Posted: Mon Oct 28, 2002 8:32 pm
It looks like Brick is running into some troubles with their stubby & the Beer Store. I wonder if they'll re-consider their plastic bottle idea?
Attention Business/News Editors:
Beer Bottle Battle
Brick's successful stubby beer bottle triggers Beer Store threat to
cut off bottle supply to Brick
- Brick forced to seek injunction against The Beer Store -
TORONTO, Oct. 28 /CNW/ - Brick Brewing Co. Limited (TSX:BRB) today
announced that it will seek an injunction against The Beer Store, Ontario's
private virtual monopoly beer retailer. Brick has launched the injunction
proceedings as the result of threatened action by The Beer Store.
The Beer Store has threatened that as of November 1, 2002 it will no
longer release to Brick its share of empty industry standard bottles (the
familiar long necks) for re-use.
The Beer Store's action comes mere months after Brick's highly successful
April launch of Red Cap beer in the historic stubby bottle. The Red Cap stubby
reached close to one percent of the industry's bottled volume in Ontario in
four short months. Moving a brand one share point is considered a major
victory in the beer business, where growth has been flat for the past several
years.
Despite the fact that The Beer Store, which is owned by the three largest
Ontario brewers, Labatt, Molson and Sleeman, distributes a number of prominent
brands in non-standard bottles (including Corona, Heineken and the various
Sleeman beers), The Beer Store alleges that Brick's use of the "stubby" bottle
for its popular Red Cap beer is a breach of The Beer Store's standard brewer's
user agreement.
"We are puzzled and surprised by the action threatened by The Beer Store
and can only assume it is tied to the success of the stubby," says Jim
Brickman, founder and CEO of Brick Brewing Co. Limited of Waterloo. "Our
standard brewer's user agreement with The Beer Store in fact expressly permits
innovative, non-standard bottles and only requires that a brewer using non-
standard bottles pay extra handling fees. The Beer Store has charged us those
extra fees since the launch of the stubby and we have paid them in full. We
can only conclude that it's an unjustified attempt to disrupt our operations.
"We have been using the industry standard bottle for the past 10 years
and have been using The Beer Store system without incident since our founding
in 1984," says Brickman. "When we were launching Red Cap in the stubby, The
Beer Store was very supportive and worked closely with us. There was never a
hint of any objection from them until after it was clear that Red Cap was a
phenomenal success and had attracted considerable attention."
The three major breweries collectively sell over 90% of The Beer Store
volume and use both standard and non-standard bottles. There are in fact over
50 different non-standard bottles in The Beer Store system. The major
breweries and many small breweries entered into an industry standard bottle
agreement in 2001 that provided cash payments to small brewers if they agreed
not to introduce any new products in non-standard bottles. Brick found this
agreement too restrictive and refused to sign it.
Even with the popularity of Red Cap in the stubby, close to two-thirds of
Brick's business still comes from beer sold in the long-necked standard
bottle. Until the issue is resolved, Brick will seek to obtain new and used
industry standard bottles from as many alternative sources as possible.
"We will take all necessary steps to protect the Company, our employees
and our shareholders from any attempted anti-competitive conduct by this
virtual monopoly retailer or any other player in the industry," says Brickman.
Brick Brewing Co. Limited and The Beer Store
BOTTLE BACKGROUNDER
Brick Brewing Co. Limited seeking injunction against The Beer Store
- Brick Brewing Co. Limited (TSX:BRB) is seeking an injunction against
The Beer Store, also known as Brewers Retail Inc.
- The Beer Store has threatened that as of November 1, 2002 it will no
longer release to Brick its share of empty industry standard bottles
(the familiar long necks) for re-use.
- The Beer Store alleges that Brick's use of the "stubby" bottle for
its popular Red Cap beer is a breach of The Beer Store's standard
brewer's user agreement.
- Brick's standard brewer's user agreement with The Beer Store
expressly permits non-standard bottles and only requires that a
brewer using non-standard bottles pay extra handling fees. The Beer
Store has charged Brick those extra fees since the launch of the
stubby, and Brick has paid them in full.
- Threat to restrict Brick's access to industry standard bottle empties
appears to be in reaction to the successful launch of Red Cap in the
stubby beer bottle in April 2002. Red Cap and the stubby have been
very well received in Ontario and are being requested for other
Canadian markets.
History of The Beer Store
- According to The Beer Store website: "Today's Beer Store was created
in 1927 (following the repeal of Prohibition) by a group of brewers
working with the Government of Ontario to create a responsible system
for beer distribution in the province."
