New Beer Store deal ‘window dressing’ to guard monopoly: critics

WATCH: How do independent brewers really feel about the Beer Store’s ownership offer?

A new deal proposed by The Beer Store, the privately owned, government-backed distributor of beer in Ontario, is “window dressing” designed to fend off public criticism while ensuring profits continue funneling to the chain’s foreign owners.

That’s according to Ontario’s convenience store operators, who are fighting for the right to sell beer across the province.

The Beer Store —  owned by AB InBev, Molson Coors and Sapporo — said Wednesday it will open up a slice of ownership to Ontario-based craft brewers, while lowering fees to have their products stocked at Beer Store locations.

“This is a Beer Store initiative to protect the monopoly,” Dave Bryans, chief executive of the Ontario Convenience Stores Association (OSCA), said.

“This is just more window dressing. Fundamentally nothing changes, it’s still controlled by the big three foreign owners with an added touch of Canadian content,” Bryans said

Lower fees, board membership

The Beer Store has promised Ontario-based brewers the right to sell at least two of their products at the closest five Beer Store locations located near the brewer, while issuing ownership shares to them. Among other measures, The Beer Store’s board will also make room for three members selected by Ontario brewers (with five apiece appointed by Molson Coors and InBev and two for Sapporo).

“With those three seats they get a say in decision-making and governance of the business on all the operational and financial policy decisions, so there’s a voice that they now get at the table,” said Beer Store spokesman Jeff Newton. “And when they come in as owners, they’ll be treated financially the exact same way as the large brewers are treated.”

MORE: Beer Store opens ownership to all Ontario-based brewers

George Croft, chief executive of Brick Brewery, the largest independent brewer in the province, said he supported the The Beer Store proposal. “There’s certainly an opportunity to evolve and improve. My view of today’s announcement is that it’s going to provide a system that’s more inclusive,” Croft said.

Jeff Fisher, owner of Indie Ale House in Toronto, said he wouldn’t be an owner under the Beer Store’s offer, which he characterized as a public relations campaign.

“The craft brewers can’t get together and say let’s paint all the stores or let’s sell them,” said Fisher. “You have no real say, so you’re an owner that gets to choose nothing. It does nothing for me.”

Ontario craft beer represents about five per cent of total Beer Store sales, according to estimates. The majority of the rest is comprised of labels owned by the three foreign brewers. Molson Coors is based in Denver, AB InBev is headquartered in Belgium while Sapporo is based in Japan.

Lots of questions

Ontario Craft Brewers, a trade association, said the announcement came as a surprise. The association wasn’t consulted, it said.

“We need more information; we have lots of questions,” Cam Heaps, chair of the OCB said. “It certainly does not address our major issue of improving access for consumers.”

Last fall, Ed Clark, the former head of TD Bank who is advising the Ontario government on ways to raise money, criticized the Beer Store’s favourable treatment of its own brands, such as Canadian, Coors Light, Blue and Sleeman, over Ontario craft beers.

Clark suggested The Beer Store pay more money to the province if it’s to retain control over the majority of Ontario beer sales.

The federal Competition Bureau has also looked into the distribution agreement between the Beer Store and the province.

MORE: Federal watchdog probing Ontario’s beer monopoly

Ontario’s convenience stores are hoping they can win the right to sell beer across their network of thousands of stores, replicating the same arrangement found in other provinces such as Quebec.

Bryans said convenience store owners would be satisfied with selling only craft beer made in the province.

“If the government said that tomorrow, we would stand up with them and say, ‘We’ll take it and we’ll drive and grow the craft beer business in Ontario.”

— With a file from Canadian Press