Brewers Retail Inc.

Infobox Company
name = Brewers Retail Inc.

type = Joint venture
genre =
foundation = 1927
founder =
location_city = Mississauga, Ontario
location_country = Canada
location =
locations = 450 retail stores (2007)
area_served = Ontario
key_people =
industry = Beer distribution
Beer retail sales
products =
services =
revenue =
operating_income =
net_income =
assets =
equity =
owner = Labatt (49%)
Molson Coors Brewing Company (49%)
Sleeman Breweries (2%)
num_employees = 5,700 (2007)
slogan = "the ultimate source for beer"
homepage = [http://www.thebeerstore.ca www.thebeerstore.ca]

Brewers Retail Inc. founded in 1927, is a privately owned chain of retail outlets in Ontario, Canada, that operates as The Beer Store. Ontario government regulations regarding the sales of alcohol gives the chain a near-monopoly of domestic retail beer sales in Ontario. These regulations stipulate that Brewers Retail cannot sell "hard liquor" (spirits), or consumer goods (like groceries). Its only legal competition is found in the beer sections of the Liquor Control Board of Ontario (LCBO) stores, government-owned outlets which stock beers outside of the Brewers Retail system, and retail outlets at breweries.

Company

Forty-nine percent of the company is owned by the Labatt arm of InBev of Belgium; forty-nine percent is owned by Molson Coors Brewing Company which has headquarters in both the United States and Canada; and the remaining two percent is owned by Sleeman Breweries, an arm of Sapporo of Japan. [http://www.cbc.ca/story/business/national/2006/08/11/sapporo-sleeman.html]

Although founded by the Government of Ontario, it is only linked by a relationship with Alcohol and Gaming Commission of Ontario (AGCO). As of November 2006, the company operates 450 retail stores, [http://www.thebeerstore.ca/OurStores/Store_finder.asp] operating as "The Beer Store", which sell beer to the general public. BRI also has the government legislated exclusive right to sell domestic beer to Ontario bars and restaurants, of which more than 17,000 are licensed to sell alcohol. The LCBO sells imported beer to bars and restaurants. Imported beer is available for sale at The Beer Store, but this product is actually imported by the LCBO and then sold to Brewers Retail.

Workers are currently represented by the United Food and Commercial Workers (UFCW).

History

The company began in 1927, with the end of prohibition in Ontario. Although prohibition had proven to be unsuccessful, the provincial government still needed to placate angry temperance advocates and agreed that beer would be sold through a single network of stores. However, the government did not want to operate this network itself (as was done in some other Canadian provinces), and so permitted brewers to organize the Brewers Warehousing Company Ltd., which later became Brewers Retail.

BRI established one of the first returnable bottle systems shortly after it was founded.

Brewers Retail today

tore information

Many stores (currently 129 of the 450 locations) have extended shopping hours. Hours vary in different cities, but many are open past 9 p.m. on Friday and Saturday nights, with some stores open until 11 p.m.

As of 2005, The Beer Store offers 300 brands from 70 brewers in 450 stores province wide.

The Beer Store is a global leader in the practice of “extended producer responsibility”, meaning that they will take back all the packaging material they sell (including the cardboard, the glass bottles and bottle caps) and either recycle or reuse it. Environmental leadership is a core value of The Beer Store as demonstrated by the company's environmental policies. The Beer Store is reported to have diverted approximately 70 billion beer bottles from Ontario landfill sites over 80 years of operation.

The Beer Store has been presented with the Eco Logo award, which was given for its efficient environmental package management systems. The Beer Store operates an efficient packaging and recovery system with an aim of recovering 100 per cent of beer packaging sold in Ontario. The Beer Store accepts cartons, bags, plastic bottles, and every other kind of beer packaging, claiming the best packaging recovery system in the world.

The company claims a system-wide recovery and re-use rate of 98 per cent for the industry standard bottles, which it claims are reused 15 to 20 times. It supports the Conservation Council of Ontario’s "We Conserve" program.

Criticism

Most Canadian provinces have since allowed privately owned stores to compete for sales of beer and wine while retaining tighter controls over the sale of spirits, while Alberta has privatized all retail liquor stores. However, in Ontario, no changes have been made and Brewers Retail continues to sell over 90% of the beer sold in the province. Despite its near-monopoly, it is permitted to charge non-shareholding breweries substantial listing fees for each beer carried in stock (currently more than $45,000 per brand no matter how many stores the brewery actually stocks beer in) [http://www.realbeer.com/library/authors/hughey-r/distribution.php] . This practice has been criticized as restricting competition in the huge Ontario beer market, especially from smaller brewers who often cannot afford the fees especially for multiple brands.

Although the province-owned LCBO also sells beer to the general public, Brewers Retail is the main distributor to restaurants and bars (Ontario-based craft breweries may sell to licenced establishments directly). [http://www.realbeer.com/library/authors/hughey-r/distribution.php] The company refuses to grant either quantity discounts or credit to any customer, meaning that even the most solvent establishments in Ontario must pay cash on delivery for their beer. This is a constant source of friction between Brewers Retail and the hospitality industry.

