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Revisiting Ontario’s Master Framework Agreement with The Beer Store

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In 2015, in response to Ontarians’ frustrations about The Beer Store—a private corporation owned by three of the world’s largest brewing companies: Anheuser-Busch InBev SA/NV, Molson-Coors, and Sapporo—the Provincial Government and The Beer Store entered into a new agreement, dubbed the 2015 Master Framework Agreement.

Last week, I wrote a post about the fact that it seemed to me like The Beer Store might not be living up to its end of the bargain with respect to the 2015 Master Framework Agreement, specifically their obligations to improve their customer experience.

In light of the fact that the province is handing out money to craft brewers, the industry is booming, and we’ve added even more grocery stores to the list of places we can now buy beer, it once again occurred to me that my choice of subject matter last week was pretty consistent with criticism I’ve heard that I only focus on negative things.

And so, rather than only write about one shitty thing in relation to the Master Framework Agreement, I thought I’d do a follow-up post today where I outline a lot of other shitty things in relation to that agreement.

Because frankly, the fact that The Beer Store may or may not be meeting their commitments under this agreement isn’t really even the shittiest thing about that agreement. The agreement itself, aside from the addition of grocery stores to the list of places we can buy beer, is generally pretty shitty.

In fact, it largely just reinforces all the things we found so rage-inducing back in 2015. Let’s take a look.

THEN: The Beer Store and the LCBO have a “sweetheart deal.”

Remember when Martin Regg Cohn of The Toronto Star revealed the “bombshell” revelation that The Beer Store and our state-run liquor distributor did in fact have something of a gentlemen’s agreement to let each other run their respective businesses a certain way? You may recall that, at a time when people were hyper-aware of the fact that The Beer Store was the only entity in the province allowed to sell beer privately, the province making concessions to them was akin to something of a scandal.

It was, in fact, essentially the straw that broke the camel’s back. The Star, as is their wont, piled on after their “exposé” and the series of articles that followed in all likelihood led the province to create the Master Framework Agreement.

NOW:: The Agreement created in response to the agreement basically has all the same agreements.

The new master framework still says that the LCBO has to notify the Beer Store when it wants to open new stores, if the Beer Store decides they want to open a store in that community instead, they can (Section 6.7(a)), effectively giving The Beer Store first right of refusal to further enforce their monopoly.

THEN: WE WANT 12 PACKS!

One of the things that seemed to piss people off the most about that “sweetheart deal” was that the LCBO had agreed not to sell beer in formats larger than six packs, effectively handing The Beer Store the rights to large format and bulk discount sales.

NOW: We’re supposed to get excited that the LCBO is “allowed” to sell 12 packs, but a look at the fine print of the new agreement shows that Section 6.4(b) of the agreement actually dictates that the LCBO can carry those 12 packs in just 60 retail stores—an amount that’s equal to about 9% of all the LCBO retail outlets. Furthermore, “with respect to such 60 retail stores,” the LCBO agreed “to prioritize stores that are at least two kilometres from the Corporation’s [The Beer Store’s] stores.” So Ontarians are almost definitely still buying their 12 packs from the same place.

THEN: Bar and restaurant owners are literally not allowed to buy beer from the LCBO if that product is available at the LCBO.

In a blog post from 2012 I detailed how licensees who are picking up their liquor at the LCBO can’t also grab a six pack of something unique for their patrons if The Beer Store also sells that beer. Even if the LCBO stock is fresher, was stored better, and is more convenient for a licensee, if it’s a SKU at the Beer Store, the licensee has to go to TBS (a private retailer) to buy it.

NOW: Same. Section 6.7 (c) of the new agreement says “The LCBO will not sell to Licensees any Beer product listed for sale through the Corporation, including products that are sold through both the Corporation and the LCBO.” Read that again. This is another element of the “sweetheart deal” that got the Toronto Star all hot bothered back in the day and it’s right back in there in the new agreement.

Ice Cold Express
THEN: The Beer Store retail experience is garbage.

I touched on this in my last blog post, and many column inches have been devoted to the archaic system by which consumers must line up and choose a beer from a wall depicting tiny labels of all the products offered by The Beer Store. Much ado is (rightly) made about the fact that The Beer Store’s owner breweries might easily manipulate whatever consumer comes in without a beer name in their head already by stocking their own products in the “Ice Cold Express” or by posting a “Top 10 Sellers” which, predictably, lists owner brewer’s beers. In addition to being a shitty customer experience, it’s also pretty specifically designed to help the big brewery owners sell more of their industrial lagers.

NOW: Pretty much the same. In last week’s post, I questioned whether or not The Beer Store had actually spent $100,000,000 jazzing up the place, as they are required to do per the agreement. It’s not clear, either from my limited recon or the store’s publicly-available financial records, that they’ve spent that much. But the fact remains that “improved customer experience” is pretty vague and, even if they can show they’ve spent that much, all the updates the Beer Store typically points to don’t actually lead people to explore new beer. If you ask them, you’ll hear much ado about a hifalutin iPad system designed to allow customers to explore new beer, but let’s be honest, no one walks into a Beer Store looking to buy a 12 pack for the handlebars of their ten speed, but finds an iPad and decides to explore a locally crafted saison. They touted their updated retail model back in 2013 and, as I recall, one devilishly handsome beer blogger astutely called the updates “same shit, different pile.”

Which is not to say that people wouldn’t buy better beer if that had a better retail experience. I’ve heard — anonymously and without actual proof — that, when the Beer Store opened its “boutique stores,” where customers can actually walk around and explore craft beer offerings, the stores reported an uptick in sales of craft brands. That’s why — allegedly — they stopped opening such boutique stores. Much lip service is paid to The Beer Store supporting craft brands, but I will remain skeptical that any real “customer experience improvements” will be undertaken if they hurt the bottom line of the place’s owner breweries.

THEN: The Beer Store is a privately-owned company that is allowed to sell beer from its owner breweries as well as charge money to any other brewer from anywhere else in the world that would like the right to sell beer in Ontario. Small brewers must pay three of the biggest beer companies in the world just to sell beer at the store down the road—where most people in this province still buy beer. This store received and continues to receive fairly ridiculous concessions from the government, largely because of their lobbying efforts, and the agreement the two entities share continues to hamper the growth of small and independent breweries that are creating jobs and tourism opportunities in Ontario.

NOW: Same.

 

 

Lead photo by By Raysonho @ Open Grid Scheduler / Grid Engine from Wikimedia Commons
Ice Cold Express photo by “haunted by Leonard Cohen” via Wikimedia Commons

Author: Ben

http://www.bensbeerblog.com

2 thoughts on “Revisiting Ontario’s Master Framework Agreement with The Beer Store

  1. They only get away with it because all the political parties along with the elite Queens Park technocrats accept the status quo. It is banana republic style corruption using progressive paternalism as cover, and folks are too shy to call it out for what it is.
    Nothing will change until someone follows the money and highlights the corruption. Unfortunately the person most likely to do that is Doug Ford, and yes, that is one reason he is popular with “the folks” in Ontatio.

  2. I shop at our local beer store because it is a walk in warehouse style experience. I am a homebrewer ( started because of the beer store experience ) and don’t buy a lot of beer. If I am close to our local small brewery, I will definitely shop there instead of the beer store.

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