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New Beer Store Deal

This forum is for discussing everything beer retail: LCBO, Beer Store, Grocery Stores and Indie Stores.

Moderators: Craig, Cass

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Craig
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Post by Craig »

Cass wrote:
atomeyes wrote:the big breweries claim is unprofitable.
I don't think they do. Obviously TBS makes money, which is why they hold on to it so dearly. "Profits" get rebated back as a reduction of fees so it looks like TBS doesn't make money. It's outlined in their annual report. The "no profit" message is just convenient PR.
Is it a reduction in fees where they make their money? I always assumed Molson & Co just sold their beer to TBS at a high enough markup that TBS was just barely breaking even. I've never been in quite the right frame of mind to read a TBS annual report.

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Post by saints_gambit »

Cass wrote:
atomeyes wrote:the big breweries claim is unprofitable.
I don't think they do. Obviously TBS makes money, which is why they hold on to it so dearly. "Profits" get rebated back as a reduction of fees so it looks like TBS doesn't make money. It's outlined in their annual report. The "no profit" message is just convenient PR.
The Beer Store is not designed to make profit. It is designed to offset cost. The reason that the big brewers want to retain control of The Beer Store is because it prevents them having to spend money to compete in a privatized market. Because they own the stores, they don't have to pay for a labour force, a delivery fleet, warehousing, a team of sales people negotiating door to door. It does not primarily exist to make money. It primarily exists to prevent the large breweries having to spend money in the way that they would have to in a privatized market. There may well be some profit, but it's not designed to generate profit.
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Cass
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Post by Cass »

This is the wording:
Service charges revenue is primarily earned based on the volume of products distributed at rates determined annually. The difference, if any, between service charges revenue and costs and expenses incurred is allocated among the owner-breweries in accordance with the terms of the shareholders’ agreement and recorded as an adjustment to service charges revenue.
Pretty clearly states that difference b/t revenue & expenses (profit) is given back to the owners and the revenue # is reduced. Math games.

atomeyes
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Post by atomeyes »

Cass wrote:
atomeyes wrote:the big breweries claim is unprofitable.
I don't think they do. Obviously TBS makes money, which is why they hold on to it so dearly. "Profits" get rebated back as a reduction of fees so it looks like TBS doesn't make money. It's outlined in their annual report. The "no profit" message is just convenient PR.
but profits will continue to be rerouted, thus continuing the trend of it being not for profit. having a paper loss every year would be easy to continue, since the Big 3 will still have a majority.

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Craig
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Post by Craig »

Cass wrote:This is the wording:
Service charges revenue is primarily earned based on the volume of products distributed at rates determined annually. The difference, if any, between service charges revenue and costs and expenses incurred is allocated among the owner-breweries in accordance with the terms of the shareholders’ agreement and recorded as an adjustment to service charges revenue.
Pretty clearly states that difference b/t revenue & expenses (profit) is given back to the owners and the revenue # is reduced. Math games.
That's the difference between service charges and expenses, not the actual profit on a bottle of beer.

I think they're buying the beer from MolBatt at a huge markup, selling it to consumers at their cost, then covering their expenses with service charges levelled against brewers.

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boney
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Post by boney »

This decision is brilliant positioning for TBS. they extend an apparent olive branch to both craft brewers and the critical public who are incensed about shady frameworks and business practices while at the same time impacting practically nothing about how they operate. Either craft brewers do their best to utilize their token throw away opportunity or they take a stand and say they will not play this game. TBS then feigns astonishment that craft brewers wont take advantage of this tremendous opportunity to reshape beer sales in Ontario and counter accuse them as being money hungry capitalists who aren't interested in collaboration, want to impose a strictly non-TBS solution so that they can maximize their own profits and who have little regard for the related issues of health and public safety that are inherent in beer sales (issues that TBS believes in and is sooooo conscientious of, obviously). This move is indeed a reactive decision borne out of public pressure, but it's also very, very savvy.

atomeyes
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Post by atomeyes »

boney wrote:This decision is brilliant positioning for TBS. they extend an apparent olive branch to both craft brewers and the critical public who are incensed about shady frameworks and business practices while at the same time impacting practically nothing about how they operate. Either craft brewers do their best to utilize their token throw away opportunity or they take a stand and say they will not play this game. TBS then feigns astonishment that craft brewers wont take advantage of this tremendous opportunity to reshape beer sales in Ontario and counter accuse them as being money hungry capitalists who aren't interested in collaboration, want to impose a strictly non-TBS solution so that they can maximize their own profits and who have little regard for the related issues of health and public safety that are inherent in beer sales (issues that TBS believes in and is sooooo conscientious of, obviously). This move is indeed a reactive decision borne out of public pressure, but it's also very, very savvy.
correct.
but it doesn't address the key issue that will result in change:
the Ontario government wants more revenue.
desperately.