Despite their unpopularity, the BRI-aligned AGCO conducts a heavy-handed enforcement of the laws proscribing off-sales by sending undercover agents to perform random spot-checks. Observers have frequently noted that AGCO agents often seem more concerned with off-site consumption than they are with enforcing the legal drinking age. Bars can be heavily fined (and even lose their liquor licences) if they fail to take stringent steps to ensure that the beer and liquor they sell is consumed on-site.

Representatives for Brewers Retail claim that not offering either credit or quantity discounts means that everyone is treated the same way and also ensures that Brewers Retail and The Beer Store do not have to pass on costs associated with bad debts to consumers. They also offer free delivery of orders province-wide, but only if the licensee orders a very large amount by small business standards, otherwise there is a $25 delivery fee. The company claims that unlike the LCBO, it does not outright refuse shelf space to any eligible product approved for sale in Ontario.

The company claims that the Brewers Retail monopoly generates significant economies of scale and that most of the savings generated compared to the systems used elsewhere are passed on to the consumer. [http://www.canoe.ca/NewsStand/Columnists/Toronto/Christina_Blizzard/2004/08/08/pf-573357.html] The company claims that allowing corner stores to sell beer (as is done in neighbouring Quebec where about 20,000 stores sell beer compared to 1,250 in Ontario - about 25 times the number of stores per capita) would cause increased distribution costs of about $4/case that in other provinces have been either passed on to consumers or absorbed by the government in the form of a tax cut. However, these claims are dubious at best and have been vehemently refuted by officials in both Quebec and Alberta. As of June 2007 the retail price for a case of 24 of some brands of beer sold in Gatineau, Quebec has been proven to be more than $10 cheaper than the price for 24 of the same brand in nearby Ottawa, despite the fact that the differences in taxes are less than half that amount for that volume of "any" particular brand. [http://www.ottawabusinessjournal.com/323988430351674.php]

Brewers Retail further claims that selection is greatly reduced in the more liberalized jurisdictions, especially outside the major cities. They reason that a small, independent store will only have space and cash flow to stock a few major brands as opposed to the hundreds on the shelves of The Beer Stores. These claims have developed a hollow ring with the recent changeover of many Beer Store outlets from the Self-Serve format to the “Ice Cold Express” format. Critics of this change claim that its only logical purpose is to discourage customers from buying brands other than those of the Brewers Retail shareholders. One survey found that 78% of The Beer Store’s customers are opposed to the format change.

The price difference of approximately 40 cents per serving between stores in Eastern Ontario and Southwestern Quebec is sufficient enough to make illegal smuggling (or "bootlegging") of beer across Ontario's unpatrolled eastern border for re-sale on the black market a highly profitable enterprise, especially for anyone who can find both a vendor in Quebec that will negotiate discounts (which at least some will do in exchange for the convenience of selling beer by the pallet) and can also find (or simply "be") one or more high-volume customers in Ontario (such as unscrupulous bar owners who might simply looking for a feasible way to fight what they see as an unjustified monopoly). BRI has lobbied the Government of Ontario to name interprovincial bootlegging of beer as an irritant in intergovernmental relations with Quebec. However, BRI and the unions representing employees of both the Beer Store and the LCBO have been criticized for falsely and/or misleadingly claiming that it is against the law for consumers to bring alcoholic beverages from Quebec or (less commonly) from Manitoba under any and all circumstances. [http://www.canoe.ca/NewsStand/OttawaSun/News/2004/12/22/792878-sun.html] In fact, it is perfectly legal for consumers to import alcoholic beverages from other provinces into Ontario provided it is not intended for re-sale.

Supporters of more open competition counter that average Canadians are not normally connoisseurs of obscure beers and usually prefer the increased convenience that limited or full privatization has been responsible for in other provinces. They also contend that as the purchaser of all imported beer in Ontario, the LCBO has the facilities, contacts and resources to satisfy the needs of those consumers who want the less common brands (most of which are imported and thus handled by the LCBO in any event).

Brewers Retail has become politically controversial especially following the Molson-Coors merger, which placed the majority of its ownership in the hands of foreigners. In 2005, Ontario's alcohol laws were reviewed and proposals to allow the sale of beer in grocery and convenience stores were put forth. However, although some Liberal backed the idea of changes of some sort the Liberal government rejected the proposals and refused to change the laws. The government has received considerable criticism for perpetuating a virtual monopoly on Ontario beer distribution by a foreign-owned cartel.

