The Bar Towel

Saw this on Canadian Beer News.

Best quote: "Retail analyst Lisa Hutcheson said The Beer Store’s retail model is antiquated and doesn’t hold much allure for shoppers."

How do you lose money when you predominantly sell your own brands in high volume? They also operate a very low frills type of business with little in the way of merchandising, advertising and general customer experience features. No doubt they'll use this to double down on their lobbying efforts against further loosening of beer sale restrictions on the province instead of improving their business model.

seangm wrote:How do you lose money .... instead of improving their business model.

The business model was set up to distribute beer for the brewer/owners (currently 2 primary owners: AB Inbev & Molson Coors, and to a smaller extent Sapporo).
As Jordan has written many times elsewhere, its meant to be a "cost-recovery" model, not a retail for-profit model. In other words, the owners (ABI and MC) can make the P&L look any way they want by simply changing how much they charge The Beer store for the inventory (transfer pricing), and how much dividend (if any) they pull from the "bottom line".

Don't get me wrong, The Beer Store is a broken system, and they continue to lose huge chunks of market share from the "craft" segment but you shouldn't be making much of the headlines saying how much they "lost" any given year.

portwood wrote:

seangm wrote:How do you lose money .... instead of improving their business model.

The business model was set up to distribute beer for the brewer/owners (currently 2 primary owners: AB Inbev & Molson Coors, and to a smaller extent Sapporo).
As Jordan has written many times elsewhere, its meant to be a "cost-recovery" model, not a retail for-profit model. In other words, the owners (ABI and MC) can make the P&L look any way they want by simply changing how much they charge The Beer store for the inventory (transfer pricing), and how much dividend (if any) they pull from the "bottom line".

Don't get me wrong, The Beer Store is a broken system, and they continue to lose huge chunks of market share from the "craft" segment but you shouldn't be making much of the headlines saying how much they "lost" any given year.

Well I guess that kind of ties into my prediction that they'll use it as an excuse to continue their lobbying, and make it look like they are suffering due to expanded beer sales elsewhere. It certainly comes across as smoke and mirrors.

portwood wrote: The business model was set up to distribute beer for the brewer/owners (currently 2 primary owners: AB Inbev & Molson Coors, and to a smaller extent Sapporo).
As Jordan has written many times elsewhere, its meant to be a "cost-recovery" model, not a retail for-profit model. In other words, the owners (ABI and MC) can make the P&L look any way they want by simply changing how much they charge The Beer store for the inventory (transfer pricing), and how much dividend (if any) they pull from the "bottom line".

Don't get me wrong, The Beer Store is a broken system, and they continue to lose huge chunks of market share from the "craft" segment but you shouldn't be making much of the headlines saying how much they "lost" any given year.

Maybe I'm ignorant here, but aren't there tax laws that address transfer pricing? I wouldn't think that ABI and MC can manipulate TBS P&L at their whim. Granted, loopholes are everything in tax law and there is probably wiggle room to artificially adjust, but I wouldn't think it's an unfettered right to cook the books.

Not that I am in anyway endorsing TBS; cannot recall the last time I was there to make a purchase rather than return empties.

You can lobby all you want, but grocery isn't going away, young people don't want six of something let alone 24 of something, and if no one shows up there's nothing you can do about it.

Besides. There are ~400 brewing entities also lobbying that the beer store excludes.

Walkin' dead.