Monday, October 29, 2007

Working on the LCBO

So, in Ontario there are only a few ways a brewery is (legally) allowed to sell beer. Here they are:

1) The Beer Store. This is a private, for-profit company, owned by Molson (which is owned by the U.S.’s Miller-Coors) and Labatts (which is owned by Inbev, from Belgium). Okay so Sleemans (owned by Sapporo in Japan) owns something like 1%, but let’s not split hairs. Something ridiculous like 85% of all beer sold in Ontario moves through this juggernaut.

2) The LCBO. This is a government-owned company that focuses on wines and spirits, but does sell beer as well. The LCBO does not sell larger packages than the 6-pack, so customers looking to purchase a case of beer go to the Beer Store.

3) Brewery retail store. Breweries are allowed to sell beer out of their brewery. They are not allowed to open up stores off-site, which is too bad, ‘cause that would be cool.

4) Restaurants and bars. Technically only restaurants can get new liquor licenses in Ontario, which is why you see fewer taverns every year.

So as you can see, options are really limited for a little brewery that wants to sell in the Ottawa-area exclusively. The Beer Store is very expensive to get into. In fact, it would cost us about $20,000 to get listed in 20 stores selling the usual 6-pack, 12-pack and 24-pack. Furthermore, if we don’t meet sales targets, the Beer Store takes back the listing and bans us from selling in that store.

On top of that, the Beer Store is converting more and more stores to a format where you can pick up a case of Molson Canadian or Blue Light real quick and get out the door; OR try to find what you want on a tiny list of beer, then wait in line forever while someone in the back hunts for your beer. I suppose it makes sense — if I was the one who owned the Beer Store, I’d probably try to make it tough for them (Miller-Coors) to sell their beer.

The LCBO is a much better option, but still quite challenging to work with on a small scale. Because they sell all the wine and spirits for the whole province, they have very long lead times and most of their programs expect the supplier to be able to reach the whole province. As an example, the deadline to submit a seasonal beer is 12 months in advance.

On the flip side though, the LCBO is interested in higher-end beer and I’ve had very good experiences working with the beer team and the inside folks there. For my first listing, and because I asked really nicely, they were able to fast-track Beau’s through the process, shaving 4 months off the submission timeline. (The process involved in getting a listing is rather interesting and I’ll write a separate blog about that some time). So finally, the good news is that it is looking likely that Beau’s will be able to sell through the LCBO starting in January. Although we’ll miss you all coming down the brewery to get your fix, it’ll be nice to know people in Ottawa can say, “Let’s go buy some Beau’s,” and not have to gas up and pack a lunch for the ride to VKH.


Wayward Mind said...

Woohooo! C'mon, January...

Anonymous said...

I sure hope a TON of people in this province read this, and understand what a warped, unfair, and non-competitive system we have in this province for small companies like your favorite OCB brewery, and stand up and speak out and try and do something about it.

steve said...

Say it loud!

David R said...

Hi Steve, I met with Philip over a year ago and tasted you beer then... and yesterday. My brother Louis heard about the shop from me and stopped in with a client... they got treated like royalty, the grand tour and everything. Let's just say the client was really impressed.

Louis (my brother) wanted to thank Tim personally.

I introduced my local bar/restaurant Lucky 7 to Philip about a year ago and I understood from the owner Philip visited him a couple of weeks ago and that I would be able to enjoy Beaus in my favorite watering hole in Embrun!


Steve said...

Hey All,

I had posted this blog on the ontario craft brewers blog as well and its getting some people sending comments of support for a craft brewers retail store in Ontario...if you are interested in adding your voice to the list go here:

Tim B. said...

Hi Louis....I'm glad you enjoyed the visit and drop anytime... Cheers Tim

Tim B. said...

Actually Louis I didn't mean to drop anytime but rather drop in anytime....Tim

Anonymous said...

It's unfortunate that microbrewery's can only open retail stores in their brewery.

What if you had a 2nd location, and did one part of the brewing process out of that 2nd location.

That may be a work around to opening up a 2nd retail store.