Brewers Retail has waged an ongoing battle with the Brick Brewing Company of Waterloo since at least 2002, when it used monopolistic tactics to force what is now Ontario's largest independent brewer to stop offering beer in "Stubbies" by withholding supplies of industry standard "long-necked" bottles. This dispute was finally settled in favour of Brick in September 2008. [http://www.thestar.com/Business/article/490198]

Following Sapporo Breweries' purchase of Sleeman Breweries Ltd. for approximately $400 million, no portion of Brewers Retail is now held by any majority Canadian-owned entity, which has increased pressure on the government to force an end to the Brewers Retail near-monopoly, or at least to return it to Canadian ownership. [http://www.cbc.ca/story/business/national/2006/08/11/sapporo-sleeman.html]

At the start of the 2007 provincial election campaign, Brick again made headlines when it cited a number of discriminatory BRI practices and policies (such as restrictions on price advertising) for causing a decline in company sales. BRI representatives deny that their policies are hurting small brewers and implicitly questioned the timing of the Brick Brewing Company's statement, suggesting that in their view it is unethical for a brewery to openly criticize BRI policies in the middle of an election campaign. [http://www.thestar.com/Business/article/255506]

In response to the growing unpopularity of the Brewers Retail monopoly, the main opposition party in Ontario now opposes the status quo with regards to Brewers Retail, although radically different alternatives have been proposed:

*The official opposition Progressive Conservatives propose abolishing the Brewers Retail monopoly and initiating a licencing process that would allow private retailers such as corner stores who meet the necessary qualifications to sell beer and wine. It appears that distilled beverages would not be included in the program, thus the LCBO monopoly on those products would likely remain in force. The policy was re-iterated by PC leader John Tory on September 23, 2007. [http://www.thestar.com/News/article/259607] BRI would be permitted to continue operations. The previous PC government of Mike Harris mused about complete privatization of the retail liquor industry, although the PC's did not carry this out during their time in office.

*The social democratic New Democrats strongly oppose any relaxation to the government-legislated monopolies in alcoholic beverages. Some NDP MPP's have responded to the relevant foreign acquisitions by demanding the nationalization of Brewers Retail by means of expropriation, with the company and its assets then being absorbed into the LCBO. It is not clear if that is official party policy, but if it were to take place then most Beer Stores would presumably be converted into LCBO stores. In places where Beer Stores are too close to existing LCBO stores for it to make sense to maintain separate LCBO locations, the outlets would presumably be merged with one store, shut down, and sold. The LCBO would hence become the sole distributor of alcoholic beverages in Ontario.

*Re-elected Liberal Premier Dalton McGuinty also rejected Tory's suggestion, and has said nothing to suggest he supports any change to the status quo with regards to the LCBO or the Beer Store. He has criticized during the campaign for making a disingenuous argument that focused on the importance of maintaining the "safety" of alcoholic beverages available in Ontario when in fact there is negligible difference with regards to the quality of the relevant product sold in Ontario compared to any other province. It has been reported that in recent years, the Liberals have received sizable donations from several individuals with close ties to the province's three major brewers. [http://www.theglobeandmail.com/servlet/story/RTGAM.20070924.welectionwrap0924/BNStory/National/home?cid=al_gam_mostview]

Ontario Craft Brewers is the main lobby group for Ontario's smaller brewers and has been increasingly critical of the current system. The 29 OCB members currently employ several thousand Ontarians. OCB wants to either acquire shares in BRI or be permitted to set up their own competing chain. Premier McGuinty responded by saying that his government would not even consider any application to form a competing chain, and that his government would not consider compelling BRI's shareholders to sell any shares although some Liberal and Conservative backbenchers have said they would expect BRI to at least negotiate in good faith with craft brewer who made a serious offer. BRI responded by saying that it was not considering and would not consider selling shares at any price, and that they do more than enough to accommodate non-shareholding brewers already. Canada's National Brewers (the lobby group that represents the BRI shareholders) further said that in the event OCB did get to set up a competing chain, they would refuse to stock their products there. [http://www.thestar.com/Business/article/260999]

As mentioned above, the BRI monopoly became an election issue of at least moderate importance in the first half of the 2007 campaign. BRI representatives have warned that it is unlikely they would be willing continue doing business as before if they have to compete with corner stores. They contend that since corner stores offer products they are not allowed to sell to attract customers, they would have an unfair advantage over the Beer Store model.

Map Publisher

In the 1980s Brewers Retail published a directory of its retail locations in a booklet with a small map to each location. It had a picture of an animal, (a penguin, for example) on the covers. The booklet when closed was approximately 4 inches by 3 inches. The 1972 version issued by Brewers Retail had cartography by Rand McNally. [http://zippy.cso.uiuc.edu/~roma/roadmaps/namisc1.html]

In the media

The Beer Store has been featured in a few aspects of pop culture. In the film "Strange Brew" the McKenzie Brothers visit a Brewers Retail store demanding a refund after they attempt to return a bottle of beer that contained a mouse (the mouse was however placed in the bottle by the brothers). The Beer Store was also showcased in episodes of "Late Night With Conan O'Brien" during O'Brien's week-long tenure in Toronto during the week of February 10, 2004.

Related companies

Brewers' Distributor Ltd. operates in Western Canada and is owned by InBev and Molson-Coors (Sleeman has its own distribution operation in the West). Unlike BRI, BDL only warehouses and distributes beer and is not in the retail business.

External links

* [http://www.thebeerstore.ca The Beer Store Corporate Website]
* [http://www.beerhunter.ca Find open Beer Stores in Ontario in real-time]
* cite article
url = http://www.thestar.com/News/GTA/article/454836
title = The real reason your beer costs more than it should
publisher = The Toronto Star
work = The Saturday Star
date = 2008-07-05
first = Dana
last = Flavelle