Brewers Retail Inc

Brewers Retail Inc.
Joint venture
Industry Beer distribution
Beer retail sales
Founded 1927
Headquarters Mississauga, Ontario, Canada
Number of locations 441 retail stores (2012)
Area served Ontario
Owner(s) Labatt Brewing Company (AB InBev) - 49%
Molson Coors Brewing Company - 49%
Sleeman Breweries (Sapporo) - 2%
Employees 7356 (2010)
Website www.thebeerstore.ca

The Beer Store (or simply Beer Store at some newly renovated locations; sometimes abbreviated "TBS") is the trading name for Brewers Retail, a privately owned chain of retail outlets selling beer and other malt beverages in the province of Ontario, Canada, founded in 1927. Owned at its inception by a consortium of Ontario-based brewers, subsequent national and international consolidation has resulted in control now being shared by three multinational brewing companies, each of which is at least 50% controlled by non-Canadian interests.[nb 1]

Under Ontario's Liquor Control Act, Brewers Retail is the only retailer permitted to sell beer for off-site consumption, except for stores on the site of a brewery, locations of the provincial government-owned Liquor Control Board of Ontario (LCBO), and LCBO-authorized agency stores in certain smaller communities.[2] The act and the company's articles of incorporation further stipulate that Brewers Retail cannot sell "hard liquor" (spirits), or consumer goods (like groceries).

Company

Forty-nine percent of the company is owned by the Labatt arm of Anheuser-Busch InBev of Belgium; forty-nine percent is owned by Molson Coors Brewing Company which has headquarters in both the United States and Canada, and is jointly controlled by the namesake families;[1] and the remaining two percent is owned by Sleeman Breweries, an arm of Sapporo of Japan.

It is regulated by the Alcohol and Gaming Commission of Ontario (AGCO), a government agency. As of May 2010, the company operates 441 retail stores which sell beer to the general public. Due to its legal monopoly TBS is the largest distributor of domestic beer to Ontario bars and restaurants, of which more than 16,000 are licensed to sell alcohol. The LCBO sells imported beer to bars and restaurants. Many imported beers are available at The Beer Store, but they are imported by the LCBO and then sold to TBS.

TBS has a policy of accepting any brewer in the world to sell its product, as long as the brewer meets the requirements set by the LCBO.[3] Furthermore, unlike many other retailers, a brewer is given flexibility with regards to how many and which stores it would like to sell its product in.[3] This allows brewers to strategically place products in local markets where maximum volume can be achieved.

Currently, workers are represented by the United Food and Commercial Workers (UFCW) Local 12R24 union.

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/The Beer Store.

Since its inception, TBS has been committed to a platform of “extended producer responsibility”, ensuring TBS takes full responsibility for all of the packaging it sells.[4] Packaging refers to cardboard boxes, plastic cellophane wrap, steel bottle caps, glass bottles (refillable and non-refillable), and aluminum cans.

Furthermore, TBS’ recycling efforts translate into cost savings for municipal governments as municipalities need not spend tax revenue on recycling packaging that TBS sells. In 2008, TBS estimated that its return program has saved taxpayers $38 million in avoided waste management and recycling program costs per year.http://www.thestar.com/life/food_wine/2013/06/28/the_average_beer_bottle_is_refilled_15_times_in_its_environmentallyfriendly_life_cycle.html

The Beer Store today

Estimated Profits

The Beer Store operates as a not-for-profit entity, however, a study in August 2013 by Professor Anindya Sen of the University of Waterloo revealed that the near-monopoly the Beer Store has in Ontario allows it to capture as much as $700 million in "incremental profits" each year.[5] The study focused on beer prices for 24-bottle (341 ml) cases of beer. The data on beer prices were collected from two major grocery stores in Quebec and The Beer Store (in Ontario).  Beer prices were virtually identical between different grocery stores in Quebec. However, there were significant differences between average prices in Quebec and Ontario.  For example, the pre-tax average price for24-bottle packs of brands including Molson Canadian, Molson Dry, Coors Light,Budweiser and Bud Light were $25.95 in Quebec and $35.56 at The Beer Store in Ontario.[5]

Store information

Store hours vary in different cities, but some are open past 9 p.m. on Friday and Saturday nights, with a small number of stores open until 11 p.m.

