The Beer Store monopoly needs to change, says 23-year-old article

It’s always important to remember, whenever we launch headlong into the debate about The Beer Store, that this debate actually happens with a fairly predictable frequency. Indeed, in beer writing circles, it’s been posited that you can count on a rant exposing Ontario’s “foreign-owned monopoly” to surface pretty reliably roughly every six months or so. It’s almost as though beer nerds unofficially take turns having a go at The Beer Store simply for the guaranteed web traffic it typically translates to. It’s our version of shift work.

What even we angry beer writers might not realize though, is just how long this debate has been raging.

To give us some idea, and to maybe lend me a reminder of just how futile all of our recent anti-Beer Store writing probably is, fellow beer scribe Jordan St. John, who is the national beer columnist for QMI and who writes a beer blog called St. John’s Wort, recently sent me an article that he uncovered while doing research for a forthcoming book he co-authored on Ontario’s brewing history (a book which, incidentally, is currently available to pre-order on Amazon.ca).

The subject line of his email, appropriately, was simply “hahahaha” and he had saved the attached file as NOTHING EVER CHANGES.pdf.

The actual title of the article attached, however, was “‘Smelly’ stores cleaned up,” a piece by reporter John Heinzl from The Globe and Mail from December 9, 1991, about The Beer Store. It’s an interesting article for a few reasons, but mainly because it serves as a stark reminder, some 23 years later, that the issues we all currently have with The Beer Store are nothing new, that they’ve faced competitive upstarts before, that they’re happy to make tiny improvements to appease their consumers, and that, ultimately, sadly, they’re probably not going anywhere.

The article focuses mainly around The Beer Store’s archaic and “smelly” setup and, interestingly, includes quotes from then-Brewers Retail’s president and chief executive, Larry Jackson, which might as well have been lifted from current Beer Store president Ted Moroz’s talking points:

“The research we’ve done with consumers, over the last year and a half in particular, has shown that they’re not very pleased with our stores,” said Brewers Retail’s president and chief executive Larry Jackson.

“There is an opportunity to do a better job at retail,” Mr. Jackson said.

In addition to talk of sprucing the joint up (efforts that apparently are still ongoing 20 years later), it’s also interesting that the article posits what might happen to The Beer Store should they be forced to face any real competition, in this case coming from the Brew On Premise Association of Ontario. For the most part, this article could still run in the Globe today, and one need only update the provincial price comparison breakdown and sub out home-brewing operations for the Ontario Convenience Stores Association.

(side note: perhaps the OCSA might do well to consider the fate of the now non-existent Brew On Premise Association following their efforts to take on The Beer Store in 1991…).

What else stands out is that this article was written at a time when The Beer Store had very recently been forced by new legislation to offer beer from import markets, having previously only sold beer made in Ontario–an interesting fact to note given that the current stream of anti-Beer Store rhetoric is so often pro-Ontario beer: Until 1991, they actually only sold Ontario beer.

I’ve attempted to reproduce the article’s text in its entirety, below, and following my text is a link to a PDF of the original article.

Incidentally, the article’s author, John Heinzl, still writes for The Globe and Mail and is now listed as their Investment Reporter and Columnist. He’s also on twitter so why not give him a follow maybe send him a tweet today to thank him for his pioneering–though equally futile–work exposing the Beer Store?

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EDMUND Burke figured a bright orange and white sign would attract hordes of beer drinkers to his brew-it-your­self shop in Pickering Ont. Great idea. Poor choice of colours. Almost immediately,the sign provoked the wrath of Brewers Retail Inc., Ontario’s mighty beer retailing monopoly.

“They’ve just been like a bulldozer,” an exasperated Mr. Burke said. The problem : Brewers Retail’s signs are also orange and white and use two of the same key words as Mr. Burke’s. His read: Brew Shop – The Brew-It Beer Store; Brewer’s Retail’s say: The Beer Store.

Rather than battle the close to $2-billion-a-year beer retailing giant, which aleged trademark infringement, Mr. Burke threw in the towel and dismantled his sign on Dec. 2 following an out-of-court settlement.

Brewers Retail is quick to throw its weight around when competitors encroach on its turf. But what if the 65-year-old private company were stripped of its monopoly and, with all due respect to Mr. Burke, forced into real competition?

“It would be out of business very quickly,” said retailing analyst John Winter of John Winter Associates Ltd. in Toronto. “It’s just a smelly old place where bottles or beer come rolling down.” At a typical outlet, customers place their orders with an attendant at the front of thestore, who shouts into a microphone. Then someone in the back room -you don’t usually see who – sends the beer scooting out across steel rollers
from a hole in the wall.

