Could Ontario Craft Brewers open their own store?

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zane9
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Could Ontario Craft Brewers open their own store?

Postby zane9 » Tue Aug 17, 2010 7:52 pm

A post on the private stores in Nova Scotia by Bobbyok, http://www.bartowel.com/board/viewtopic ... 9105#69105, reminded me of an idea I had months ago.

Now bear with me guys, you're the experts and I'm the newbie. You know the ins and outs of the business. But I'm puzzled why the Ontario Craft Brewers haven't banded together to experiment with a retail operation that they wholly own. If the large wineries in Ontario can sell wine within a Sobey's, or a Metro, or a Longo's grocery store, what's the hold-up with the beer crafters opening their own store?

To me a retail storefront makes sense on so many levels. Surely there is enough product among the 28 breweries to fully stock a retail store. I'm certain that customers would flock to a properly financed, advertised, and marketed operation.

Start with one store, say in a busy and vibrant section of Toronto. If it works, slowly expand.

Are there legal impediments? Lack of innovative thinking? Please tell me why this would not work, or preferably why the concept has merit. :)
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Postby saints_gambit » Tue Aug 17, 2010 8:31 pm

This is an idea that I've toyed with as an experiment, and someone else possibly on this forum brought up the idea that what you really need in order to be able to pull this off is a centralized depot for the Ontario Craft Brewers. Think about the logistical planning involved in opening one OCB retail stand in a supermarket. It's just one more place to drop off cargo and all of the brewers are doing that independently at the moment.

It seems to me that it would be far more likely to work if they could band together and get a refrigerated warehouse in a relatively central location. Of course, the cost of doing this would initially be slightly prohibitive, so you'd be looking at opening more than one store in order to make it financially viable. You'd need a chain to commit to opening stands in a number of stores. And you'd need to staff them.

It's a good idea, and I have to believe that the Ontario Craft Brewers must have thought about it previously, but have been dissuaded by the initial outlay in order to make a go of it. I feel like that's a mistake since a small financial loss would serve to expand their ability to market. I think that must mean that they think it would be a significant loss that would offset the benefit of the increased accessibility to the products.
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Postby zane9 » Tue Aug 17, 2010 8:42 pm

saints_gambit wrote:This is an idea that I've toyed with as an experiment, and someone else possibly on this forum brought up the idea that what you really need in order to be able to pull this off is a centralized depot for the Ontario Craft Brewers. Think about the logistical planning involved in opening one OCB retail stand in a supermarket. It's just one more place to drop off cargo and all of the brewers are doing that independently at the moment.


I appreciate the level of logistics. But the Wine Rack gets its product to 160 retail outlets in Ontario! I'm talking about one retail store, at the outset.

saints_gambit wrote:...It's a good idea, and I have to believe that the Ontario Craft Brewers must have thought about it previously, but have been dissuaded by the initial outlay in order to make a go of it. I feel like that's a mistake since a small financial loss would serve to expand their ability to market. I think that must mean that they think it would be a significant loss that would offset the benefit of the increased accessibility to the products.


No doubt the initial capitalization would not be small change. But the access to the marketplace by the OCB members would be unprecedented.

Thanks for your views, saints. I hope others will take a minute to chat about the idea.
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Postby SteelbackGuy » Tue Aug 17, 2010 9:08 pm

Winerack and Vineyards locations are considered "extension" of the winery by the AGCO. So there is no reason we couldn't have an "extension" of a brewery in the forum of an OCB store.

I guess the first questions are:

A) Where do we put it?
B) How many breweries can we get on board?
C) How much will it cost our members (Members being the breweries that pay to be members of the OCB)
D)How do we get this started?



There has to be enough vision and passion from the people at the OCB to want to make this happen. While I do appreciate what they have done for craft beer so far, I really feel like they often take a back seat or sit idly by when it comes to a lot of things. I feel they need to be aggressive a la VQA to get the balls really rolling.
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Postby Kel Varnsen » Tue Aug 17, 2010 9:19 pm

saints_gambit wrote:It seems to me that it would be far more likely to work if they could band together and get a refrigerated warehouse in a relatively central location. Of course, the cost of doing this would initially be slightly prohibitive, so you'd be looking at opening more than one store in order to make it financially viable. You'd need a chain to commit to opening stands in a number of stores. And you'd need to staff them.


