Brewers Retail Inc.
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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.
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[edit] Company
49% of the company is owned by the Labatt arm of InBev of Belgium, 49% is owned by Molson Coors Brewing Company which has headquarters in both Canada and the United States and the other 2% is owned by Sapporo Breweries. [1]
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 441 retail stores. [2]
It has over 430 retail stores, operating as "The Beer Store", which sell beer to the general public. It 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.
[edit] History
The company began in 1927, with the end of prohibition in Ontario. Although prohibition had proven to be a complete farce, 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.
[edit] Brewers Retail today
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 its entire liquor industry. 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. This practice has been criticized as restricting competition in the Ontario beer market, especially from smaller brewers.
Although the province-owned LCBO also sells beer to the general public, Brewers Retail is the sole distributor to restaurants and bars. The company refuses to grant 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.
Many stores (currently 129 of the 441 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 11p.m.
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 credit 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 (only if the licensee orders a certain amount otherwise there is a $25 delivery fee - as of 2005). The company claims that unlike the LCBO, it does not 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. [3] 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, officials in Quebec and Alberta have strongly disputed these claims.
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 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.
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 the LCBO is more than capable of filling the needs of consumers who want less common brands.
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, 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 also received negative publicity in 2002 when it used monopolistic tactics to force the Brick Brewing Company of Waterloo to stop offering beer in "Stubbies" by withholding supplies of industry standard "long-necked" bottles.
In response to the growing unpopularity of the Brewers Retail monopoly, both main opposition parties in Ontario now oppose the status quo with regards to Brewers Retail, although they propose radically different alternatives:
- The official opposition Progressive Conservatives propose abolishing the Brewers Retail monopoly and initiating a licencing process that would allow any private retailer who meets the necessary qualifications to sell beer and wine at least. 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 and their current policy on LCBO privatization is unclear.
- The social democratic New Democrats on the other hand now support the nationalization of Brewers Retail by means of expropriation, with the company and its assets then being absorbed into the LCBO. Beer Stores would 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 be merged with one store, shut down, and sold. The LCBO would hence become the sole distributor of alcoholic beverages in Ontario.
As of 2005, The Beer Store offers 300 brands from 70 brewers in 436 stores province wide.
On August 12, 2006, Sapporo Breweries reached a tentative deal to purchase Sleeman Breweries Ltd. for approx. $400 Million. Directors and Shareholders have agreed, and the terms and conditions are to be disclosed in the coming weeks. [4]
This takeover by Sapporo would mean that no portion of Brewers Retail would be held by any majority Canadian-owned entity, and will likely increase pressure on the government to force an end to the Brewers Retail near-monopoly.
[edit] Map Publisher
In the 1980's 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. [5]
[edit] Trivia
The Beer Store has been featured in a few aspects of pop culture. In the film Strange Brew the McKenzie Brothers visit The Beer 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.
[edit] 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.
[edit] External links
