The Bar Towel

On 2003-07-16 08:40, Jon Walker wrote:

..... What I can point to is the vastly different approach taken in Washington and Oregon back in the 80's when the micro scene there exploded. Guys like Bert Grant started up small operations and decided not to bother making products for the Bud drinker,...

While I agree with most of your comments, we cannot assume that because the approach of Grant and his peers in the Pacific Northwest worked there, it would work here. The Pacific Northwest, (Northern Cal, Oregon, Washington, and BC) have a long history of supporting their local industries, particularly those associated with their agricultural base. The wine industry in the area flourishes - and not just grape wine, a variety of strange fruit based wines as well. The area is a huge hop growing region and much of the support for the small brewers in the area was a rally around the local hop growing industry. Yes, the tax laws and liquor license laws are significantly more benefitial to the small brewer out west than here, but it's the laid back culture, a much more relaxed attitude toward alcohol in general and a strong desire to support the little guy that really keeps the micro's going. The McMenamins chain of brew pubs has been around for 20+ years and has grown enormously. They are a "family oriented" chain of restaurants that make beer - and malt extract beer at that. Try making that one fly in T.O. - ain't gonna happen.

We live in the big smoke - bigger is better, faster is better. Molson's and Labatt rule (unfortunately) - Sleeman's is a Micro that makes "premium" product - just ask any Joe Blow on the street. We also don't have a reputation for supporting our local agri based industries - look at how we've "supported" our local wineries over the years.

If the Micro brews are to succeed, they certainly must differentiate themselves from the big guys - making another faux Pilsner or Cream Ale just isn't going to cut it (unless your name is Cool and your mission is to sell real cheap simple suds). Quality of course has to be superior but education I believe is the key. The Ontario Small Brewers Association and the brewers themselves have to draw more attention to themselves. The sale of KLB to Amsterdam may be a sad event to the relatively small group of "beer connoisseurs" in Ontario, but the vast majority of people in this province have never heard of either KLB or Amsterdam for that matter. If you want more people in Ontario to drink local beer, you have to get in their face and let them know you exist first - from my perspective anyway.

Hey, the.brewer, give me a 5 year old Chimay Blue anyday and freshness be damned! Actually, when I last visited Chimay I had an 18 year old bottle....absolute elixir.

You're quite right, Peter. How silly of me!
Of course I should have said that bottle-conditioned or unfiltered beers are pretty much exempt from my comments, as the yeast scavenges up the oxygen. For some reason, I can still tell when I'm drinking old wheat beer, mine included. I guess more substantial beers either cover up or can handle oxidation.
Michael H.

[quote]
A start would be for the provincial and federal governments to start enforcing their own current laws in order to prevent the big breweries from slinging free kegs to publicans.
Interbrew and Molson have approached the government with a proposal that would enable all brewers to sign exclusive contracts with bars and restaurants. Labatts has argued that it goes on anyway so why not just make it legal and above board. Further, they rationalise it by saying that because all brewers can do it it is a "level playing field". Nonsense. No real micro has the cash to offer the bars to secure such a deal. We would be effectively shut out of any place that does volume. Stalwarts like Castro's, Smokeless Joe's and, of course, the Winking Judge would be the only types of place where we would stand a chance. I would prefer to sell my beers in such bars anyday, but they are few and far between and if all the micros are going to scramble to get into these few places, its going to get ugly.
The Ontario Small Brewers Association is lobying to prevent this and to get fairness in our tax system. Please support their efforts.

First off, great thread! I have thoroughly enjoyed reading everyones comments! Thank you all!

Next, I think what I've really gotten out of this are a few conclusions... :

- From a business perspective, running a profitable Micro brewery in Ontario in the current climate is near impossible. Look at how many have come and gone, it's almost like most brewers essentially last as long as the 'infatuation' stage - Once the brewer gets bored, and realizes they can't make a reasonable profit, they pack it in. (and as a business owner myself, I don't blame them!!)

- We all want the same thing, for a wide variety of great beer to be brewed (and purchased) in Ontario!

From what I understand from this thread anyway, the central reasons why micro-breweries can't survive are:

1) Uneducated beer drinkers
2) Too much tax

(Not to totally over-simplify, I'm sure there are many other contributing factors, but let's move forward with these 2 for the moment, unless I'm totally off-base)

What can _WE_ do about this?

