What to expect from Ontario beer in 2019

Because it is again that time of year where we do this sort of thing, here are the topics that I think will shape the conversation as it relates to beer, especially in Ontario, in 2019.

The failure of DME Brewing Solutions
In late November, I wrote here about the receivership status of Diversified Metal Engineering (DME), one of North America’s biggest manufacturers of brewing equipment. In that post, I suggested that there would be many breweries–Canadian and otherwise–effected by this closure. Shortly after I wrote about the issue, Josh Rubin of the Toronto Star wrote about the closure of DME and how it will effect local breweries, specifically the Indie Alehouse, whose owner Jason Fisher told the Star he was waiting for about $800,000 worth of brewing equipment to expand his brewery that he was now unlikely to ever see. Shortly thereafter, Good Beer Hunting picked up the story, expanding on it and chatting with a handful of Canadian brewers. In that story, GBH noted that DME owes “at least $20 million to 370 businesses and banks, and an unknown amount to another 382 individuals and companies.”

This is a story that will continue to have a ripple effect into 2019 and beyond as the brewers who are listed among the entities to which DME owes money will have a very difficult task opening or staying afloat without the equipment they ordered. Publicly available documents related to the receivership show a complete list of the individuals and companies who have money in flux with DME’s receivers and, among the long list, is a handful of Ontario breweries and/or brewery start-ups, including Canvas Brewing in Huntsville, Elora Brewing, Gateway City in North Bay, Avling Brewery on Queen East in Toronto — about whom blogTO has already written, five months ago, noting that “they have some sweet equipment from the BC-based company Newlands Systems, and [owner Max] Meighen says they’ll be getting the rest of their equipment (like tanks from yet another Canadian company, DME from P.E.I.) within the next two months.” Henry Blyth Farms Inc, which is the corporation name for Cowbell Brewery in Blyth is on the list, suggesting that new and sprawling brewery might have also already planning some changes, Prince Eddy’s Craft Brewery in Picton is on the list, as is Paris Brewing and Malting which appears to be the corporate name for a company called “Walking Plow Farm and Brewery” in Paris Ontario. Even Labatt’s is on the list of those DME owes, with an address listed at the location for Oland Brewery in Nova Scotia, suggesting the big brewery was planning updates to that facility.

West Coast brewers are taking a hit, too. Dan Webster, co-cofounder of Container Brewing, slated to open in East Vancouver in 2019, sent me a note after my post lamenting the need to now go off shore for equipment since economically-priced local options were no longer available. “It became clear to us that this whole process [i.e. receivership] would drag on a long time. While the financial hit of potentially losing our deposits is impactful to our startup business,” he told me, “delaying our opening would be more detrimental – waiting would be worse. So we made the decision to push on, move forward and seek alternative solutions to this problem.” So Webster will be importing Chinese equipment, then working with Innovative Stainless in Courtney, BC, a startup that imports equipment and updates it to meet North American standards. Other West Coast brewers effected include Central City Brewers & Distillers, Four Winds Brewing, Old Yale Brewing, and Wildeye Brewing.

It is, of course, tough to say how hard the DME receivership will hit all the brewers listed as creditors. Some of them will presumably be able to absorb the financial hit — I don’t see this shuttering Labatt’s, for instance, and the folks at Cowbell sold off one of Canada’s largest propane companies to start the brewery so I don’t think they’ll be eating cat food anytime soon — but it will certainly register as a dip in the growth of craft beer in Ontario, Canada, and beyone. Big Bend Brewing Co in Alpine Texas, for example, announced their closure via instagram on Decemeber 21 as a direct result of losing $1 million in deposits to DME.

And while I am of course approaching the issue from the perspective of a beer consumer who is friendly with beer industry people that have been hit by this, it’s worth noting that, aside from how this closure will impact the beer that gets to our collective bearded suckholes in 2019, let’s also remember there are 335+ people working for DME who found out a few weeks before Christmas that they are out of a job. In addition to DME out east and NSI in the west, DME owns companies in the US. I received a note from the family member of an employee of Accent Stainless Steel in Loris, South Carolina, a company owned by DME. The employee told me that those who work at Accent Stainless Steel received a final paycheck, but the payment was then reversed, the receiver is allegedly refusing to pay employees, and won’t provide any details on what happens next. This employee expressed anxiety about having lost not only a job, but health insurance, and wages owed.

