The Beer Store and the hundred million dollar question

The Beer Store is a private corporation owned by three of the world’s largest brewing companies: Anheuser-Busch InBev SA/NV, Molson-Coors, and Sapporo.

This is a fact about which, it seemed, people used to care.

That time, to be exact, was 2013. Ragey beer writing had something of a moment and bloggers and traditional journalists alike seemed to set their collective sights on the worst kept secret in beer: The Beer Store is the only third party allowed to open privately owned retail beer stores in Ontario.  It was a time when Martin Regg Cohn of the Toronto Star was largely leading the non-beer-nerd charge and felt emboldened enough to write Toronto Star-ific ledes like the delicious: “The Beer Store is Ontario’s longest-running public disgrace and economic blight.” Oh Marty.

One of the main beefs the long lost people of 2013 seemed to have, in addition to anger about the fact that three of the biggest beer companies in the world were handed a virtual monopoly on retail beer sales in the province, was that the shopping experience at these stores really sucked. Indeed, the Beer Store, with its Ice Cold Express, list of top ten sellers, and hidden inventory, seems uniquely designed to continue allowing the big brewers who own the place to continue to sell more of their own product because there really isn’t any option for browsing. You can’t chuck an empty OV bottle at a stack of articles about the Beer Store without hitting a reference to the archaic conveyor belt system, the mysterious wall of labels, or the general communist-era vibes of Ontario’s beer retailer of choice.

And so, when the public sentiment culminated in a fine frothy rage that actually emboldened the province to do something about our retail beer fiasco, it included stipulations that The Beer Store would need to improve its customer experience. In 2015 the province released the “Master Framework Agreement” between the entities that own the Beer Store and the province and, in addition to the much-publicized introduction of beer in grocery stores, that agreement laid out details for The Beer Store updating their facilities; specifically, Section 6.1 of the 2015 framework agreement, entitled “Customer Experience” dictates that “The Corporation shall improve the customer experience across its retail network, including by converting stores to more modern retailing formats such as self-serve, open concept formats, and shall ensure that all newly built stores shall have self-serve, open concept formats.” They even put a specific number of the expense of upgrades: “The Corporation shall spend at least $100,000,000 from 2015 through 2018 on capital expenditures (not less than $80,000,000 of which shall be in respect of retail stores), which may be funded through the sale of existing assets of the Corporation.”

Well, a cursory glance at the ol’ calendar suggests that, hey, it’s been 2018 for a few months now.

Has The Beer Store spent that $100,000,000 to clean the place up? Frankly, I’m not so sure. I don’t regularly shop at the Beer Store on account of that whole macro-brewery-ownership-monolpoly vibe, and while I have actually been in a Beer Store twice in the last three years (both times to buy cases of short cans of the excellent Helles Lager from Wellington Brewery, incidentally) it seemed like roughly the same shitty experience I remember from my misspent Budweiser-sucking university days.

But rather than pass judgement based on my small sample size of visits, I decided to ask The Beer Store if they might be willing to detail how exactly they’d spent the $100,000,000 they had agreed to spend. They weren’t exactly forthcoming. I reached out to Midtown PR, the company that handles public relations for The Beer Store, as well as Charles Dougall, the person nominated to the role of Beer Ombudsman, a supposedly neutral position intended to mediate issues between the Beer Store, brewers, and the public. I also reached out to Ontario Minister of Finance, Charles Sousa, who oversaw the 2015 Master Framework Agreement.

The Beer Ombudsman sent a fairly quick reply from his iPhone noting that he was aware I’d already reached out to Midtown PR and that they would answer me. To date, Charles Sousa’s office has not responded to my emails, and Bill Walker from Midtown PR indicated that I could find all details about expenditures online. Specifically, he noted:

“Capital spending is disclosed in our audited Annual Financial Statements which are publicly available via: http://www.thebeerstore.ca/ownership-governance/corporate-policy-financial-information – see note 18 in the 2016 financial statement. It states: “In addition to the above, and as per the MFA, the Company is committed to spending $100M on capital expenditures during the years 2015 through 2018, not less than $80M of which shall be in respect of retail stores. Between 2015 and 2016, total capital spending amounted to $61.9M of which $49.6M relates to retail stores.”

And while it’s true that the Beer Store posts financial statements online and it’s true that the statement actually contain the above note about the Master Framework Agreement, those online statements are about as transparent as a New England IPA and it’s not entirely clear where the MFA statement has pulled these numbers.

There do appear to be expenditures of $37.7 million in 2017 and $31.3 million in 2016 for the purchase of property, plant and equipment, and intangible assets, and while you might be able to attribute those expenditures to “improved customer experience,” $69.1 million ain’t $100,000,000. The statements also show that “leasehold improvements” went from $60.9 million in 2016 to $61.6 million 2017, and that’s also a pretty minor increase. There wasn’t a single line up, and certainly not one amount to at least $80,000,000, related to “making shopping here not shitty anymore.”

So it seems (to me at least) like the Beer Store has in all likelihood not actually spent $100,000,000 on improving the customer experience–at least not in any way their PR company was excited to point me to, nor in any way that was apparent to respondents to my twitter poll of followers who shop there (an admittedly-biased sample group, surely), nor in any way that is immediately obvious ton their publicly available financial statements–to either me or an anonymous finance industry friend I pulled into take a look since I’m an English major and big numbers make my palms sweat.

And so, my question is this: If the Beer Store has failed to live up to its end of the bargain as outlined in the 2015 Master Framework Agreement, is the province obligated to hold up its end?

You may or may not recall that the agreement was something of a compromise: The province would add just 450 grocery stores to our retail beer system, and phase them in over time, and The Beer Store would improve their customer experience. Given that The Beer Store hasn’t spent $100,000,000 to improve customer experience, does this mean the province might feel free to finally open the retail beer scene more broadly, i.e. to anyone who might want to purchase a licence to sell beer?

It’s unclear whether the Premier of Ontario will still be Kathleen Wynne after the June election, or if it will be Andrea Horwath, or the terror dog that hatched from a gargoyle in the first Ghostbuster movie, and it’s also unclear (and let’s face it, unlikely) that whomever does win will want to take bold action on the retail beer portfolio, but it is perhaps interesting to note that, at the very least, there appears to be a loophole available now if any person (or bulky, red-eyed, demon creature) wants to shake things up.

Then again, it’s entirely possible that The Beer Store simply broke their promise and no one really gives a shit.

Photo by chuttersnap on Unsplash