The Session #112: The Other Beer Economy

8055045283_f19683a3f3_oOntario is the laggiest of beer economies. Our policies are always at least 100 steps behind everywhere else that is culturally and geographically similar, and about 50 steps behind the industry. In response to Session #112 from The Beer Babe, ‘The Other Beer Economy,’ in which we discuss all the businesses that create a network that support the beer industry, I will provide you with an anecdote that illustrates just how much potential the “other beer economy” has here.

A major angle to my master’s Major Paper, “Ontario’s Craft Beer Industry: Current Assessment and Future Directions,” was the tension between beer entrepreneurs and the roadblocks that prohibition era policy frameworks created. Essentially to be a small-scale entrepreneur in beer in Ontario before 2014, you were working under really weird rules coming from both the LCBO (Liquor Control Board of Ontario) and the AGCO (Alcohol and Gaming Commission of Ontario), and before 2010 you were paying hilarious amounts of taxes. Through my research interviews I attempted to get a sense of how difficult or easy it was to navigate and adhere to said rules – were they clear? Who was overseeing? Who was auditing? Who would you answer to if you broke one of them?

The answers to the majority of these things were often unclear. Some were just easy to ignore, claim ignorance, which would then lead to a small change in that outdated policy (as I’m relatively sure happened with Beau’s and direct home deliveries…) etc., etc. So, the most potent of these was this: prior to Fall 2015, small brewers (that is, below 400,000 hects), were not authorized to pool their deliveries to points of sale. This meant that they weren’t even allowed to hire a third-party delivery service to store and warehouse their product and deliver to liquor stores and licensees.

Problems: I was aware of at least two of these types of businesses in Ontario that did offer this service (must’ve gotten one-off passes from the AGCO or something?) and had been doing it for years. Further, there were a number of open secrets about this or that brewery throwing their product onto this or that other brewery’s truck for certain bar deliveries who’d keep hush hush about it.

So, Fall 2015 comes around and as part of this new policy roll-out, surprise! Small brewers can pool their deliveries now! This was, of course, announced as if it had never been done before and had been strictly prohibited prior… but I digress.

Anyway. The point is, in 2014 or 2015 Ontario got wise to the fact that, in prohibiting this type of third-party delivery activity, they were also seriously stunting that level of entrepreneurialism that would only add to Ontario’s economy. We now have Coldhaus and RG Transfer, two distribution companies, expanding their operations and I’ve heard whispers of other delivery and warehouse services starting up in the province.

We’re still in a bit of a wild west moment for small brewers here in Ontario – it’s a lot of small companies just hacking it together and trying to do everything in-house. Secondary entrepreneurs filling those niches that are, frankly, costs that most business owners in other sectors would have outsourced anyway (like, marketing, for example, or even packaging!) are, I would argue, probably going to make more money than the majority of new brewers over the next few years, and faster. When you’re aware of a direct need, and only need to invest in say, one or two pieces of equipment and then charge other businesses for use of it, (I’m looking at you, mobile canning line dudes!) you’re laughing.

Basically, my thoughts are this: as long as Ontario keeps loosening up on the beer business like they have been, more entrepreneurs can enter the market and be more creative about the types of things they do in and around alcohol. There really is endless potential at this point.

Oh yeah: and hops/grain agriculture here is a bit of a joke. A sad, sad joke. I have other stuff to say about that, and in a nutshell it’s that agriculture needs a lot more government support than just creating market conditions. Farm businesses are high risk and complicated – and I’m no expert but aren’t hops particularly susceptible to disease? So I suppose that, on the manufacturing end, loosening the market is helpful, but government response to creating market conditions for new entrants to the agricultural sector needs to be a whole lot more hands on than it is.



Welcome to It’s Not Just the Alcohol Talking, the craft beverages blog of Derek Harrison now in partnership with Tish Gaudio after a year and a half absence. Tish very recently defended her Master’s thesis “Ontario’s Craft Beer Industry: Current Assessment and Future Directions” and is stoked to keep writing about beer and the industry in a more casual tone, with the ability to break out into ALL CAPS every once in a while. Derek Harrison has been writing a craft beer column for The Windsor Independent for over three years and needs somewhere else to put some of his ideas because Dean won’t let him take up more than a page or two of space in the paper.

I tend to geek out on business ownership structures. I believe there is a lot of power in the backbone of how companies function, and I’m a sucker for anything that empowers local ownership, equity and internal democracy. It’s the reason I bank at a credit union over a big bank, for example. I could do all my banking with TD, but co-ops just tickle me pink, and I love the idea of keeping dollars local and “in the community,” so to speak. I crave a sense of closeness and accountability with the businesses I interact with, and those backing ownership structures can reveal a lot about a business.

I’m inclined to believe that so much of what draws us to the craft beverage movement is that sense of closeness and accountability. Something I have picked up on in no small way since I’ve spent time in the industry is the sense that craft beverage producers often see an antagonistic relationship between Craft and Not Craft. They are the little guy, emerging in the wake of the Big Bad Corporate Macro Brewers, and they have a responsibility to Do It Right. Independent ownership is important. If we know who owns our companies that don’t get too big, we can always ensure they’re on the right track.