The shared distribution is an interesting idea, especially since it seems most if not all of the small breweries in Ontario handle their own deliveries. I mean Beau's delivers to Toronto now, so I imagine once they do those deliveries those trucks drive back to Vankleek Hill empty. But there are lots of breweries that are pretty much Toronto/GTA only, so what would it take for the OCB or specific breweries to band together so those empty Beau's trucks could be carrying some Black Oak or Dennison's back to eastern ontario.


B) How many breweries can we get on board?


There has to be enough vision and passion from the people at the OCB to want to make this happen. While I do appreciate what they have done for craft beer so far, I really feel like they often take a back seat or sit idly by when it comes to a lot of things. I feel they need to be aggressive a la VQA to get the balls really rolling.


I kind of see this being an issue. I mean quite a few of the OCB breweries didn't even get involved with Craft Beer Week. I sort of get a sense that most of the brewies in Ontario are just sort of happy making enough beer to meet their current demand, but don't really want to make the effort or investment to promote their product to get more drinkers, or in turn spend the money to expand their capacity.
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Postby SteelbackGuy » Tue Aug 17, 2010 10:20 pm

Kel Varnsen wrote:

B) How many breweries can we get on board?


There has to be enough vision and passion from the people at the OCB to want to make this happen. While I do appreciate what they have done for craft beer so far, I really feel like they often take a back seat or sit idly by when it comes to a lot of things. I feel they need to be aggressive a la VQA to get the balls really rolling.


I kind of see this being an issue. I mean quite a few of the OCB breweries didn't even get involved with Craft Beer Week. I sort of get a sense that most of the brewies in Ontario are just sort of happy making enough beer to meet their current demand, but don't really want to make the effort or investment to promote their product to get more drinkers, or in turn spend the money to expand their capacity.



I wonder about it too.

See, I think the OCB should have a partially different role. I think they should be a quality standards association, whereas their stamp of approval would not only mean that the beer is from Ontario, but that it meets certain standards.....avoiding things like constant infection or some other affliction.

A lot of brewers can only produce enough to provide beer for their local market.......fair enough. Supply your local market and expand if you want, when you are able to.

Joining the OCB makes for good advertisement for each brewery involved and it certainly raises awareness through many avenues like the OCB website and the annual LCBO beer promotion.

But I often wonder why breweries join when the same breweries do not want to reach out further than their local market. It seem downright daft to me.
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Postby Tapsucker » Tue Aug 17, 2010 10:34 pm

I have seen this shot down several times based on legal grounds. The current McTBS administration in Queens Park claims it would violate free trade by not allowing access to non-Ontario/Canadian breweries. Apparently the Wine Rack stuff only exists because it was grandfathered in.

Whatever the real story, I get the impression there will always be an excuse not to allow another private player in the distribution game.

Can you just imagine all those underage irresponsible drinkers not returning their empties if the TBS lost their monopoly? :roll:
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Postby SteelbackGuy » Tue Aug 17, 2010 10:38 pm

Tapsucker wrote:
Can you just imagine all those underage irresponsible drinkers not returning their empties if the TBS lost their monopoly? :roll:




I can imagine.
I suspect we'd be overrun be youngsters buying Jagermeister and drinking Miller "douchebag" Chill and Bud "douchebag" Lime, all the while robbing old ladies and holding up gas stations for cigs.
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Postby icemachine » Wed Aug 18, 2010 6:58 am

Gabe Magnotta ran into all sorts of problems when he wanted to sell his beer at his various Wine Stores around Toronto. As I recall he had to brew at each outlet, and couldn't even transfer beer between stores if it meant volume sold at a location exceeded the brewing capacity for the location.
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Postby SteelbackGuy » Wed Aug 18, 2010 9:08 am

icemachine wrote:Gabe Magnotta ran into all sorts of problems when he wanted to sell his beer at his various Wine Stores around Toronto. As I recall he had to brew at each outlet, and couldn't even transfer beer between stores if it meant volume sold at a location exceeded the brewing capacity for the location.