EDUCATION
- I think things like the Toronto Festival of Beer, and other similar events are a great start for educating beer drinkers, 10 years ago the beer festival didn't exist, where could someone go to sample a bunch of different beers?? What else can be done to increase the 'average' beer drinkers' understanding of good beer?? It's a tough question, while I can think of a few ideas, I'm certainly in no position to implement many of them.

I would think it would require all the small brewers to get together and pool a % of their marketing budgets towards this common goal of 'beer education' because collectively if 5-10% of the beer drinking population understood they were drinking sh*te and began drinking Micro's instead, that would be a wonderful thing!

Could we perhaps come up with a 1 page flyer and hand it to everyone going into the beer festival this summer, educate them on say 3 key things we think ALL beer drinkers should know (purity laws, true styles of beer, (IPA vs. Keiths...), etc... - get a few thousand copies run off... The micro's in the festival could maybe 'sponsor' the printing of these things...? Perhaps co-promote BarTowel.com as well - give interested people a place to come, communicate, learn some more, etc...

#2) TAXES - Brewers, please respond on this - What (if anything) can us beer-drinkers do to help out from a tax perspective - maybe it would be a waste of time, but could we create a web-based petition to send to someone? - Could we organize a protest and generate some publicity? I don't know - but sitting back and doing nothing doesn't sound very productive If anyone is going to do anything about this - It's going to be 'us'...?

I would absolutely love it if we had more micro breweries in Ontario brewing great beer, but so far, 2 of my favorites bottled Ontario beers (Hart's Dragon's Breath Pale Ale, and Upper Canada's Rebellion Ale), have already disappeared, I suspect this will continue to happen unless we work together, fight the good fight and try to make a difference (even if it's a small difference!)

- Thanks to Cass for Bar Towel...BTW, here is someone who has actually stepped up and made a difference, purely for the love of great beer!!

I'd certainly be willing to help with any projects designed to help with either of these aims! I think if you look at what CAMRA has acheived in the UK, it can definately be done!

Micro friendly pubs should also educate beer drinkers. The best one that does this has to be the Winking Judge. I've talked to a guy in there who was drinking Scotch Irish Sgt. Major who three months ago was drinking Blue.
Brilliant!

On 2003-07-16 23:14, JWalter wrote:
Could we perhaps come up with a 1 page flyer and hand it to everyone going into the beer festival this summer, educate them on say 3 key things we think ALL beer drinkers should know (purity laws, true styles of beer, (IPA vs. Keiths...), etc... - get a few thousand copies run off...

a neat idea but it would have to be carefully done. Cass, I'm sure, does not want to get sued.

FYI, here is Andrew's press release:

PRESS RELEASE

Friday, July 18, 2003

Sale of Kawartha Lakes Brewing Co. Ltd.

On June 27, 2003 Kawartha Lakes Brewing Co. Ltd. (KLB) accepted an offer to purchase all of KLB’s brands and assets from Amsterdam Brewing Co. Ltd. of Toronto, Ontario. The sale of KLB's assets is conditional upon creditor approval on July 22, 2003.

“I have full confidence in Amsterdam’s management, and their fine brewer Joel Manning to continue to brew and produce all of KLB’s brands. Our many loyal customers from across Southern Ontario can also be assured that they will be able to continue to find their favorite KLB products at their local Beer Store, LCBO outlet or on-premise account without any interruption in supply. Everyone at KLB has worked diligently on the quality and consistency of our fine beers, and I am confident Amsterdam Brewing Co. will continue to do so”.
Andrew Cousins, President/CEO, KLB

Amsterdam is currently in the process of exploring all of its options with respect to the future use of the KLB brewery including finding ways to improve KLB's retail presence within the Peterborough area.

For further information, please contact Andrew Cousins at 705-741-1819
klbceo@nexicom.net

Sincerely
Andrew J. Cousins
President/CEO, KLB

Here's a story about KLB:

http://www.peterboroughthisweek.com/ka/ ... 6454c.html

Two things from the article:

"At peak time, the company was making almost $2 million a year"

I assume this is sales and not profit. At the risk of being intrusive roughly how would this break down on the balance sheet?

"Small breweries got together and lobbied for a substantial tax cut that was granted May 26 but Mr. Cousins says it was too late for KLB."

What is this? It must have been a minor concession otherwise people here would be trumpetting it...

