questions for the lcbo seasonal release decision makers

[Kel Varnsen]

Some of Canada's own great craft-brewing Provinces are largely left out of our product selection as well.

I wonder how much this is the LCBO's issues and how much of this is the breweries. I mean I used to live in Victoria and would go on tours of the Vancouver Island Brewery all the time. They basically said that they objective was to brew beer to sell in Vancouver Island and the lower mainland of BC. So if you are a brewery like that, that isn't really that big and probably sells most or all of what they make, what motivation is there to try and get into the LCBO? Especially since for a lot of smaller breweries across Canada they would probably need to make a pretty significant capital investment to be able to increase there production. I mean there is a reason you can get Labatt Blue anywhere in Canada, it’s because they make a shit load of beer. But when you are a small brewery I am not sure it would be that easy to be able to just start making enough beer to sell to the LCBO.

this is a great post! one issue with the breweries in this province is that the best ones are also some of the smallest. ive witnessed a brewery run off its feet trying to fill one spot in a ocb pack, the owner was left questioning whether it had been worth it to fill the biggest order he'd ever had.

Excactly, I mean there is a lot of talk on this board about distribution problems hurting Ontario Brewers because their product isn't really available in a lot of stores. Now I am sure that is probably part of the problem, but I also wonder how many craft breweries in Ontario make the maximum amount of beer as they can possibly make. I mean I have been to some of the smaller breweries like Church-Key and I can't imagine that place being able to increase their capacity enough to serve every LCBO in Ontario, or even all of the ones in Ottawa. And if they are alraedy selling everything they make, what is the motivaiton for them to expand? You might make more money, but you will certainly have to spend money (or go into debt) getting more equipment and staff. Plus with more production there is also a risk of a drop in quality and if you are a small brewery, a quaility product is pretty much the name of the game. For breweries outside of the province it is probably an even bigger risk.

[Roland + Russell]

I wonder how much this is the LCBO's issues and how much of this is the breweries. I mean I used to live in Victoria and would go on tours of the Vancouver Island Brewery all the time. They basically said that they objective was to brew beer to sell in Vancouver Island and the lower mainland of BC. So if you are a brewery like that, that isn't really that big and probably sells most or all of what they make, what motivation is there to try and get into the LCBO? Especially since for a lot of smaller breweries across Canada they would probably need to make a pretty significant capital investment to be able to increase there production. I mean there is a reason you can get Labatt Blue anywhere in Canada, it’s because they make a shit load of beer. But when you are a small brewery I am not sure it would be that easy to be able to just start making enough beer to sell to the LCBO.

this is a great post! one issue with the breweries in this province is that the best ones are also some of the smallest. ive witnessed a brewery run off its feet trying to fill one spot in a ocb pack, the owner was left questioning whether it had been worth it to fill the biggest order he'd ever had.

Excactly, I mean there is a lot of talk on this board about distribution problems hurting Ontario Brewers because their product isn't really available in a lot of stores. Now I am sure that is probably part of the problem, but I also wonder how many craft breweries in Ontario make the maximum amount of beer as they can possibly make. I mean I have been to some of the smaller breweries like Church-Key and I can't imagine that place being able to increase their capacity enough to serve every LCBO in Ontario, or even all of the ones in Ottawa. And if they are alraedy selling everything they make, what is the motivaiton for them to expand? You might make more money, but you will certainly have to spend money (or go into debt) getting more equipment and staff. Plus with more production there is also a risk of a drop in quality and if you are a small brewery, a quaility product is pretty much the name of the game. For breweries outside of the province it is probably an even bigger risk.

This is exactly the issue that haunted one of our client breweries. How big do you want to be? How fast do you want to grow? Will your quality and reputation be at risk? How much control are you prepared to relinquish in exchange for more capital? Do you risk becoming one of those mainstream producers? If so, is that an acceptable risk?

The thing that acted as a growth restraint in this particular case was the fear that by adding more equipment and thus increasing the production, a radical growth in staff was necessary - at the end they decided they did not want to deal with HR issues, scheduling, benefits, salaries, vacations, conflicts... they did not want to be surrounded with money experts, people experts, IT experts...

This brings us to another issue - payment terms... many craft breweries (and other producers) are set up to deal only Ex-Works, payment due upon product leaving the warehouse. Therefore, some orders have to be "prepaid" and we do it under those terms because we see it as the only way to get certain product to our shores. Cash flow management can quickly get out of control if brewers wait 60-90 days after the product reaches warehouse here, for payment - as a Belgian craft brewer once told us, "We are in the art of making fine beer, not in the money lending business". In reality, perhaps smaller distribution entities and buyers are better equipped to deal with these demands.

Perhaps, everybody has seen enough indie bands going big... expensive videos, big tours, fancy studios, enormous stages - but the songs and the integrity are long gone by this point.

Best,

[Belgian]

So, my question is: Why doesn't the LCBO go out and try to find the best, rather than relying on submissions?

Good question. Why are they not proactive, in the interest of product quality & diversity? Don't they need to be?

Classic example I've heard about - each year, almost ALL the first-rate Burgundy wine in the world is sold to independent buyers long before any seller ever approaches the LCBO. Why?? Burgundy doesn't need us. It is relatively a tiny wine region, and all the good stuff is snapped up by buyers who make an effort to GO there & forge healthy business relationships with the wine sellers.

The result? We lucky Ontarians get a grab-bag of often inferior Burgundy products, and usually at a highly inflated premium of cost. That's just how it works when our big, powerful buyer the LC just sits there and waits for suppliers to show up, begging for sales.

The latter does not sound like a 'healthy business relationship' - nor one that benefits us, the Ontario public. All of which is not a question for the LCBO so much as an aside to your question.