I’ve said in the past that news about alcohol sales in Ontario is cyclical, but every time a story breaks the wave pushes a little further up the beach. If that’s the case the leaked agreement before Christmas flooded the front garden bed, and the news today soaked the front hall.
If you, unlike me, didn’t wake up after a fairly late night drinking with Aussies, planning on drinking with Aussies for the day, and find yourself being asked to comment on a press release about something “big” about the beer store, let me fill you in.
The Beer Store made a pretty big announcement about a shift in multiple policies this morning. You can read it here:
http://www.newswire.ca/en/story/1469257/major-announcement-beer-store-opens-ownership-to-all-ontario-based-brewers-new-small-brewer-benefits-package-unveiled
Yeah! The Beer Store! Oh, wait……
I’ll run you through the details in a moment, but here is what you need to know: This is big time damage control. They might just be doing it proactively, but I suspect that they actually know details about looming provincial changes, and are trying to build as good a hand as they can. Given reaction today, it doesn’t sound like it’s working.
So here is what they changed today:
Any Ontario brewery can buy-in to The Beer Store (mostly, I think…. We’ll get back to you)
They are offering shares for breweries to buy-in, whether they’re big rich craft breweries (haha) or small guys who just want to have a say on the board. The board, by the way, is 15 seats; 5 filled by Molson-Coors 5 by ABInBev 2 by Sleeman/Sapporo and 3 by “the rest”. Except for contract breweries. Or not. Actually they’re not sure about contract breweries so they’ll get back to us.
To be fair, this is a pretty big offer in a vacuum, except no craft brewery is going to buy-in to an operation that’s a) still actively treating them as second class businesses and b) likely to get the rug yanked out from under its feet shortly. Also, it’s pretty clear they will still have no real say about anything.
Two free SKUs at 5 local stores
Any “Small” (selling less than 1 000 000 litres of beer per year at TBS) brewery will have the ability to sell two products with no listing fees at the five locations nearest to their brewery. They can also expand the reach of those SKUs at a reduced listing rate at other locations.
Okay, actually this is really the only thing that might benefit a few breweries. To an urban brewery this is not just useless, but actually bad for business. If you are located in an area where the five nearest TBS locations are all within 10km of your brewery, you’ll be encouraging people not to visit you brewery, engage with your staff who actually know and care about your product, and have access to more than two products in a single format each. But for a small brewery in a rural area, there’s a possibility they might take them up on this offer. Maybe. And certainly, if a few did, this would result in a bit more selection at a few locations. I guess. Not a solid point, but we should take what we can get. I should also mention that I know of one very rural brewery who feels basically the opposite, and says that this really only benefits breweries in bigger towns and cities. So maybe I’m way out to lunch on this one.
Trade 2 SKUs per year
Another great-in-the-cold-dark-vacuum-of-space idea: swapping SKUs.
Previously, to list a product, say your brewery’s tasty imperial session IPA, you would pay a fairly offensive amount in fees, and have it stocked somewhere in a self-serve store, or else get a little square added to a huge board of remarkably similar cards, or a listing on an iPad that most people never even actually see. Once done things go great. Doubtlessly the staff at the stores have a depth of understanding of your product, and the incentive to see it do well, and sell lots of it. So when you produce your summer seasonal (a double white mild), you think “Oh, I’ll just get them to sell that for a few months”, right? Wrong. That’s a new SKU, and therefore a new offensively high listing fee……. you see where I’m going. You have go through that, even if you’re only going to sell the product for 2 months. For giganto breweries who either have Scrooge McDuck vaults of money to cover these costs, or else no variance in their brands, this was a fine arrangement. For a brewery who’s annual salaries combined are less than the cost of filling one of those 4000 hectolitre fermenters at the 401/427 Molson brewery, this is just outrageous.
But now they’re offering brewers a chance to swap one product for a seasonal one, twice a year, for free.
This is fantastic news for any small craft brewery. If they have products for sale at TBS. Please see above…..
What do you think, Jason?
Photo: P. Aihoshi http://paulaihoshi.tumblr.com/
Basically immediately the response was negative. It’s important to remember that most craft breweries aren’t just suspicious of The Beer Store, they hate it. They hate it with the kind of passion that can only be instilled by a giant bully stealing your lunch money, pulling down your pants, and snow-jobbing you every single day, including weekends and holidays, even when there’s no snow and you were wearing a kilt, for your entire school career. When the bully then says “hey, want to join my team”, you can probably guess how that’s going to go over.
Scrambling, The Beer Store invited all Ontario breweries to participate in a teleconference with TBS President Ted Moroz tonight. As the link was a public one, some writers listened-in #soiveheard. It was pretty boring #soiveheard, but there were a few interesting tidbits to come from it #soiveheard.
For one, they don’t know where contract breweries stand in terms of ownership. The exact language used described “having a brewery” initially, but when asked, they sort of didn’t know.
Another concerning question was “why didn’t you consult with any of us?” which, on the face of it, seems unanswerable, except to be brutally honest and say “because we’re in panic-mode”. Instead, in what I couldn’t help but think of as a Ford-esque response, the brewers were reassured that multiple people from TBS have conversations “all the time” with smaller brewers, so the process was “consultative”. But maybe they just didn’t ask the right question.
Lastly, and I will admit to just having my dander up on this one: One question Ted tried to dodge answer was whether or not these changes would make TBS more transparent. Apparently “Very transparent already…. statements on website….. blah blah blah”. Except to even begin the process of buying a measly $100 share there’s a non-disclosure form to sign. And the original press release quotes THREE DIFFERENT PEOPLE INCLUDING MOROZ saying that this would make it more transparent (though they never really say how). It’s going to be so transparent, by this time tomorrow not even Waldo will be able to find the place.
The New TBS Corporate Jet
Let me say it again: This is damage control. Or trying to play nice before the rules on the playground change. Or however you want to think of it. What is being offered does nearly nothing for small Ontario breweries, and almost as much for consumers.
Throughout today I tried to stay positive and objective; I’m done with that.
This is a lousy deal. I want to say they’re desperate, but they’re obviously not desperate enough. Or, if they are, they’ve become so self-centered they don’t appreciate they have offered virtually nothing in an effort to make up with an ever-growing group of hard-working business people who they’ve actively treated like shit.
Maybe we need another wave on the rising tide to smash down a wall, or maybe this one was enough, and the effects will seep into a poorly-laid and cracking foundation. No matter how, we are very close indeed, to seeing some real change come to the Ontario alcohol retail scene.
Surf’s up, dudes.
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