Summerhill Growler/Craft Beer Destination Store

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biegaman
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Summerhill Growler/Craft Beer Destination Store

Postby biegaman » Fri May 22, 2015 7:57 pm

The LCBO revealed some information at the annual trade day last week regarding growlers as well as other plans for craft beer in the province. I've highlighted some of the more noteworthy points below...

The Board has bought out the Timothy's shop attached to the Summerhill store and will be converting that space into a destination "craft beer store", set to open this coming August. The intention is to showcase every craft beer SKU and possibly offer some selections that will only be made available there. The emphasis will be on Ontario craft beer (the impression I got was that it'll be exclusively OCB, though don't quote me on that).

Included will be a growler fill station that, initially, will offer only 3 Ontario brands (though they've said if it proves successful they will increase that number). We were told that initially these will be existing products already listed at the LCBO, though they welcome the idea down the road of collaborating with local brewers to offer seasonal/exclusive brands otherwise not available in can/bottle.

The LCBO will sell its own branded growlers and also offer pre-filled growlers (as micros do now). It sounded to me like they won't accept outside growlers, but again this is an assumption on my part. Their intention is to select a handful of 'beer ambassadors' to run the section much as 'product consultants' currently do the Vintages department, ideally providing them with a little extra product knowledge training. They will be the ones permitted to fill growlers. There was no mention of deposits or returns.

The LCBO has also targeted 24 stores throughout the province where they've seen the largest percentage of craft beer sales. Depending on the outcome of this project, the intention is to make those stores similar "craft beer destinations". (No actual details provided as to what that encompasses.)

While the category manager spoke in detail about the fall of domestic sales and the drastic rise of craft sales, she also mentioned they will likely be shrinking the beer category. She said they carry too many brands as it is. To wit, they have now limited the seasonal releases to maximum 10 beers, with each agency only allowed to submit 3 brands for consideration per. The Christmas and Halloween releases are likely to be reduced too and may be merged with the fall/winter. The brewery spotlight program is officially on hiatus (not likely to ever return, so I've been told unofficially).

Hesitancy with regards to seasonal products was related to the fact that they've had difficulties selling through orders once the season passes.They put the onus for beers arriving late to market or stale dated on agents and external forces (which, to be fair, is sometimes true. But still, they're not innocent and I wish they would constructively address this problem rather than try to avoid any blame).

Ciders, coolers, and RTD ("ready to drink") will continue to be grouped in with beer, meaning those items are reflected in each stores' SKU count for the beer category. (What this essentially means is that each summer cooler forced to stores equals one less listing of craft beer.) There was no mention of increasing store SKU counts nor increasing the allocation of stores on the "specialty beer program" (i.e., the ones that get the seasonals). The Board also put out a call for ciders, with preference being for "mixed" or "variety" packs and "flavoured" ciders.

By way of conclusion, the Board's prerogative as outlined multiple times at trade day is to shift away from beer (low margins, labour intensive, seasonal sensitivity) and renew/heighten the emphasis on spirits (high margins, long shelf life, etc). The outlook for craft beer that I got was a grim one, with no commitment to improving (or even capitalizing on current successes). For better or worse, Ontario brewers is clearly the focus. The growler project sounds very limited in so far as what it will offer. While they addressed beer in corner stores they shed no details on what the plan is there nor what their plan is in response. There continues to be no sincere effort to work with trade partners or to address the deficiencies in this beer market.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby midlife crisis » Sat May 23, 2015 9:20 am

Terrific post, thanks. After the first few paragraphs I thought this was going to a good news story, but it clearly isn't. Maybe not bad if one lives close to Summerhill. But pretty disastrous overall and a logical outcome of putting beer in grocery stores, really ("great, now we don't have to worry about beer any more"). Lazy, incompetent bureaucracy.
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Chris
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Chris » Sat May 23, 2015 11:20 am

Yeah, my fear is that the LCBO will use the "beer in grocery stores" as an excuse to diminish it's beer line up even before the first bottle hits the shelves in the grocery stores ...
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Rob Creighton
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Rob Creighton » Sat May 23, 2015 5:42 pm

Chris wrote:Yeah, my fear is that the LCBO will use the "beer in grocery stores" as an excuse to diminish it's beer line up even before the first bottle hits the shelves in the grocery stores ...


And so we finally clearly see big brewery/government coordinated strategy. Makes total sense and is so logical...and they do hire guys to come up with this that are paid extreme sums of money...unlike us.
biegaman
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Re: Summerhill Growler/Craft Beer Destination Store

Postby biegaman » Sat May 23, 2015 7:28 pm

Chris wrote:Yeah, my fear is that the LCBO will use the "beer in grocery stores" as an excuse to diminish it's beer line up even before the first bottle hits the shelves in the grocery stores ...

You're right.
Beer in grocery stores *WAS* cited in the presentation as an excuse to tighten up the beer category. They see it that fewer SKUs allow for better efficiencies and high-volume, proven brands are safer and more economically viable.

