Recently, The Toronto Star wrote a story about the fact that Restaurants Canada would like their Ontario members to be able to sell retail beer.
Touting the fact that six other provinces already allow “off sales,” Restaurants Canada vice-president James Rilett was quoted as saying that the idea was “a natural evolution in Ontario’s retail system.”
And while that seems a logical statement at face value, it’s important to remember that there really is nothing natural about Ontario’s retail beer system. Indeed, legislated under almost century-old rules and controlled by foreign-owned entities and a government-endorsed monopoly, Ontario’s retail scene is not so much something borne of “natural evolution” as it is an ungodly, slapped-together, and agonized monster stumbling in the woods praying for someone to euthanize it.
That is to say, I don’t think this plan will work.
For one thing, this not-so-new-idea doesn’t really seem to have Ontario’s brewers’ best interests at heart. Full disclosure: A nice guy from Restaurants Canada once bought me lunch to discuss this very idea in hopes that I’d help them shore up support from brewers for this plan. As I told them then, I think it’s a lovely plan for Restaurants Canada, but not so much the solution brewers need.
That is, allowing patrons to take home six packs after they buy a meal would obviously be a great boost to business for restaurant owners, but for craft brewers who are already battling for limited shelf space in stores run by other entities, this seems like largely more of the same. Ontario’s craft brewers, as they’ve stated through their only formal organization, need their own stores.
I asked Darren Smith, the vice-chair of the Ontario Craft Brewers (and the guy who recently plead the case for brewers to have their own stores) what he thought of the idea.
“From my perspective, the restaurant off-sales proposal is a little like the grocery stores idea – it could be good if it’s structured properly and policed well, but there are some potential pitfalls to be careful of,” he told me via email. “On the positive side, it could be an extra outlet for unique and hard-to-get beers, it’d help bar and restaurant owners earn more revenue, and it’d be convenient for beer drinkers looking for something to bring home. And it ought not to compete significantly with existing retail because a lot of the sales would occur after-hours when regular outlets are closed anyways. So as a piece of this retail puzzle that’s coming together right now, it could be valuable.”
Smith then is largely being consistent with the Ontario Craft Brewer’s official stance on beer sales in grocery stores; essentially, “It’s nice, but please sir, we want some more.” Personally I have my own misgivings about the grocery store angle, and those notwithstanding, I think the restaurant and bar angle adds a whole other sketchy element. Frankly, not to pick on Ontario’s hard working bar and restaurant owners, but I worry about giving retail sale responsibilities to a group who, typically, already comprise some of the most shady and underhanded distributors of alcohol in this province.
Wait, I will qualify that, because it’s not really their fault.
As I’ve been saying for roughly the last two years to pretty much anyone who will listen, lax enforcement of the laws governing the practice of providing incentives to bars has meant that Ontario’s draught taps have largely become not much more than auctioned real estate: Brewers willing and able to play ball offer swag, patio furniture, free beer, and cold hard cash to bar owners in exchange for the promise of draught lines or exclusivity. And yes, the practice seems plainly illegal. Regulation 720 of the Liquor License Act states in part:
A manufacturer of liquor or an agent or employee of a manufacturer shall not directly or indirectly offer or give a financial or material inducement to a person who holds a licence or permit under the Act or to an agent or employee of the person for the purpose of increasing the sale or distribution of a brand of liquor.
But with no one really enforcing this, the practice has become the norm and it is increasingly disadvantaging small and new brewers (something I ranted about in greater detail in July of 2014 if you’re interested.) And so while I prefer to patronize restaurants and bars I know don’t play the game (Shout out to barVolo and Bar Hop), it is tough to fault those bars that do accept incentives since no one is really making them play nice. That is, if it’s not being enforced, can we really expect bars to turn down upwards of $5000 in exchange for a draught line (an actual figure I recently heard bandied about in relation to a local bar in Liberty Village)? Owning a restaurant often means razor-thin margins, so it’s tough to turn down financial help–even if it means your draught line-up ends up looking like a who’s who of the province’s corn-based, mass-produced lagers and “big craft” offerings.
And I’m pretty certain this “pay to play” bullshit is the likely end result of any off sales plan, too. The idea of being able to take home some beer from the restaurant or bar near your house seems like a convenient and welcome change, but won’t it just end up another place where brewers with money can flex their muscle?
I talked to James Rillett about my concerns, and he was candid about the plan’s possible flaws. “We know that this is in no way solves the myriad problems inherent in the beer system, but if the government is serious about rejuvenating the beer retail system, this is something that should be seriously discussed,” he told me via email. “We see this proposal as a chance to offer another opportunity to small brewers. If there are potential problems, they should be considered as part of the conversation.”
Rilett is, of course, no stranger to big brewers’ bully tactics as his members have long been subject to what essentially amounts to price-gouging from The Beer Store’s brewery owners (which I detailed in Toronto Life in February 2014), so I’m hesitant to get on board with (and inherently suspicious of) his enthusiasm for a plan that seems to me like an opportunity for our corporate, lager-slinging overlords to spread their clout: Where there’s potential for small brewers, there’s even more for big brewers and their Mr. Burns levels of wealth. Money fight!
Smith, for his part, thinks the big guys could throw their weight around, but seems optimistic Ontario’s small brewers could ultimately hold their own in new markets.
“You’re right that if larger players are able to muscle their way in,” he says “then it wouldn’t be much of a win for the smaller, newer breweries that most need access to the marketplace. But, if you think about it, craft beer in Ontario has its highest market share in the on-premise channel, and on-premise sales represent the single biggest outlet for craft beer in this province – bigger than either the LCBO or TBS. So craft brewers have historically been most successful at bars and restaurants, and in fact, most new brewers get their start there. If this is all true, then small brewers must be finding ways to compete in the on-premise channel – either based on consumer interest, or product quality & innovation, or something else.”
I hope Smith is right, but it’s that elusive “something else” currently driving a lot of draught beer sales in bars that worries me.
