Back in August, the Ontario Craft Brewers announced the appointment of a new association president.
The former CEO of Golf Canada, Scott Simmons was also Vice President, marketing and business development for The Beer Store, and he led that organization’s development of a long range strategic plan.
The OCB currently boasts 82 members and is the only organization representing the interests of small brewers in the province. Accordingly, the role of president is one that could conceivably be pivotal in shaping the future of craft beer in Ontario. I reached out to Simmons and managed to catch him during a free half hour when he was literally driving to Queen’s Park to chat beer with provincial politicians and we discussed what he’s been up to in his first 12 weeks on the job, what we can expect next for beer in Ontario, and, importantly, what a newly-craft-converted and self-described “blue collar” guy from Brantford (who went to high school with Gretzky no less) likes to drink. What follows is an edited transcript of the things Simmons was willing to go on the record about (also worth noting: I knew we only had 30 minutes, so I tried to cut to the chase).
Ben’s Beer Blog: “Ok, you probably saw this one coming, so lets start with it. Craft brewers in Ontario are still “the little guys,” and to my mind, there are a few big guys they have to do battle with and one of them is The Beer Store. You come from The Beer Store. How do you reconcile that? I’ve talked to some OCB members and, the consensus is generally “who better to help us in that system,” but there are also a lot of guys that want to blow up that system. In March 2015, I watched Darren Smith, the owner of Lake of Bays Brewery and the Vice Chair of the Ontario Craft Brewers, give an impassioned speech directly to provincial politicians, basically saying “Let us have our own stores.” I still think that’s the best possible scenario here: Let craft brewers open their own stores. But given your Beer Store background, does this signify that the OCB is content to work within that system, or are stores still a goal?”
Scott Simmons: “I think it’s still a goal for sure. But as you know from your work in the industry, every thing is political. Everything is a negotiation. I think that, my personal opinion, the craft brewers kind of lost the battle for their own stores—for the time being at least—when the grocery store plan got announced.”
BBB: “I agree.”
SS: “I think when they announced grocery, cross-selling and individual stores fell off the table for the time-being but it’s certainly something that I’m going to keep advocating for. And to your point about the little guys and the big competition with Molson and Labatt—for sure, but I try not to think of it as so contentious. They’re not evil and all this. You know, they’re good people.”
BBB: “Sure. And I’ve had lengthy conversations with [Beer Store President] Ted Moroz and he’s very cordial. And I know they “support craft beer,” and they’ve got their new iPads they’re happy to talk about, but at the end of the day, they’re still charging little guys to sell beer in a store that the big guys own. Fundamentally, there is opposition there.”
SS: “I’ll give you my view of The Beer Store from the time that I was there. I think there’s a lot of good things that the Beer Store does for Ontarians and for all brewers quite frankly that maybe aren’t well understood. The cost of service, or if you’re just trying to move one hectolitre of beer, the Beer Store is by far the most efficient distribution system—”
BBB: “I won’t disagree with that. As a draught distributor, they’re unparalleled. Anyone importing beer into Ontario would probably agree, too.”
SS: “Their cost per hec, let’s call it $40/hec, is far cheaper than the LCBO. If you just want to get your beer into a retail system, they’re well set up to do that and the listing fee is quite nominal. The problem with The Beer Store is that you can’t see the beer. If I’m a brewer and I’m in there, I have no way to market my beer. When I was with The Beer Store, I built those Ice Cold Express systems, the lobby display units, the new wall unit with the cards—well, that’s all gone now and you have to rely on the ipad. I went in there as a consumer, new to this job, and I’m still a little bit of a neophyte when it comes to all the different types of beer, but I’m learning. It was very difficult for me as a consumer to go on that thing and try to learn what they have. It’s not user friendly. It’s not a great shopping environment. Getting your beer to the store, they do a great job. The listing fee is low and you get seven free stores around your neighbourhood. I’m saying all the good things. But it is a tough place to sell your beer, and that comes through in the numbers. Craft beer is 2% of TBS sales and there’s good reason for that. Number one, the vast majority of customers coming into the Beer Store are coming in to buy their 2-4s or 12 packs. At the LCBO the craft beer share is around 10% and you look at the first foray into grocery and it’s around 20%–and we don’t have sales data from the stores, so we’re using shipping as a proxy, but it’s just intuitive.
Molson and Labatt are not bad people. There is a market for that kind of beer, but there is a growing market or growing taste that only craft brewers can meet. And there is a growing demand toward supporting local and supporting people who are putting money back in the economy, supporting local jobs, being part of the communty—that’s a big part of the culture of craft beer and the people that support it. I see no reason that, with a few changes, craft beer can’t get to a 20% market share.
To come back to your first point about stores, is it still on the table for us? Absolutely. But if Im being realistic, I’m not sure that’s going to happen in the next couple years. They’re not going to touch anything new with retail unit grocery is fully implemented. And we’ll see some things that may or may not happen with the LCBO and The Beer Store.
Molson and Labatt are not happy. Their share was declining when I worked there and I believe that trend has continued. One share point in this province is worth like $30 million and that system is slowly but surely eroding from them.
[. . .]
If you do your job well and you can market your product well, the Beer Store can be a boon to you, and there are a number of brewers who are doing quite well in the Beer Store. It’s not set up though for the smaller guys.”