My perspective - what an unfortunate mentality. The LCBO has witnessed domestic/industrial beer sales dip lower and lower every year and craft sales sore (especially for OCB). I understand that the vast majority of profits still come from big brand names, but why not shift emphasis to craft while still offering the macro cash-cows. Why not use this change as opportunity to establish yourself as a leader in craft beer retailing and exploit the fact you still have a monopoly to do so. Heck, for a government body don't you have an interest and/or responsibility to do so - at least to support Ontario craft!? We see it in almost every store that expands their craft selection: sales in Vintages and spirits increase too. Better variety and greater selection is a way of drawing people into your store and keeping them loyal.

FYI, while no one claims to know anything yet, and apparently no concrete decisions have been made, the consensus that I've gotten in speaking to people at and close to the LCBO is that what will most likely happen for WINE (if/when) is that they'll take a snapshot of the province's top 200 brands and that'll be it to start. I imagine the beer roll-out will be something similar, again with priority and preference going to the big brewers considering that grocery chains operate on a 'high volume/quick turn-around' business model. Not to mention they'll have the money to throw at them.

Of course, they've made it clear that provisions will be made for OCB so who knows exactly how it will turn out. In fairness, we do already have Longo's supporting OCB with their Corks restaurants so maybe the grocery chains will embrace niche craft brands more than we expect?! That retail sector at least is *slightly* more competitive and may want/have to innovate by offering more than just standard macro brands (though, again, I'm doubtful since all the real profit is in Mol/Bat, etc).
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Re: Summerhill Growler/Craft Beer Destination Store

Postby napoleon » Mon May 25, 2015 4:53 pm

What really needed to happen in the craft beer category was some experiment with a private craft beer store. Either run by some collective of small brewers or operated completely independently. Go ahead an apply all the standard markups, but let them buy what they want from Ontario and import what they want from elsewhere. It would make the province plenty of money and thrill the craft beer fans at the same time.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby cfrancis » Tue May 26, 2015 11:21 am

Drastic craft beer sale increases.

Clearly that means, reduce inventory and selection of craft beers.

Good business model....
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Craig
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Craig » Tue May 26, 2015 12:24 pm

cfrancis wrote:Drastic craft beer sale increases.

Clearly that means, reduce inventory and selection of craft beers.

Good business model....


It would be interesting to see what their sales per square foot are for beer vs craft beer vs wine. It's hard to ignore a sales increase like that, but if beer is pulling them 70% less per square foot than wine, I would at least understand the reasoning.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby groulxsome » Tue May 26, 2015 12:39 pm

Image

Is this an LCBO image? Wonder if they got permissions to use Bellwoods art (Farmhouse Classic and Cat Lady) for the posters... you know, since they are not currently sold in LCBOs?
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Cass
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Cass » Tue May 26, 2015 1:10 pm

Here's the presentation the LCBO gave:

http://www.doingbusinesswithlcbo.com/tr ... %20Two.pdf
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boney
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Re: Summerhill Growler/Craft Beer Destination Store

Postby boney » Tue May 26, 2015 4:59 pm

Counter-pressure growler fill stations are shown in the presentation. Do we know if they will actually be used or was that an overly ambitious screen capture?

I hate that I was right and didn't see it happening this soon, but I saw the contracture in the number of craft beer brands available at the LCBO happening and said as much in the Beer in Grocery Store thread several weeks ago. The minds running the LCBO have a truly baffling grasp on both economics and logic.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby ErkLR » Tue May 26, 2015 9:37 pm

biegaman wrote:The brewery spotlight program is officially on hiatus (not likely to ever return, so I've been told unofficially).

Not surprising, the last couple didn't seem to go so well. Especially the Mikkeller.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby BakaGaijin » Tue May 26, 2015 11:19 pm

Based the presentation attached it says their mandate is to be the best craft beer retailer in Canada.
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Cass
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Cass » Wed May 27, 2015 8:06 am

boney wrote:Counter-pressure growler fill stations are shown in the presentation. Do we know if they will actually be used or was that an overly ambitious screen capture?

I hate that I was right and didn't see it happening this soon, but I saw the contracture in the number of craft beer brands available at the LCBO happening and said as much in the Beer in Grocery Store thread several weeks ago. The minds running the LCBO have a truly baffling grasp on both economics and logic.


I've got a really bad feeling that things are going to get worse for beer selection, at least from an import perspective. The LCBO is reducing what they're bringing in and using the grocery store thing as justification. But I think we can all agree that the government is going to botch the grocery store rollout - you just know it's going to go badly. And I predict that the government is going to impose that grocery stores can only stock regularly-listed LCBO or TBS products, thereby forbidding them from doing their own private orders and actually having a unique selection. TBS and LCBO would of course never want this as it would actually cause a competitive environment to exist. I hope to be proven wrong but I think the last few years with the seasonals & brewery features will be looked back as the best we had it.
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Re: Summerhill Growler/Craft Beer Destination Store

Postby Craig » Wed May 27, 2015 8:19 am

Hasn't it already been announced they're only going to be able to list what TBS or LCBO have? I can't remember that specifically, but they did say the prices had to be the same in the grocery stores as everywhere else, which is only really possible with that limitation.

Hopefully the grocery chains decide it's worth it to get themselves set up as importers so they can carry things the other guys don't, which would probably involve lobbying and some time.

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