“There’s certainly no romancing of the product,” said John Williams, head of Toronto-based John C. Williams Consulting Ltd.

Even Brewers Retail admits there’s room for improvement in the way it sells suds to the public. Many stores have been revamped since 1985, when the company began changing over its signs to The Beer Store from the staid Brewers Retail. But those efforts have done little to boost customer satisfaction.

“The research we’ve done with consumers, over the last year and a half in particular, has shown that they’re not very pleased with our stores,” said Brewers Retail’s president and chief executive Larry Jackson.

In Toronto, for example, beer drinkers must travel an average of about two kilometres to get to the nearest outlet. When they arrive–85 per cent or so come by car–the parking lot is ofien jammed. Line-ups, especially on Friday and Saturday nights, are another problem.

“There is an opportunity to do a better job at retail,” Mr. Jackson said.

“On the other hand you get a lot of customers who say I know what I want. I want to get in and out as quickly as I can.

“We obviously want to position ourselves for the long tenm and ensure that we’re doing things that will build customer loyalty down the road. There is a lot of uncertainty in the marketplace in terms of where competitiveness is going and where competition will come from.”

On Friday, International Trade Minister Michael Wilson promised that Canada will comply with the General Agreement on Tariffs and Trade ruling that provinces eliminate unfair pricing and permit distribution of imported beer.

Implementing the GATT decision could mean a substantial drop in the price of US and other foreign brews as as early as next spring, and force Brewers Retail to stock imported beer alongside domestic brands. Liquor stores in Ontario have been selling imports for years, but Brewers Retail sells only beer made in Ontario.

The GATT ru ling comes at a particularly troubling time for the Canadian beer industry, as domestic sales are suffering because of changing consumer tastes, cross-border shopping, increased taxes and high unemployment. Brewers Retail’s sales, measured by volume, plunged 8 per cent in November from the same month a year ago, Mr.Jackson said.

Brew-it-yourself shops are another threat. While still a relatively small industry–the Brew On Premise Association of Ontario has more than 40 members with annual sales of about $10 million–they enjoy a significant tax advantage that allows customers to make their own beer on the site for about half the price.

Brewers Retail isn’t taking the threats lying down. In a bid to spruce up its image, the company will unveil three superstores in the Toronto area next May. Two are to be outfitted with covered drive­ through bays where cases of beer are stacked high on the wall. All three will be expansions of existing sites.

The typical superstore will be 5000 to 6000 sq feet in size, about six times as large as Brewers Retall’s smallest outlets. Most of the extra space will be devoted to a shopping area, which will be much larger than in the 60-odd selfserve stores already operating.

Mr. Jackson promises the new outlets will be brighter, more contemporary, and offer a much wider assortment of beer-related paraphenalia–hats, sweatshirts, bottle openers and key chains, for example–which Brewers Retail began stocking in the 1980s.

“The whole thrust behind these stores is to make them larger and
more productive. That ratinalization will create more efficiency in terms of our whole retailing system,” Mr.Jatkson said.

If the project is a success, plans are to roll it Out across other major citits, including Ottawa, Windsor, London and Hamilton.

Meantime, Brewers Retail has been weeding out less efficient outlets, including 39 that were closed in October. As well, last summer Mr. Jackson eliminated several layers of management.

BrewtrS Retail is operated as a non-profit co-operative by four Ontario breweries – Labatt’s Ontario Breweries Ltd., Molson’s Breweries (Ontario) Ltd., Northern Breweries Ltd. and Amstel Brewery Ltd.

In addition to its 470 retail stores, the oompany distributes beer to about 14,000 licensed establishments and 620 Liquor Control Board of Ontario outlets across the province.

Despite the criticism, Brewers Retail counters that beer in Ontario, as $22.4S for a case of 24 exclusing deposit, is cheaper than in any other province. Even in Quebec, where beer and wine is widely available at corner stores, the price iS $25.50.

“Our stadies have indieated that you certainly couldn’t expect to deliver beer to the consuming public better than we’re doing it right now,” Mr. Jackson said.

HOwever, analysts say the real test will come if and when Brewers Retail is forced into competition in the retail marketplace, a prospect that could have the comapny and its 6,500 unionise workers crying in their beer.

One person who won’t be at all upset is Edmund Burke, whose store now sports a green and white sign that reads: Brew Shop – The Brew-it Beer Shop. The word store has been removed.

“If I bad the money I’d go after them tooth and nail, and I’d win the bloody thing. I’d just love to take them on.”

Original Article in PDF: Smelly Stores Cleaned Up