The Beer Store’s owners are gouging licensees

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It is perhaps not news to  readers of this blog that The Beer Store and its foreign company owners occasionally get up to some shady dealings.

I’ve detailed the way big brewers buy their way into bars by illegally paying for draught line exclusivity and I’ve shared the odd fact that bar owners are required by law to buy their beer from The Beer Store, but this newest news might just be the shadiest.

It seems that licensees, i.e. restaurants and bar owners, are getting supremely gouged when they opt to purchase bottles of Molson and AB-InBev products for resale in their businesses. Indeed, in most cases licensees pay almost 30% more than the public when they opt to purchase brands like Coors Light and Canadian.

On January 16, 2014, the Canada Restaurants and Foodservices Association (CFRA) met with the Standing Committee on Finance and Economic Affairs for a pre-budget consultation and shared the surprising fact that they are paying considerably more than the public for beverage alcohol at both the LCBO and The Beer Store.

You might conceivably apply flawed-Ontario-liquor-law-logic to this fact and suggest that maybe licensees pay more because they stand to make a profit reselling the alcohol to patrons, but if that were the case then you’d assume there was a consistent markup across the board for beer sold to licensees, right?

Wrong. This is not the case at all.

In fact, the mark-ups only occur for brands of beer owned by the foreign companies that own The Beer Store. Consider the following chart, which the CFRA shared with the Committee:

Brand Public Price for 24 Licensee Price for 24
Coors Light $34.95 $44.75
Molson Canadian $34.95 $44.75
Budweiser $34.95 $44.75
Bud Light $34.95 $44.75
Blue $29.95 $44.75
Heineken $46.95 $54.87
Keith’s $41.50 $46.13
Sleeman Original $33.95 $44.75
Stella Artois $46.95 $54.87
Mill Street Organic $45.95 $45.95
Moosehead $41.50 $46.13
Steam Whistle $45.95 $49.45
Wellington SPA $45.00 $38.10
Muskoka Dark Ale $44.95 $44.95

You’ll note that Coors Light, Canadian, Budweiser et al are marked up by The Beer Store almost 30%, whereas in the case of Ontario’s craft brewers like Mill Street and Muskoka, licensees typically enjoy the same price as the public and, in some cases–like that of Guleph’s Wellington Brewery–they actually pay less.

(Aside: Bar owners pay almost 50% more for Blue? Who the fuck drinks Blue?!)

So not only are bar owners required by law to purchase their beer from the foreign-owned Beer Store, but if they want to buy the brands that The Beer Store’s owners brew (those brands that most Ontarians sadly still prefer to drink), they are paying considerably more for no reason at all other than the fact that The Beer Store can get away with it.

Supposedly, in response to bringing these numbers to light, the Committee, the LCBO, and The Beer Store have all “committed to working with CRFA to find solutions,” but this is just all kinds of greasy.

The takeaway here though, if you’re a bar or restaurant owner seems pretty clear: It’s more cost effective to serve bottles of Ontario craft beer in your establishment. That, along with the fact that The Beer Store is screwing bar owners, is a message I don’t mind getting out to as many people as possible.

Hat tip to a nameless tipster who pointed me to this article on the CFRA website.

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46 Comments

Filed under The Politics of Drinking

46 responses to “The Beer Store’s owners are gouging licensees

  1. That’s nuts. I had no idea that the public pays less!

  2. Wow! I had never noticed this before. Is this also true for kegs?

    • Ben

      I’m not sure, but I don’t think so. Based on every iteration of “buy 5 kegs get one free” that the big brewers [allegedly] pull at all bars, I think they tend to think of keg sales as a lesser side of their business. That is, I feel like the big brewers view draught in bars and restaurants as basically advertising for their retail and bottle sales where they make monstrous amounts of money. That’s just my opinion, but I’m occasionally right about stuff.

      • North Country Boy

        I worked for a microbrewery here in Toronto, and I also own a bar. Small breweries get screwed all the time… BUT… they also give away a lot of beer for free too. The brewery I worked for had a 3 for 1 system in place and probably still does to this day. A licensee buys 2 kegs and gets one free. The delivery drivers were instructed to keep separate and secret records of the free keg drops which the brewery kept track of away from the brewery office. While I agree the big brewers and the Beer Store are complete crooked… the small guys have been pulling tricks for years too. .

  3. Jason

    The public ends up paying more, and the big brewers get rich while strengthening a system that screws local brewers. Ontario.

  4. Beerstoreguy

    I work in a beer store and deal with a lot of small licensees.
    A lot of small licensees will buy their product off license to get the home consumer price, because the margins on licensee prices are too high. So small business owners are forced to risk their liquor license in order to get a fair (relative term) price on the popular brands.