On 2003-07-19 13:24, A wrote:
"At peak time, the company was making almost $2 million a year"

I assume this is sales and not profit.

I think it's pretty safe to assume that the $2Million figure is income (revenue), not profit. KLB is a private company, so revenues would probably be fairly easily caluclated given that they had to pay the wonderful excise tax on virtually every litre they produced. Profit would depend on the KLB cost structure and Mr. Cousins simply isn't going to make public his costs.

"Small breweries got together and lobbied for a substantial tax cut that was granted May 26 but Mr. Cousins says it was too late for KLB."

What is this? It must have been a minor concession otherwise people here would be trumpetting it...

Here's a press release talking about the tax roll back. Doesn't give the details on the actualy rate reduction and who qualifies. If I did a little more searching around I'd probably be able to dig that up as well.

http://www.newswire.ca/releases/March2003/28/c5355.html

What is this? It must have been a minor concession otherwise people here would be trumpetting it...

If you're interested, here's the link to the Excise Tax act information related to Breweries:

http://laws.justice.gc.ca/en/E-14/51188.html

The tax rates as laid out in the Excise Tax schedule for breweries are:

II. BEER

1. On all beer or malt liquor containing more than 2.5% absolute ethyl alcohol by volume, $27.985 per hectolitre.

2. On all beer or malt liquor containing more than 1.2% absolute ethyl alcohol by volume but not more than 2.5% absolute ethyl alcohol by volume, $13.99 per hectolitre.

3. On all beer or malt liquor containing not more than 1.2% absolute ethyl alcohol by volume, $2.591 per hectolitre.


This does not reflect a tiered system based upon capacity, so I'm guessing these figures are from before the March changes. Hopefully someone in the industry would be able to provide the correct details regarding just what changed.

Found the March 2003 tax adjustments.

The details are available on this web site:
http://www.gov.on.ca/FIN/bud03e/paperc.htm


Beer and Wine
Microbreweries
Small brewers promote tourism and community and rural development. To encourage the growth and development of Ontario's microbrewery sector, the fees levied by the Alcohol and Gaming Commission of Ontario will be adjusted effective May 26, 2003.

A microbrewery would be defined, on or after May 26, 2003, as a manufacturer of beer whose annual worldwide production over the last five years averages 150,000 hectolitres or less.

The microbrewery reduction rates and thresholds are proposed to change according to the following schedule:

5.11 cents per litre for regular beer and 3.61 cents per litre for draught on the first 15,000 hectolitres of beer shipped in Ontario on or after May 26, 2003;


12.76 cents per litre for regular beer and 9.01 cents per litre for draught on the next 15,000 hectolitres of beer shipped in Ontario on or after May 26, 2003;


25.53 cents per litre for regular beer and 18.03 cents per litre for draught on the next 20,000 hectolitres of beer shipped in Ontario on or after May 26, 2003;


38.29 cents per litre for regular beer and 27.04 cents per litre for draught on the next 25,000 hectolitres of beer shipped in Ontario on or after May 26, 2003;


45.95 cents per litre for regular beer and 32.45 cents per litre for draught on the next 75,000 hectolitres, up to 150,000 hectolitres of beer shipped in Ontario on or after May 26, 2003; and


51.05 cents per litre for regular beer and 36.05 cents per litre for draught when over 150,000 hectolitres of beer is shipped in Ontario on or after May 26, 2003.
Regular beer is beer shipped in containers with a capacity of less than 18 litres. Draught beer is beer shipped in containers with a capacity equal to or greater than 18 litres.


So, based upon my poor math, before the tax change, those producing under 15,000 HL would pay about $560 in taxes per 20HL brewed. Under the new scheme, they would pay about $102 in taxes per 20 HL (I think 20 HL is 2000 litres . A pretty significant change and because of the tiered structure, seems to reflect poorer economies of scale in the smaller brewer.

The excise tax is a federal one and there is no sliding scale. There is a bill being presented, drafted by Unibroue I believe, that would give a major break to brewers shipping less than 70,000 hl per annum. This break could make many micros profitable overnight. The break is fair to all brewers, regardless of volume. Even Molson and Labatt would receive the break on their first 70,000 per annum.

On 2003-07-19 22:21, PRMason wrote:
The excise tax is a federal one and there is no sliding scale.

So are there actually two separate taxes then. An excise tax applied by the federal government and a fee levied by the Alcohol and Gaming commission of Ontario?