TBS operates approximately 441 retail locations spread across the province of Ontario. It employs approximately 7500 employees. As of 2010, The Beer Store offers more than 350 brands from over 90 different brewers.[3]

In June 2011, The Beer Store opened a so-called "boutique" store in Toronto's Liberty Village. The outlet does not feature recycling but has a more modern interior design.

Green Policies

Until 2007, The Beer Store operated with an aim of recovering 100 per cent of beer packaging sold in Ontario. In February 2007 the Ontario Deposit Return Program (ODRP) was launched by the Government of Ontario. The ODRP’s goal is to ensure that 100 per cent of all packaging sold at the LCBO follows the same path of all packaging sold at The Beer Store, to be reused or recycled.[6] The Beer Store was selected as the primary operator for this program for a period of five years. In 2008, The Beer Store’s return system has resulted in energy savings equivalent to 491,372 barrels (78,121.9 m3) of oil or the removal of 32,530 passenger vehicles off Ontario roads.[4]

The company achieved a system-wide recovery and re-use rate of 99 per cent for the industry standard bottles, which are reused 12 to 15 times.[4] The Beer Store has received praise from local and national organizations including the Conservation Council of Ontario, Environmental Defence Canada, The Recycling Council of Ontario, and Toronto Environmental Alliance.[7]

The Beer Store also is actively engaged in reducing its carbon footprint by finding innovative ways to reduce its energy consumption, a key input for any retail organization, especially one with a need to constantly refrigerate its product.[4] A notable initiative is the use outside air to cool beer when outside temperatures provide for such a tactic.[4]

Pierre Sadik, Senior Policy Adviser at the David Suzuki Foundation has stated, “Ontarians should be proud of The Beer Store's environmental achievements. It's time businesses across the province follow The Beer Store's lead and turn their talk about waste diversion into real action.”[7]

Corporate responsibility

TBS maintains a policy of “WeID 25” and a right to refuse any customer who appears intoxicated. Furthermore, TBS empowers its retail management to actively monitor and track every employee’s refusal rate to ensure proper conformance to company policy.[4] In 2007, TBS challenged over 4 million sales of beer at its retail locations, refusing service for 111,000 individuals.[8]

Returns for Leukemia

Since 2006 The Beer Store, UFCW Local 12R24, and the Returns for Leukemia" but many refer to is as the "Leukemia Bottle Drive." The bottle drive is held on the last Saturday and Sunday of May and is also the world's largest bottle drive. Over the last seven years, through donations of cash and empties, the event has raised $6.4 million for the cause.

Criticism

Brewer Neutrality

The Beer Store employees are not allowed to recommend one brand over another. Staff can only tell customers about the products but cannot encourage customers to choose a specific brand. This policy is known as brewer neutrality. The Beer Store is permitted to charge non-shareholding breweries listing fees for each beer carried in stock that many critics perceive as substantial.[9] Listing fees have 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.

The Beer Store historically operated on a cost-recovery basis. This kept listing fees at a minimum for smaller breweries. In fact, TBS actively engages in a discounted program to help small brewers gain entry into its retail outlets. Furthermore, TBS provides reduced volume rates for brewers who produce under 75,000 hectoliters, and steeper discounts for brewers who produce under 25,000 hectoliters.[4] The current BRI User Agreement (2010) that Brewers are being asked to sign includes a statement that is a departure from this cost-recovery tradition. It states, "...the cost to BRI of providing a service shall include a reasonable margin of profit to BRI". Previous Agreements read, ..."the cost to BRI of providing a service shall include a reasonable margin of profit that was envisioned in the original Memorandum of Understanding". The removal of any reference to the MOU is problematic for small craft brewers who must access consumers through their largest competitors.

When one compares certain policies that The Beer Store has now implemented to agreements laid out in the Canada-United States Memorandum of Understanding on Provincial Beer Marketing Practices,[10] it would appear that some of the current policies violate the MOU. One example of this is the universal listing policy. This policy assured brewers that they would be able to have at least one sku of a listed brand in any store they desired in spite of sales volume, so long as the required listing fee was paid. The current policy allows The Beer Store to delist any and all skus if they do not meet certain sales thresholds. Historically the MOU was a fundamental tenet in determination of Beer Store operating policies.