BBB: “Well that sort of leads me to a criticism I’ve often heard about the OCB. There are a lot of small or smallish craft brewers who are fairly successful and they aren’t interested in becoming members. From what I’ve heard, it’s largely because they feel that the OCB represents the interests of your larger members than your smaller ones. So like, the OCB is happy to help Beau’s and Steam Whistle operate in the existing system and doesn’t want to rock the boat, and maybe the OCB isn’t catering to these smaller guys who have different needs. I know you’ve only been in it 12 weeks, but what would you say to that?”
SS: “I kind of don’t agree with that. I’ve seen in my short tenure, I’ve seen great camaraderie between brewers of all sizes. Our board has the big guys on it and the small guys on it. I think a lot of things the OCB is doing caters to smaller brewers. The biggest problem that I’ve seen in 12 weeks is that the value proposition of membership is not well understood. That’s priority one for me. Crystallizing the value proposition and telling people what we’re doing. Sure, there are going to be things that help some brewers and not others. There’s a tax issue I’m working on for example, that will only impact brewers once they get to a certain size, and a lot of our brewers will never get there or don’t even dream of getting there. So for sure thats for them. But then there’s other things. The first tax legislation John Hay worked on greatly helped the little guys, but there are some other incentives were working on every day. The short answer is that in my 10-12 weeks here when I chat with all the various consultants we have, they are working with every brewer every day an they don’t discriminate.”
BBB: “OK, so you want them to see the value. What do you say to those small brewers? Let’s hear your pitch.”
SS: “Well, they’re paying—and I don’t have the fee schedule in front of me—let’s call it $500. Well, there’s a number of marketing initiatives you can get involved with. There’s the assistance with the LCBO–their merchandising program can be a nightmare if you’re new. We have an expert on staff. One of the consultants who manages all the craft brewer buy-ins into that program. We’ve got government grants that subsidize the buy-in to that merchandising program. Another area is data. I don’t know if you know how data flows from the LCBO, but it’s pretty arduous. You get these big complicated flat fills that don’t tell you anything. It really takes someone with analytics to mine the data. And what the OCB can do for a brewer that doesn’t have those resources or smarts, is we can help you understand what markets you should be in based on what your objectives are, we can help you get monthly data to help you understand your sales, your shipments, your sales by store—you know, those are just a few examples of services that we can provide. And not a lot of people are taking us ip on these because quite frankly I don’t think lot of people know they’re available.”
I’m n the midst of writing a strategic plan. I think John did a great job writing his plan 10-12 years ago that got the association where they are today but it’s a vastly different landscape, going from like 12 brewers to 270 and growing, if you include contractors. The association has to grow up with that. Are we representing the industry or the members? I want to represent the industry. The vast majority of our members are under 5000 hec–under 2000 hec even–so a big part of our value proposition has to represent those brewers.”
BBB: “You mentioned your predecessor. John was obviously a former politician himself and, in my opinion, was pretty content to work behind the scenes. He’s not a “rock the boat” kind of a guy. When there have been big policy changes, I often get calls from news outlets seeking someone to discuss the changes because the OCB simply didn’t. To me, that is a bit of a criticism. I think the OCB should rock the boat a little. I understand you don’t want to piss off politicians you have to work with, but—you’re literally walking into Queens Park right now. Is your approach going to be more of the same? Or you going to be a little more vocal?”
SS: “I have no problem being vocal. The government has been a great supporter of the industry and quite frankly I don’t think the industry would be where it is without government support. You have to recognize that and thank them for that, but at the same time, it doesnt’ stop there if there are things that need to be dealt with that are unfair or that are actually going to help the government. [. . .] I wouldn’t call it “rock the boat” or just continue to advocate but our government funding through Growing Forward 2 comes to an end this year. And I knew that before I took the job. So I’m literally walking into an association with a very small budget that has zero government funding in it. So, I’m actually maybe in a better position as I—what would I call it?—I’m not beholden to them as I go in and talk to government.
[. . .]
There’s going to be 300 brewers in this province. We have 82 members. The first think I’m going to do is find a way to talk to the other 218 and find a way to say, “Come on, get in the boat.” Because if we’re truly going to represent the industry, we need as close to 100% membership as we can get. And if we can get that membership, that’s a source of funds, and there are other sources of funds I’m looking at that I won’t elaborate on right now.
There’s a way to continue to grow the association without that GF funding if we have to but we have to continue to advocate government because there are subsidies and grants that our members can capitalize on.”
BBB: “One more question, because I know you have to go. What’s in your fridge right now?”
SS: “Well, it’s growing, let me put it that way. Consider that I worked for TBS and grew up in Brantford, Ontario, the beer-guzzling capital of the world. I admittedly have drank a lot of mainstream beer my entire life. But ever since I started kicking the tires on this job, I’ve been experimenting and my palate is slowly changing. I’m drinking some IPAs now, but lower on the bitterness scale. I couldn’t drink the bitter stuff at first. Although, interestingly enough, and the guys I’ve been working with told me this would happen, I try to go back to Coors Light now and I go “Fuck, that’s not beer.” So my tastes are slowly changing. I haven’t gotten into porters and stouts yet—the odd wheat beer—but my palate is changing, especially now that I know what goes into the process.”
BBB: “So you’re not going to name drop any breweries or what?”
SS: “Well, I started by drinking the beers by the guys on my board, which is a smart move. So I’m drinking a lot of Great Lakes, Camerons, Muskoka, Beaus, All or Nothing, Sleeping Giant, Flying Monkeys, Sawdust City—”
BBB: “OK, you’re just naming them all now.”
SS: “No, I’ve literally had some of all those beers in my fridge in the last four weeks. I haven’t landed on my go-to yet. I’m still in my experimental mode.”