- The Beer Store website also states: "The Beer Store is owned by three
Ontario brewers: Labatt, Molson and Sleeman....The Beer Store is
committed to fulfilling our founding principles of providing
efficient beer warehousing, distribution, and retail/wholesale sales
for any brewer large or small, foreign or domestic who wishes to use
our system. No brewer is refused access, nor is any legally-approved
brand refused entry. The system operates with common rules and a
service fee mechanism based on volume. We provide retail and
distribution services for over 25 Ontario brewers and 35 other
Canadian and foreign brewers from the cottage, micro and large
brewing industries."
- The Beer Store is the primary distribution and sales channel for beer
in Ontario, operating 436 stores in Ontario and servicing 17,000
licensed bars, hotels and restaurants, as well as servicing
approximately 600 government-owned LCBO retail outlets.
Different bottles in The Beer Store system
- Beer in Ontario is sold in industry standard bottles (ISB) and non-
industry standard bottles, such as the stubby.
- Many of the beers sold in non-industry standard bottles are in the
fast-growing premium market and are dominated by imports such as
Heineken, Stella Artois, Sol, Corona, Bass, Miller Genuine Draft,
Lowenbrau, Becks, Grolsch and Pilsner Urquel, which are owned or
distributed by Labatt, Molson and Sleeman, as well as domestic beers
like Moosehead and the Sleeman brands.
- The three major brewers, collectively selling more than 90% of The
Beer Store volume, use both standard and non-standard bottles. There
are over 50 non-standard bottles in The Beer Store system.
- The major breweries and many small breweries entered into an industry
standard bottle agreement in 2001 that provided cash payments to
small brewers if they agreed not to introduce any new products in non-
standard bottles. Brick found this agreement too restrictive and
refused to sign it.
- Brewers such as Brick have always paid additional handling fees as
part of their user agreement with The Beer Store to handle non-
industry standard bottles.
- Close to two-thirds of Brick brand package sales are in the industry
standard bottle.
Brick Brewing Co. Limited was founded by Jim Brickman in 1984 and was the
first craft brewery to start up in Ontario in recent decades. Brick Beers are
all-natural, contain no additives or preservatives and are reassuringly craft
brewed to deliver a variety of refreshing tastes. Brick is credited as being
one of the pioneers of the present day beer renaissance in Canada. Brick
trades on the Toronto Stock Exchange under the symbol "BRB". Please visit
http://www.brickbeer.com for more information.
-0- 10/28/2002
For further information: Jane Widerman, Jane Widerman Communications Inc., (416) 534-9888; email, janew@widecomms.com
Attention Business/News Editors:
Beer Bottle Battle
Brick's successful stubby beer bottle triggers Beer Store threat to
cut off bottle supply to Brick
- Brick forced to seek injunction against The Beer Store -
TORONTO, Oct. 28 /CNW/ - Brick Brewing Co. Limited (TSX:BRB) today
announced that it will seek an injunction against The Beer Store, Ontario's
private virtual monopoly beer retailer. Brick has launched the injunction
proceedings as the result of threatened action by The Beer Store.
The Beer Store has threatened that as of November 1, 2002 it will no
longer release to Brick its share of empty industry standard bottles (the
familiar long necks) for re-use.
The Beer Store's action comes mere months after Brick's highly successful
April launch of Red Cap beer in the historic stubby bottle. The Red Cap stubby
reached close to one percent of the industry's bottled volume in Ontario in
four short months. Moving a brand one share point is considered a major
victory in the beer business, where growth has been flat for the past several
years.
Despite the fact that The Beer Store, which is owned by the three largest
Ontario brewers, Labatt, Molson and Sleeman, distributes a number of prominent
brands in non-standard bottles (including Corona, Heineken and the various
Sleeman beers), The Beer Store alleges that Brick's use of the "stubby" bottle
for its popular Red Cap beer is a breach of The Beer Store's standard brewer's
user agreement.
"We are puzzled and surprised by the action threatened by The Beer Store
and can only assume it is tied to the success of the stubby," says Jim
Brickman, founder and CEO of Brick Brewing Co. Limited of Waterloo. "Our
standard brewer's user agreement with The Beer Store in fact expressly permits
innovative, non-standard bottles and only requires that a brewer using non-
standard bottles pay extra handling fees. The Beer Store has charged us those
extra fees since the launch of the stubby and we have paid them in full. We
can only conclude that it's an unjustified attempt to disrupt our operations.
"We have been using the industry standard bottle for the past 10 years
and have been using The Beer Store system without incident since our founding
in 1984," says Brickman. "When we were launching Red Cap in the stubby, The
Beer Store was very supportive and worked closely with us. There was never a
hint of any objection from them until after it was clear that Red Cap was a
phenomenal success and had attracted considerable attention."