Some 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. In Ontario, no changes have been made and The Beer Store continues to sell over 80% of the beer sold in the province, which many critics believe constitutes a monopoly. However, TBS must compete for retail sales with the government-owned LCBO and individual brewer retailers, located on-site at most Ontario breweries.

With regards to distribution, TBS operates its own fleet and provides service to over 16,000 licensed establishments in Ontario. TBS also delivers beer to Beer Stores on behalf of Brewers who may choose to avoid the high cost of self-distributing. Critics have stated that TBS does not provide any credit terms for licensed clients, forcing them to pay cash on delivery (COD), causing friction between TBS and the hospitality industry. However, TBS does provide credit terms and flexible payment options for customers. Customers may receive up to seven days of credit terms.[11]

Consumer prices

Critics say TBS constitutes a foreign-owned

Critics state that if retail beer sales were opened up, then the average price to the consumer would drop. TBS has stated that it believes the price of beer will increase if this happens.

Political controversy

The Beer Store has been subject to criticism following the Molson-Coors merger, whose 49% stake in TBS was the last 100% Canadian-owned share of the venture under the pre-merger Molson Breweries. In 2005, Ontario's alcohol laws were reviewed and proposals to allow the sale of beer in grocery and convenience stores were put forth. A report called the Beverage Alcohol System Review was released on March 24, 2005 by the Ontario Government. However, the report’s findings dealt centrally with the LCBO and the economic and social impact of its privatization.

An online petition was started by a private citizen, Derek Forward, to ask the provincial government to end the monopoly enjoyed by the Beer Store. The petition has received coverage in the Toronto Star, and has generated enough support to allow it to be formally presented to the provincial legislature in the fall of 2008 for consideration (petition No. P–146: "Practice and arrangement of retailing beer"). However, on December 9, 2008, the Ontario government dismissed the petition citing the effectiveness of the TBS system.[13]

At the start of the 2007 provincial election campaign, The Brick Brewing Company of Waterloo made headlines when it claimed The Beer Store engaged in a number of discriminatory practices and policies, such as restrictions on price advertising, for causing a decline in company sales. TBS representatives denied 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 use an electoral campaign to forward self-interests.[14] Additionally, Brick claimed that TBS allegedly 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. The Beer Store claimed that Brick signed an agreement in 1992 to use the industry standard bottle and Brick said it never signed such an agreement. This dispute was settled out of court with the terms of the settlement undisclosed.[15] Brick has since stopped selling beer in "stubbies" because the cost was too high.

A July 2008 Toronto Star article estimated the three foreign entities that own TBS earned $1 billion in profit per year in Ontario.[16]

Ontario Craft Brewers is the main lobby group for Ontario's smaller brewers, and has been increasingly critical of BRI/TBS. The 29 OCB members currently employ several thousand Ontarians. OCB wants to either acquire shares in TBS or be permitted to set up their own competing chain. Premier McGuinty responded by saying that his government would not consider any application to form a competing chain, and that his government would not consider compelling TBS 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 brewers 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.[17]

In February 2012, the website Canadian Beer News reported that The Beer Store has made thousands of dollars worth of political donations to the BC Liberal Party and BC NDP. The report noted that it was odd for an Ontario-based company to be making such large donations to political parties in another province, and suggested that the co-owning breweries were funneling this money through The Beer Store in an attempt to put pressure on the BC government to give their brands favourable placements in BC Liquor stores.[18]

As 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 by 3 inches (10.2 cm × 7.6 cm). The 1972 version issued by Brewers Retail had cartography by Rand McNally.[19]

In popular culture

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). Due to the nature of the scene, Brewers Retail refused to allow the use of one of their actual stores for the filming, and also refused to allow the use of the name "Brewers Retail". In response, the filmmakers built their own replica store, and called it "The Beer Store". Ironically, several years later, Brewers Retail changed the name of its stores to "The Beer Store", and they continue to operate under this name. 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 Anheuser-Busch 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.

Footnotes

References

External links

  • The Beer Store Corporate Website
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