    I’ll even tell them to get half the order on license, then half off, so they’ll have the receipts necessary to pass liquor inspection. It’s shady, but it’s what they need to do

  5. Kurt

    So how is this a problem? What’s the worst that could happen? No Molson on tap? Who cares? People drinking macro swill should be gouged. Am I missing something?

    • Ben

      This isn’t about draught beer, it’s about bottled beer.

      And I think you are missing something, yes. While it’s all well and good to say people that drink “Molson” should be penalized, the truth of the matter is that most Ontarians drink mass-produced lagers.

      What that means is that if bar owners want to stock their businesses with the products that most people drink, they are being forced to pay a considerably higher price to do so. “People drinking macro” aren’t gouged (rarely is the price of Coors Light inflated at the bar) but people serving macro are definitely gouged.

      And if your next comment is to say, “Then they should just serve craft beer,” then rest assured on that we can agree.

  6. Bev

    I think Molson Coors Canada is equally owned by the Molson family and the Coors family making it a 50% canadian company and 50& american owned and I believe ABI is 100% Brazilian owned…just an fyi

    • Bev

      Also if Licensee’s are paying $1.86 per bottle according to your chart why do they mark it up over 300% for us to buy in their bars at $5 per bottle….dont hear the licensee’s complaining, if they did the same with food costs a hamburger would cost about $20…i think we are getting gouged here

      • Billy

        Bev – Most bars/restaurants aim to operate with their cost of sales at 25-30%. Also keep in mind that when you go to a bar, there are overheads like staff wages, utilities, insurance, maintenance, advertising, etc.

        You go to a bar for the atmosphere and service. Unfortunately it involves the costs listed above to make that happen. Since Ontario licensees must buy the main popular brands from the Beer Store, their hands are tied. Reducing the retail prices increases the cost of sales percentage which then puts the business at risk.

      • BowlingRon

        We run a bar at our bowling alley. We refuse to ‘cheat’ and buy any product off-license. What hasn’t been mentioned so far…not only do we pay significantly more to buy the beer – but we also have to pay an annual fee to get the license in the first place, just to have the priviledge of paying more for the beer. Not to mention that we have to pay someone hourly to serve the product and pay business overheads to have a place to serve it. Alcohol sales are definitely profitable, and that is why people sell the stuff – but we certainly are not gouging anyone by charging $4.50 (tax included) for a bottle of Coors Light or Canadien. Also, when the Beer store has a ‘sale’ and drops the price of something in order to sell more if it – us poor licensees still get to keep on paying the ‘going price’. And when Budweiser (or any of the others) have a ’28 for the price of 24′ offer…the beer store keeps a nice little pile of the regular 24 cases to sell to the poor licensee (at the higher price no less). No bonus for the working business man, just for the average joe, even though we are the ones buying the higher volume of their products.

      • Mike

        Bev… IF?? You have never been in the restaurant industry, right? Food prices are marked up wayyyy more than alcohol. You really think that $5 plate of fries doesn’t have some serious profilt margin in it? Think again.

  7. Hmm.. I wonder what licencees are charged for brands produced by Canadian owned companies such as Brick Brewing…???

  8. Alex

    I have to point out that those brands are not marked up “by The Beer Store” but it is the brewers that set the prices. The Beer Store does not set prices for the beer it sells, licensee or otherwise. TBS makes its money from listing fees and I think also sales per hectolitre.

    • Ben

      But the brewers and The Beer Store are one and the same. The first nine brands on the chart above are owned by the companies that own The Beer Store…

  9. Chris

    My wife and I went to lunch in a family style restaurant. Believe it or not they were selling Coors Light for $7.00. I noticed all of the beers were from Molson. I ordered a Coke and left but filled out the comment section on the card at our table. Told them their beer selection is awful and so are their prices, and of course I won’t be back.

  10. The Beer Store does not set beer prices for licensees and does not apply an extra mark-up as is suggested. Licensee prices are set by individual brewers.

    • Ben

      Hi Ted,

      Thanks for swinging by my beer blog for a comment.

      I appreciate the comment and the clarification from you as the Beer Store’s president. I certainly wouldn’t want to say something on my blog that isn’t true, so I have a follow up question.

      As you’ve noted, “Licensee prices are set by individual brewers,” I feel compelled to point out that the first nine brewers I’ve listed on the chart from CFRA are also The Beer Store’s owners.

      Is there really a distinction to be drawn when the Beer Store owners ARE the brewers?

      That is to say, if it’s true that the brewers of Coors Light, Molson Canadian, Budweiser, Bud Light , Blue, Heineken, Keith’s, Sleeman Original, and Stella Artois are all gouging licensees, is it not then also true that The Beer Store is gouging licencees?

      I’d greatly appreciate your clarification.