And while I’m sure breweries will find new ways to order and buy equipment, this closure, in my opinion will have a long-lasting impact on people in and around the beer industry.

Weed (again)
Legalized cannabis in Ontario topped my list of probable game changers last year and, frankly, I’m not sure it has impacted the beer industry yet so I’m putting it on here again. Legalized pot has begun to change the craft beer landscape a little, but to my mind, not to the extent that it likely will in 2019. I’ve noticed, for example, a handful of beer writers attempting to transition to also covering cannabis (which to me is sort of ironically ambitious), Steam Whistle brewery president Andy Burgess told Bloomberg in November that the company is in discussions with cannabis companies and those discussions “have included the possibility of producing cannabis-infused beverages and launching a Steam Whistle brand of cannabis.” Molson-Coors has officially teamed with a cannabis producer to develop non-alcoholic cannabis-infused beer, Constellation Brands and Heineken have also signed deals with Canadian cannabis producers. And locally, a company, Province Brands of Canada, seems to be telling every media outlet that will listen that they are developing “the world’s first beers brewed from the cannabis plant.” That claim seems pretty dubious given the lengthy history of both beer and cannabis and the recreational activities of most home brewers I know, but that hasn’t stopped Province from announcing partnership deals with the contract brewing company Lost Craft, , Yukon Brewing, Bell City, and an agreement to brew cannabis beer exclusively for “Ayre Resorts, a new collection of five-star properties opening its first resort in Antigua in 2021,” plus touting a “123,000 square foot production facility in Grismby” that I can’t seem to find an address for.

Frankly, there are still a lot of question marks related to “weed beer” for me, not the least of which being that the company that is trying to lead the conversation in Ontario is setting off almost all my bullshit alarms and might just end up being the Parkdale Brewery of cannabis. There is also the fact that I don’t think any of the weed/beer products I’ve heard about could actually be classified as beer, plus the fact that I’m not even sure people who like to get high are all that interested in drinking their weed. But for me, the biggest question mark is that I have not yet heard of anyone who has successfully cut down the absorption rate for ingested cannabis to make it take effect as quickly as alcohol. I don’t think anyone wants to drink a “beer” then wait 30 to 60 minutes to get high like you might with an edible.

All that is to say, I still predict cannabis will have an effect on the beer industry in Ontario in 2019 once edibles become legal — and probably not for very long. When government regulations make edibles (and drinkables) legal, companies like Steam Whistle, Amsterdam, Muskoka, and Great Lakes will have some strategy to take advantage (and likely already do). And a handful of smaller breweries will follow suit. They will all introduce one or two “beers” that get you high. Some will be good, some will be bad. They will be a thing for a while…and then they won’t.

Premier DoFo
Entering his seventh month as Premier of Ontario, Douglas Robert Ford is beginning to reveal his election platform to the province and, among the string of deep cuts to services for Ontario’s most vulnerable and scaling back environmental protections, that platform has included a few announcements related to beer.

The first of which, of course, was the infamous “buck-a-beer” announcement wherein the Premier told people Ontario was going to get dollar beer again, when in actuality the province just lowered the allowable price at which brewers could sell. Unsurprisingly, almost no brewers took him up on the challenge to take a loss selling their product and/or brew bargain basement shitty beer to help Ford fulfill an election promise. The three brewers that did opt to stoop to a pandering marketing ploy may or may not have had other motives, as I’ve speculated elsewhere. Today, Cool Brewery in Etobicoke, a contract brewing facility that is also trying to get into the cannabis oil extraction business, is the only brewery still offering “buck-a-beer” in Ontario.

