, consultative review of Ontario’s Beverage Alcohol System had to say about our antediluvian system:

The challenge you put to us was to determine if the beverage alcohol system is delivering the maximum benefits to the people of Ontario. It is not.” – BASR, 2005

If we could go back to the drawing board, no one would design an ideal system this way,” – BASR, 2005

We have found that the current system falls considerably short of generating the maximum return for taxpayers.” – BASR, 2005

“Monopolies lock up economic value, and uncompetitive markets hold back innovation and value creation, leaving untapped revenue ‘on the table.’” – BASR, 2005

After 78 years, change is long overdue. It is time to transform Ontario’s beverage alcohol system for the 21st century.” – BASR, 2005

We conservatively estimate that, following a transition period, this plan would produce at least $200 million more government revenue than the government currently receives from the beverage alcohol system.” – BASR 2005

An open, competitive beverage alcohol system would increase market access, flexibility and opportunities for producers of wine, beer and spirits. Since the present system heavily favours the largest producers, these changes would especially benefit smaller producers.” – BASR 2005

A restructured system would improve market access, opportunity and flexibility for Ontario beverage alcohol producers.” – BASR 2005

For decades, Ontario has made minor repairs to the beverage alcohol system when a complete overhaul was needed. Change is overdue.” – BASR 2005

We believe this revenue, which we estimate to be in excess of $200 million annually, should accrue to the people of Ontario.” – BASR 2005

We expect that this option would encourage mass-market organizations (such as grocery stores) to enter the system. We expect their participation to result in substantial operational efficiencies.” – BASR 2005

A more open marketplace would keep prices competitive and increase selection and convenience for consumers. In order to attract and keep customers, retailers would strive to give consumers what they want.” – BASR 2005

In particular, extensive government ownership and operation of the system are not necessary to maintain social responsibility.” – BASR 2005

In addition, a more flexible and open wholesale system would go a long way towards addressing the access concerns raised with us by small producers and import agents. These stakeholders pointed out that they are at a disadvantage in getting products in front of consumers in the current system.” – BASR 2005

The consumer would be the focus of a transformed beverage alcohol system. Within the bounds set by regulation, consumers would ultimately decide, through the marketplace, what products are offered, where they are sold and how much they cost.” – BASR 2005

Boutique liquor stores might well open in some neighbourhoods. For example, stores could specialize in product categories such as Ontario VQA wines, single malt Scotch or craft beers.” – BASR 2005

It is probable that the new licensees would have much lower operating costs than the LCBO” – BASR 2005

Apart from the emphasis on social responsibility, the most powerful theme was the need to increase access, opportunity and flexibility in the system. All but the biggest producers worry about barriers to the market that cast a shadow over their future ability to reach customers and to respond to changing consumer expectations.” – BASR 2005

Ontario Fear Facts

Tuesday, the good folks behind the curiously named @ONBeerFacts Twitter account reached out to me for the first time. In response to my last blog post, they directed me to a news release I missed in February, while I was away.

Cleverly titled “There Is No Hidden Agenda”: Convenience Stores Would Raise The Price of Beer” it warns against evils like having to pay a bit more to buy from the family that operates the store on my corner.

Like the C-Stores themselves, I’m not disputing that beer might cost a bit more if I can pick it up 300 steps from my home on a long weekend. If I’m paying an extra buck or two, it still beats cab fare to and from my least inconvenient Beer Store or LCBO… whenever they re-open.

What’s really curious about the media release however, is the piece at the bottom that warns of the more dire consequences of opening the system to competition. I’m not just talking about the inane think-of-the-children! fear-mongering. It’s the part just after that – the bit that suggests if convenience stores sell alcohol it would “eliminate 7,000 well-paying Beer Store jobs…”

Wait… what? What?

Is the Beer Store threatening to close if it doesn’t get its way, or is this an acknowledgement it doesn’t feel it can compete in a fair and honest marketplace?

It seems that a well established entity that already boasts 450 locations, its own distribution network and owners who inexpensively produce most of its inventory should have no problem continuing profitably in the face of less organized, independently owned shops that don’t manufacture their own product. If the Beer Store chooses to raise prices at its own locations, it’s simply motivated by profit.

Like most statements coming out of The Beer Store, the 7,000 jobs threat is a diversion. It’s a scare tactic. No consumer should care if convenience stores charge more if they still have the option to buy cheaper where they already shop. By raising the spectre of closing down (which the convenience stores are not asking for), the Beer Store hopes to leave the impression that Ontarians would be stuck with higher prices. It’s desperate and intentionally misleading.

Sobey's -- June 11, 2014
Sobey’s — June 11, 2014

If the Beer Store has anyone to fear it’s the bigger grocery stores, which have sat by quietly through all the debate. They also have efficient distribution networks, a wealth of experience in competitive environments and solid marketing budgets. In Alberta, they also have better prices, despite 20+ years of privatized mayhem.