      Thanks.
      [reply also sent via email]

      • Ben, every brewer sets their own prices. We have nothing to do with setting prices, I promise. They decide the price, they apply to the LCBO for approval, we are notified of the price – that’s it. 100 brewers, 400 brands.

    • Ted Moroz comments as if The Beer Store is just another retailer among many that sells beer. Rather than the reality that three giant foreign brewers own The Beer Store and have a near monopoly on the sale of beer. Guessing that The Beer Store’s owners big concern is guarding against more competition in beer retailing.

      • FrostyMug

        Just like Walmart and most other retailers are foreign owned? In your convenience stores do you only sell products from Canadian owned companies? You know, like Coca Cola or Pepsi or Frito Lay? When will you guys climb down off that horse?
        If people only want to drink beer brewed in Canada by Canadians then Molson and Labatt do that along with a plethora of choices offered at the Beer Store and the LCBO. I don’t think it matters at all who owns them just like it doesn’t matter for my car, my clothes and most anything else we buy these days. Licensees sell what their customers want. If customers want beer brewed by the big two then that is what they will sell. If customers come in and ask for something else then most licensees can and do respond to that. Furthermore those same licensees are in business to make money. If they thought they could do better with something other than said big two then I’m quite confident they’d all be running to do that. Funny that’s not happening either.

  11. The Beer Store also doesn’t let Licensees pay for their orders with credit cards yet the average joe can go into any beer store and pay however they want. I asked Ted about this personally and his response was that it would cost The Beer Store too much money to allow us to pay by credit card. I guess that is the benefit of being a monopoly.

    • Mark Boscariol

      Beer store would get most favorable credit card rate imaginable not to mention that since they’re charging licensees $5-10 more a case that they could afford the few pennies extra.

  12. Jason

    Ted – missing the point, The Beer store benefits by brewers selling at higher prices to licensees because the beer store IS those same shady brewery. One branch of the corporation sets the prices, the other collects and says – we didn’t set the prices. Amazing.

    Not mentioned is that the Ontario Gov, which gets TONS of political contributions to many of it’s members from these beer store owners, allows this monopoly exist. Screwing the people is profitable for everyone except the people.

  13. Mark Boscariol

    Not to mention that licensees are forbidden from paying by credit cards, and that they cannot buy the wide variety of beer thats available at the lcbo.

    Franz Kafka could have written this

    • BowlingRon

      Another point to mention. Licensees do not get the benefit of ‘sales’ offered to the public. Those nice big 28 for the price of 24 cases – usually stuffed with an extra freebie t-shirt or whatever, we don’t get those cases. They keep a pile of 24s just for us…so the public pays 29.95 for 28 (or whatever) and we get to pay $45.75 for a 24 case…and pay for a license every year for the privilege and have to pay for smart serve courses for our staff to be allowed to sell the stuff. And people wonder why a beer costs $5 at a bar. And by the way, let’s just keep raising the minimum wage higher and higher and wonder why retailers have to raise their selling prices. Only in Canada.

  14. CS

    Ben, thanks for this. Any chance you could get a copy of a comprehensive list? This has gone viral, at least in Windsor.

  15. DMan

    It’s a scam, no question. But while licensees may complain, they won’t do anything about it. Why? Because they’re still making a tidy profit reselling Beer Store cartel brands. Just not as much profit as when they resell independent breweries’ brands.

  16. Henry

    All empires crumble, without exception. Keep voting with your dollars and one day this racket might be forced to dissolve.
    The Beer Store gave Katherine Wynne’s Liberal government $100,000 last time to leave them alone. I wonder how much the bribe will be next time? With all the details being dug up about how badly consumers are getting screwed, you’d think the price just doubled??

  17. This make no sense. Where is the government on this? This makes the honest bar owner turn evil. If a bar owner is not honest, they will just buy beer privately then sell it. Government will lose tax right there for no reason. Second part, we need local jobs and people’s(local) taste. So, this whole B.S. , government chose(un-regulate) to help certain special interest group by losing tax revenue, promoting small % bad bar owner and killing local jobs(local brews). This is sad.

  18. Joe

    The licensees’ do not have it as bad as everyone is making it out to be. In terms of package products, the majority of the bottles come through TBS, if it is not available at TBS, then they can purchase it at the LCBO per unit. For example, ciders. You cannot purchase any cider at TBS, but you can purchase any brand, and any SKU at the LCBO. Also, there are many brands available on the craft side, that are not approved OCB brands that are still available to licensee at fair rate through the supplier.

    Furthermore, licensees’ who produce a decent volume for suppliers such as Molson, and Labatts, not only get a keg rate, but a hectolitre rate. This rate accounts for both their package and draught volume. Do customers know that? Not likely.

