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Tapping into Some New Kegs for Ontario

August 6th, 2016 Posted by Consignment & Private Orders, Feature, LCBO Releases 1 comment

For those of you who know me, I have long criticized the archaic keg importation and distribution system in Ontario. It is one that is legacy at its finest, something that favours a few select companies, has not kept up with the changing beer times and ultimately has affected the potential selection that Ontario beer consumers could have on draught in the province.

To summarize the system, the only way for a local brewery agent to import a keg for in-bar sale in Ontario is to pay a significant listing fee and have it distributed by The Beer Store, or negotiate with one of three private companies (Premier Brands, Premium Beer and Diageo), who were granted authorization by the LCBO to distribute kegs. However, as these companies are brewery agents themselves, a natural conflict of interest arises when it comes to distributing the kegs of others. This was not such of an issue when the agreements were first forged many years ago, however recently with the influx of new brewery agents in Ontario, this means that many potential brands looking to get on tap in the market had to play by out of date and unfair rules. If you would like to read an in-depth analysis of the keg distribution system in Ontario, I encourage you to read Ben Johnson’s here.

However, agents perserved. Any import beer you’ve had on tap up to the present day has been technically distributed by one of the above companies, even if their local agent is another entity. A popular agent in Toronto struck a deal with one of the private companies, and their brands on draught are distributed through them. Others have agreed to pay The Beer Store’s listing fees and have brands on tap through them. Some have forgone either of these scenarios in the hopes that the system may change for the better.

Well, almost unbelievably so, perhaps it may be. The LCBO is piloting a new project whereby they will be directly importing small (up to 18L), one-way, recyclyable kegs through their Specialty Services department, which oversees Private Ordering and Consignment, two areas where a significant amount of premium bottled beers are imported through and distributed to agents, and in turn to bars and restaurants.

What does this mean? For one, agents can now request to order these small kegs as they would bottles or cans, bypassing The Beer Store or one of the three other private companies. This cuts out a huge layer of complexity, cost and conflict from the equation and potentially opens the market up for premium imported draught like we haven’t seen in Ontario ever before. Since the current system required a decent amount of volume to make it worthwhile, this new scenario allows for single or small volume keg orders with lower overhead to reach bars and restaurants. That’s not something we’ve ever had in Ontario, except possibly for those who may have attended a Saloon League event.

The potential of this is significant. Agents could theoretically bring in kegs to test the market, without making a larger commitment to a brand on draught as is the case now. Festivals could work with agents to bring in one-off kegs in a way that was otherwise not realistic. Bars and restaurants could work with agents or breweries to bring in seasonal, one-off or other interesting kegs, again something that just wasn’t feasible in the past. Now of course, the kegs need to conform to the LCBO’s outlined packaging standards, but one-way kegs have been increasing in popularity in recent years, presumaby due to ease of shipping and distribution.

We have seen in Ontario over the past number of years small step changes when it comes to the beer marketplace. As this is a pilot with numerous conditions, it is consistent with the philosophy of doing a little bit rather than drastic change. However, it is a step in the right direction to loosen one of Ontario’s most restrictive, complicated and unfair beer practices. That is something worth having a fresh glass of draught to celebrate.

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One comment

Scott says:

I would like these kegs also to be available to the general public for home consumption

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