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Craig
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Post by Craig »

boney wrote:This decision is brilliant positioning for TBS. they extend an apparent olive branch to both craft brewers and the critical public who are incensed about shady frameworks and business practices while at the same time impacting practically nothing about how they operate. Either craft brewers do their best to utilize their token throw away opportunity or they take a stand and say they will not play this game. TBS then feigns astonishment that craft brewers wont take advantage of this tremendous opportunity to reshape beer sales in Ontario and counter accuse them as being money hungry capitalists who aren't interested in collaboration, want to impose a strictly non-TBS solution so that they can maximize their own profits and who have little regard for the related issues of health and public safety that are inherent in beer sales (issues that TBS believes in and is sooooo conscientious of, obviously). This move is indeed a reactive decision borne out of public pressure, but it's also very, very savvy.
I'm not convinced. The OCB are very likely to denounce this, one way or the other. The premier's office will easily see through this, because they're not idiots. I expect the media will see through it again. This seems like a move designed to fool the masses (who I don't mean to imply are idiots, just not interested enough to have looked into the specifics) but at the same time I think this will just serve to prolong the story, get more media coverage and more exposure to how truly awful a setup TBS actually is.

A deal like this is just going to produce a bunch of stories in the paper and on TV that say "The Beer Store moved to open up access today, but small brewers say..." which is bad for them.

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Cass
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Post by Cass »

Response from Beau's:


Hi friends - we've had a lot of people asking us how we feel about the announcement made by The Beer Store earlier today. Here are our thoughts...
We feel it is important that The Beer Store is acknowledging that the current system is not fair to craft breweries – up until now they have not.
The changes announced have not been done in consultation with craft brewers – this is a surprise. We don't have enough information to say what the offer of ownership really means.
Changes from The Beer Store that benefit craft brewers are welcome, but we feel that this announcement should not impact the work the government is doing with the Ed Clark investigation. It’s important that this is not a distraction or seen as a compromise.
To read the full announcement, visit bit.ly/1Ir6lYI.

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Cass
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Post by Cass »

Here's Jason from Indie Alehouse on Newstalk 1010 today:


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lister
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Post by lister »

Cass wrote:Here's Jason from Indie Alehouse on Newstalk 1010 today:

Starts at 39:38.
lister

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Post by biegaman »

saints_gambit wrote:
Cass wrote:
atomeyes wrote:the big breweries claim is unprofitable.
I don't think they do. Obviously TBS makes money, which is why they hold on to it so dearly. "Profits" get rebated back as a reduction of fees so it looks like TBS doesn't make money. It's outlined in their annual report. The "no profit" message is just convenient PR.
The Beer Store is not designed to make profit. It is designed to offset cost. The reason that the big brewers want to retain control of The Beer Store is because it prevents them having to spend money to compete in a privatized market. Because they own the stores, they don't have to pay for a labour force, a delivery fleet, warehousing, a team of sales people negotiating door to door. It does not primarily exist to make money. It primarily exists to prevent the large breweries having to spend money in the way that they would have to in a privatized market. There may well be some profit, but it's not designed to generate profit.
When I worked there they (Molson and Labatts) used to mandatory force us entire palates (plural, at 84 cases per) of essentially expired beer (weeks away from expiry). They would bill the store for the cost (it officially counts in their book as a sale) and then when it would all inevitably expire the store would have to eat the cost (comes out our annual spillage budget). This was fairly common practice, at least the stores I worked at. The brewery makes the profit, the retail store eats the loss.

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saints_gambit
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Post by saints_gambit »

biegaman wrote:
saints_gambit wrote:
Cass wrote: I don't think they do. Obviously TBS makes money, which is why they hold on to it so dearly. "Profits" get rebated back as a reduction of fees so it looks like TBS doesn't make money. It's outlined in their annual report. The "no profit" message is just convenient PR.
The Beer Store is not designed to make profit. It is designed to offset cost. The reason that the big brewers want to retain control of The Beer Store is because it prevents them having to spend money to compete in a privatized market. Because they own the stores, they don't have to pay for a labour force, a delivery fleet, warehousing, a team of sales people negotiating door to door. It does not primarily exist to make money. It primarily exists to prevent the large breweries having to spend money in the way that they would have to in a privatized market. There may well be some profit, but it's not designed to generate profit.
When I worked there they (Molson and Labatts) used to mandatory force us entire palates (plural, at 84 cases per) of essentially expired beer (weeks away from expiry). They would bill the store for the cost (it officially counts in their book as a sale) and then when it would all inevitably expire the store would have to eat the cost (comes out our annual spillage budget). This was fairly common practice, at least the stores I worked at. The brewery makes the profit, the retail store eats the loss.
You think that might have been worth mentioning to a journalist at some point?
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Post by icemachine »

The BS knows change is coming, quite apparent this is merely an opening gambit, as illustrated by the fact that they did not consult with the OCB or have a couple of breweries signing on as they announced this deal.

Change is coming to Ontario's retail alcohol scene, and MolBatts know they can't beat both public opinion and a government with desire for new revenues
"Everything ... is happening" - Bob Cole

atomeyes
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Post by atomeyes »

icemachine wrote:The BS knows change is coming, quite apparent this is merely an opening gambit, as illustrated by the fact that they did not consult with the OCB or have a couple of breweries signing on as they announced this deal.

Change is coming to Ontario's retail alcohol scene, and MolBatts know they can't beat both public opinion and a government with desire for new revenues
while TBS has shown a # of times to be quite daft (those commercials from last year?), you can assume that they made these changes based on having the inside scoop as to what Wynne et al. are planning to do with TBS.

i'd assume that there aren't many more concessions to be made, nor many more requested from the government

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