If this is the case, I wonder how those Vineyards locations get away with it?
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Postby midlife crisis » Wed Aug 18, 2010 9:17 am

What Tapsucker said. The VQA stores were grandfathered in but don't expect this to happen for OCB any time soon.
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Postby Bytowner » Wed Aug 18, 2010 9:22 am

No, this isn't new. In fact there's a "Let Ontario Craft Brewers Open Their Own Retail Store" facebook group. Why the government allows the wine stores and not beer stores has always been an awkward question for Dalton. As I recall the Beer Store also made vague threats about not taking their bottles or some such thing, how they're doing Ontario such a huge favour and if we opened up a craft beer store they'd take their ball and go home.
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Postby Spab » Wed Aug 18, 2010 7:56 pm

I'm not expert in this area but I think the issues have everything to do with liquor laws and nothing to do with a lack of innovative thinking.

Under the Liquor Control Act, who has the power to authorize the establishment of stores? Why the Liquor Control Board of Ontario:

The purposes of the Board are, and it has power... to authorize manufacturers of beer and spirits and wineries that manufacture Ontario wine to sell their beer, spirits or Ontario wine in stores owned and operated by the manufacturer or the winery and to authorize Brewers Retail Inc. to operate stores for the sale of beer to the public


Note that the Liquor License Act states:

No person shall purchase liquor except from a government store or from a person authorized by licence or permit to sell liquor.


So it would seem that some/all of the OCBers could in theory establish stores to sell their product, BUT they would need authorization from the LCBO first. And that's happening... never!

I assume Wine Racks, etc exist by virtue of this provision of the regulation under the Act

Subject to the approval of the Board, a manufacturer of Ontario wine may establish government stores for the retail sale of wine made by the manufacturer.


One interesting thing to note is that in 2007 a Liberal MPP introduced a private member's bill to move towards allowing convenience stores to sell Ontario microbrews and VQA wines. Never went anywhere of course.
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Postby Steve Beaumont » Thu Aug 19, 2010 8:11 am

Way back when the Can-US free trade agreement was first signed, Stroh and, I think, Gallo posted a challenge to the Canadian system, which resulted in all sorts of changes nationwide, including the removal of the provision that a brewing company had to have a brewery in a province in order to sell there outside of the provincial beer importation structure. (Remember when Labatt, Molson and Carling all operated breweries in each province? Yes, I'm that old.)

One of the Ontario provisions was the elimination of the allowance for wineries to open non-premises stores, save for the grandfathered Wine Racks and whatever the other single company wine stores are called. This is the part of the regulations that tied up Gabe when he was trying to sell beer across his properties.

There has never been an allowance for VQA wine stores. All the non-LCBO wine stores you see are owned by a single winery. (I'm not sure how they manage to open new stores, such as the one in the Sobeys on Spadina, but I think it has something to do with the transfer of licenses, ie: shut down one store in order to open another.) Thus no legal structure or precedent exists that would allow the OCB to open their own store. Simply, if it was going to happen, it would require a complete rewriting of the existing regulations and the inevitable NAFTA challenge.
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Postby GregClow » Thu Aug 19, 2010 9:34 am

Steve Beaumont wrote:There has never been an allowance for VQA wine stores. All the non-LCBO wine stores you see are owned by a single winery.


Yup, exactly. The only reason that some of them appear to be more general VQA stores - such as the Vineland Estates store down on Queens Quay - is that the larger wineries own several different labels/brands that look quite distinct from each other.

Steve Beaumont wrote:(I'm not sure how they manage to open new stores, such as the one in the Sobeys on Spadina, but I think it has something to do with the transfer of licenses, ie: shut down one store in order to open another.)


Pretty sure that's the case, yeah.

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