The three major breweries collectively sell over 90% of The Beer Store
volume and use both standard and non-standard bottles. There are in fact over
50 different non-standard bottles in The Beer Store system. The major
breweries and many small breweries entered into an industry standard bottle
agreement in 2001 that provided cash payments to small brewers if they agreed
not to introduce any new products in non-standard bottles. Brick found this
agreement too restrictive and refused to sign it.
Even with the popularity of Red Cap in the stubby, close to two-thirds of
Brick's business still comes from beer sold in the long-necked standard
bottle. Until the issue is resolved, Brick will seek to obtain new and used
industry standard bottles from as many alternative sources as possible.
"We will take all necessary steps to protect the Company, our employees
and our shareholders from any attempted anti-competitive conduct by this
virtual monopoly retailer or any other player in the industry," says Brickman.
Brick Brewing Co. Limited and The Beer Store
BOTTLE BACKGROUNDER
Brick Brewing Co. Limited seeking injunction against The Beer Store
- Brick Brewing Co. Limited (TSX:BRB) is seeking an injunction against
The Beer Store, also known as Brewers Retail Inc.
- The Beer Store has threatened that as of November 1, 2002 it will no
longer release to Brick its share of empty industry standard bottles
(the familiar long necks) for re-use.
- The Beer Store alleges that Brick's use of the "stubby" bottle for
its popular Red Cap beer is a breach of The Beer Store's standard
brewer's user agreement.
- Brick's standard brewer's user agreement with The Beer Store
expressly permits non-standard bottles and only requires that a
brewer using non-standard bottles pay extra handling fees. The Beer
Store has charged Brick those extra fees since the launch of the
stubby, and Brick has paid them in full.
- Threat to restrict Brick's access to industry standard bottle empties
appears to be in reaction to the successful launch of Red Cap in the
stubby beer bottle in April 2002. Red Cap and the stubby have been
very well received in Ontario and are being requested for other
Canadian markets.
History of The Beer Store
- According to The Beer Store website: "Today's Beer Store was created
in 1927 (following the repeal of Prohibition) by a group of brewers
working with the Government of Ontario to create a responsible system
for beer distribution in the province."
- The Beer Store website also states: "The Beer Store is owned by three
Ontario brewers: Labatt, Molson and Sleeman....The Beer Store is
committed to fulfilling our founding principles of providing
efficient beer warehousing, distribution, and retail/wholesale sales
for any brewer large or small, foreign or domestic who wishes to use
our system. No brewer is refused access, nor is any legally-approved
brand refused entry. The system operates with common rules and a
service fee mechanism based on volume. We provide retail and
distribution services for over 25 Ontario brewers and 35 other
Canadian and foreign brewers from the cottage, micro and large
brewing industries."
- The Beer Store is the primary distribution and sales channel for beer
in Ontario, operating 436 stores in Ontario and servicing 17,000
licensed bars, hotels and restaurants, as well as servicing
approximately 600 government-owned LCBO retail outlets.
Different bottles in The Beer Store system
- Beer in Ontario is sold in industry standard bottles (ISB) and non-
industry standard bottles, such as the stubby.
- Many of the beers sold in non-industry standard bottles are in the
fast-growing premium market and are dominated by imports such as
Heineken, Stella Artois, Sol, Corona, Bass, Miller Genuine Draft,
Lowenbrau, Becks, Grolsch and Pilsner Urquel, which are owned or
distributed by Labatt, Molson and Sleeman, as well as domestic beers
like Moosehead and the Sleeman brands.
- The three major brewers, collectively selling more than 90% of The
Beer Store volume, use both standard and non-standard bottles. There
are over 50 non-standard bottles in The Beer Store system.
- The major breweries and many small breweries entered into an industry
standard bottle agreement in 2001 that provided cash payments to
small brewers if they agreed not to introduce any new products in non-
standard bottles. Brick found this agreement too restrictive and
refused to sign it.
- Brewers such as Brick have always paid additional handling fees as
part of their user agreement with The Beer Store to handle non-
industry standard bottles.
- Close to two-thirds of Brick brand package sales are in the industry
standard bottle.
Brick Brewing Co. Limited was founded by Jim Brickman in 1984 and was the
first craft brewery to start up in Ontario in recent decades. Brick Beers are
all-natural, contain no additives or preservatives and are reassuringly craft
brewed to deliver a variety of refreshing tastes. Brick is credited as being
one of the pioneers of the present day beer renaissance in Canada. Brick
trades on the Toronto Stock Exchange under the symbol "BRB". Please visit
http://www.brickbeer.com for more information.
-0- 10/28/2002
For further information: Jane Widerman, Jane Widerman Communications Inc., (416) 534-9888; email, janew@widecomms.com