    Who pays for the Trips, TVs, The Fridges, and The Golf tournaments that offer iPads and crazy give aways? I can tell you right now, it’s not the bar. Suppliers leverage volume with a ‘budget.’ The more beer you sell, the better your budget; the better your budget the more guests you bring in; the more guests you bring in, the more money the bar makes. Basically if your bar is crap, it’s not going to get any support from a supplier. You wouldn’t invest into anything without a return, would you?

    To take it a step further, once the bar starts hitting decent volume, then the power shifts to the bar owners. Basically, they can leverage their existing volume and cliental to other suppliers. Which is why it is not uncommon to see a Molson bar switch to a Labatts bar. It’s simply because Labatts wants Molson’s out, and their volume, so they’ll pay a better rate. That being said, ask yourself why you aren’t able to get that special beer that you and your buddies always ask for, on tap? It’s because the owner is being paid for his distribution (share) and volume from certain suppliers. The winner goes to the highest bidder. That new craft brew you like, likely doesn’t have the funds to support or compete against the other guys to get on tap.

    Finally, if you’re a bar owner it is never a good idea to buy off license, as suppliers can see the volume that is being pumped out from TBS via your license number. So if you’re selling 30 cases a week (Equal to 3 HL), and buying all your product off license, then you’re only hurting yourself as that volume cannot be seen by the big guys, therefore they will not visit you, and set you up with a budget that you’re likely entitled to.

  19. As an immigrant from Europe (been here 13 years now a citizen) I have to say that everything about the way Ontario deals with alcohol sales and distribution is utterly bizarre. The fact that bar owners are required by law to buy their beer from The Beer Store sounds like the old stories involving the mafia. This is a government sponsored racket being taken advantage of by a cartel of large breweries. The sooner everything is opened up to fair competition and taxes on alcohol are decreased, the sooner this province will come into the 20th century like the rest of the western world. There is no excuse for any monopoly these days. Frankly – it is embarrassing explaining this stuff to visitors. Furthermore – who would be a bar owner these days? With all this crap they have to deal with plus the crazy power the liquor inspectors have, you would need to have your head examined. What a headache.

  20. Pingback: Here’s the licensee price for every item The Beer Store sells | Ben's Beer Blog

  21. Sometimes you have to stand up and fight to get action. Help spread the word and encourage others to boycott the Beer Store! https://www.facebook.com/notes/rinos-kitchen-ale-house/the-beer-store-monopoly-and-unfair-business-practices/817025691647521

  22. DocDave

    The large breweries continue to produce the crap they call “beer”. However, a quiet revolution is occurring in the craft beer industry where the consumer is being educated on higher quality local products. Slowly but surely, the big guys market share is slowly being eroded as consumers discover the quality of locally produced, smaller batch product. Their palate eventually becomes suited for styles of beer not offered by the big guys. I suspect their response to this will be to buy out the small guys. They make poor quality, uninspired beer and the public is slowly realizing this. Look at the local beer scene in just about any North American city and you see what the future holds. I believe the days of these dinosaurs are numbered just like what happened to the Big Three in the seventies.

  23. sergio zevallos

    When is this madness gonna end? This is the only country ive lived in where bars, night clubs and restaurants have to pay more to purchase beer than individuals. We take great pride on our canadian beer but the fact that I can get a six pack of blue or Canadian way cheaper across in the U.S. is kinda sickening

    • BowlingRon

      I buy beer for my bowling alley through my license. I rarely have to purchase it for myself personally – so I am more familiar with licensee prices than I am with the public prices. I have noticed that within the last week or two – as if we were not paying enough already – they snuck in a price increase of $1/24 for the ‘big boys’. I’m now paying $45.75 for a 24 of Canadian, Coors Light, Blue, Budweiser,etc. Did they raise the public price by that same $1 ?

  24. Kyla

    My issue with making changes to liquor laws is the effect they could have on late-night retail employees who work alone.

    September 9, 2013 Tom Moher, Mac’s Vice President of Operations in Central Canada, presented his case for the sale of alcohol to the Toronto Region Board of Trade.

    I have serious concerns surrounding his promise to invest $54-million to build 27 new stores in Ontario if allowed to sell alcohol, an additional incentive for robbery. Mr. Moher seems confident “it’s going to happen – and perhaps sooner than some might think.” If it does happen, he explained Mac’s would be spending millions of dollars “retrofitting our current stores for the sale of alcohol.” Perhaps these retrofits would be the perfect opportunity for this company to install buzzer-barrier systems at all 24-hour locations to protect lone midnight employees from injury during robberies.

    Without first implementing necessary safety measures, I feel adding alcohol sales to the mix would be reckless and irresponsible, and would place workers in even greater danger than they already face. Before these companies proceed any further in lobbying for change to Ontario liquor laws, I urge them to consider the safety and security of current and future employees.

  25. Pingback: The Beer Store & Bad PR: Kill the Thrill | The Thirsty Wench

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