Additionally, in December, Premier Ford’s government announced that they would be extending the hours that retail beer would be available in Ontario. “The people’s government” heralded their own efforts to bring retail alcohol to the masses from 9am – 11pm seven days a week. This too is, unfortunately, something of a non-announcement. Before this change, the LCBO, grocery stores, and Beer Stores were already allowed to be open from 9am to 11pm Monday to Saturday, and from 11am to 6pm on Sunday, and it would appear only a fraction of LCBOs are actually extending their hours. Of the 660 LCBO stores serving communities across Ontario, only 50 will have extended hours in 2019 (one LCBO for the 385,000 people of London, Ontario for example), and so that 9am – 11pm for the people is actually something more like, uh, “seven per cent of LCBOs will now be open seven extra hours one day a week.” Hooray?

Of course, this is a list of things that will shape the conversation in 2019, so I have to mention that yes, actually, there is the potential for DoFo to enact a notable change — potentially one of the most sweeping changes possible to Ontario’s beverage alcohol industry. 2019 might be the year Ontario moves to allow for the sale of beer and wine in convenience stores. The province has said it is developing a plan to expand the sale of beer and wine to corner stores, grocery stores, and big-box stores, and has invited consumers, businesses, and others to have their say on the rules by completing a survey (which, by the way, you should totally do, please. Go here. Provide your input before February 1st).

I actually have a feeling the Ontario government will find a way to get this done this year. The realities of Ford’s “fiscal conservatism” aren’t exactly shaping up as he’d promised on the campaign trail. In fact,

[t]he budget deficit in Canada’s most populous province is poised to jump almost 50 per cent to $18.7 billion (US$14.3 billion) in 2019-20 from this fiscal year under plans by new Premier Doug Ford, according to a report from Toronto-Dominion Bank.

And so a good news story that might appease (read: distract) the masses “FREE THE BEER!” is likely becoming an ever-higher priority for Mr. Ford’s government. For the record, I don’t actually think alcohol in corner stores is the best possible change to our liquor legislation, but if it does happen, it would be a total game changer. On the negative side, it could mean that corner stores suddenly start selling alcohol in locations near your local brewery — which would likely hurt brewers’ onsite retail sales– and I think it would almost certainly mean that the big brewers would find a way to use their marketing muscle to dominate yet another retail avenue (I picture Bud Light branded fridges at corner stores, Molson Canadian partnerships with Wal-Mart Canada, etc).

On the plus side, of course, it would mean competition and greater access and, presumably, some beer-loving entrepreneurs would opt to create beer-haven convenience stores like some of the Deps in Montreal. I would imagine the Morana family of Volo/Keep6/Cask Days fame would jump at the chance to open a retail store in Toronto and Cass Enright of Bartowel fame has mused to me over beers about how he might procure a grocery store just to sell great beer. Opening up alcohol sales to corner stores would mean that everyone — from crack-pipe-selling Hasty Market owners to the entrepreneurs who might want to import Belgian goodies — would have the chance to do so.

Given that this is Ontario though, I’m not going to count my retail alcohol chickens before they hatch (Mmmm. Alcohol chicken). It would be foolish, for example, to think that the lobbyists representing the Beer Store would be happy about this push, and more foolish still to think the unions representing Beer Store and LCBO employees would react with anything other than fervent opposition to broadly expanded booze sales. Warren “Smokey” Thomas, the head of OPSEU, the union representing LCBO employees, has already spoken out against retail expansion on multiple occasions. When grocery store sales were first discussed by the Wynne government in 2016, OPSEU released a statement expressing fear that the greater access to alcohol would lead to increased “heart and liver disease, cancer, accidents, traffic fatalities, domestic violence, child abuse, depression and suicide.” Oy.

More recently, Thomas has objected to Ford’s expanded LCBO hours, and has used recent revelations about rampant theft in LCBOs to suggest the problem would even be worse if sales we expanded. Thomas noted that this is yet another reason Ford should pump the breaks on any expansion of alcohol sales and has even argued that…wait for it…the LCBO needs it’s own specialized security force. I shit you not.

“We’d like the LCBO to create its own security force. And the training would be specific to the retail experience of the LCBO so that they could preserve that experience, enhance it and hopefully prevent thefts and keep people safe.”

Double oy.

In short, DoFo will probably get beer into corner stores in Ontario this year (probably by simply announcing it is so and letting shit sort itself out) but I predict, much like the DME fallout, and the intersection of beer and cannabis, it is going to be very messy.

Here’s to 2019. Bottoms up!