All of that ramble is to say this: I am literally DROOLING over Beau’s announcement to sell the company TO ITS WORKERS.CinCIfAWUAAlCgO

Employee stock ownership plans are essentially where your employees get a stake in the company. It’s a solid move for succession planning, and encourages full transparency to all workers. Either way, the ethos of democratic ownership over one’s workplace exists to some capacity. It’s beautiful that Beau’s went this direction, as it reveals the ultimate faith in its workforce and their ability to drive the company to further success.

Naturally, our fears about what the next steps are as craft beer companies are getting larger – Beau’s is easily in the top four largest craft brewers in the province, operating at over 40,000 hectolitres/year and growing – is that craft brewers are destined to “sell out.” As these small, grassroots-minded companies get larger those major questions about what makes a company truly craft, or authentic, are popping up all over the place. We saw Mill St. get acquired by the Big Bad AB-InBev last year, and everyone had an opinion. We saw that same parent company funnel $3 million into rebranding Shock Top as a “Craft” brand in 2013. We’re a little hesitant to accept the grey areas.

Beau’s major decision to sell the company to its workers is proof that “selling out” isn’t the only option. As craft breweries get larger,they don’t necessarily have to lose the qualities we seek in craft brewers. There are a lot of options.6823149325_e60a644f35


Whether you like it or not, Ontario is at least ten years behind pretty much every other burgeoning craft beer region, so whatever waves we’re bound to go through here have already been covered elsewhere. In the States, plenty of discussions have emerged about craft brewer-owned investment groups. We’ve already seen larger Ontario-based beverage companies acquire slightly smaller Ontario-based beverage companies. I’m not so sure how I feel about hyper consolidation on the whole – but I think it’s pretty fantastic that people are finding ways to keep this activity within the province.

I think if we can ensure a large portion of our basic, day-to-day economic activity is harnessed locally we can empower each other and demand the level of accountability that large multinationals just don’t allow. When you add too many degrees of separation, that’s when you get problems (that’s what I think anyway. I spent all kinds of time on this during my Master’s degree. If you’re interested in this sort of thing, I recommend reading Michael Shuman, he has a lot to say on the matter).

In selling the company to it’s workers, what the Beauchesne’s just did was ensure that their company pretty much can’t be bought out – not in any Big Bad traditional sense anyway. (Heck, for all we know the company will collectively vote on being bought out by a Macro Brewer ten years from now, but could you really see that happening?) The beautiful thing about co-ops and employee-owned structures is that you have so many points of accountability to answer to. Even if 50% of the workforce is a little apathetic to major business decisions most of the time, they still get a vote – at the very least on their board of directors – no matter what. So when something comes up at work that they do care about, they’re not helpless to top-down decision making.

What employee ownership will look like for Beau’s remains to be seen. They employ over 120 and I can only imagine that those 120 people are going to have some serious sit downs to make some serious decisions about what their next steps are. There will have to be many a policy document written, many a vote to be had. Beau’s is already a B Corporation, a third-party certification that requires them to “meet rigorous standards of social and environmental performance, accountability, and transparency.” To meet these standards, Beau’s has had to incorporate certain accountabilities into their governance structure to provide legal protection of their mission and provide regular, stringent reporting on the impact of the business. They’re really really trying to Do It Right, here, and I love it.

On the whole, Beau’s being both a B-Corp and now a employee-owned is sending my heart a flutter. Good on you, you shiny angels of the industry. Don’t ever change.



Beer is Not Evil

Now that festival season is pretty much over, we can start looking back on the year. This is the year when the Beer Store monopoly story broke, when Left Field Brewery faught for and earned the right to serve at beer festivals despite having no brewhouse of their own (at the time), and when it became permitted to sell locally-produced wine at farmers markets (but not beer!). So with that in mind, I’m republishing this article, written for Windsor Independent, about how alcohol regulations in Ontario are disproportionally harmful to the local beer industry.

Ontario’s laws demonize humanity’s favourite drink

The Raise a Glass to Ontario Act, introduced by PC MPP Todd Smith , would allow Ontario breweries to sell their products in each other’s stores. If it passes, it will be a distinct change of pace from most of the province’s alcohol laws, which seem intent on limiting the growth potential of the craft beer industry and keeping beer lovers unhappy.

Prince Edward-Hastings MPP Todd Smith

In the context of the growing support for the privatization of alcohol sales, the bill could be seen as either a reasonable compromise or the first step in the right direction. The first amendment is as follows:

1. A manufacturer of beer or cider may sell, in stores it owns and operates, its own beer or cider as well as that of other manufacturers of beer or cider.

I think this is a great idea. My second favourite thing about the craft beer industry, after the beer, is how supportive they are as a community. In general, brewers happily cross-promote and have no reservations about expressing the virtues of beers produced by their competitors (providing those beers are well-made) and this is a component of craft beer culture that has held true to my experience in every province and country I’ve visited.

The bill would allow brewers to showcase the Ontario-crafted beers that they love, including rare or special occasion beers, and to distribute new beers more easily to test the market before applying for shelf-space at the LCBO or paying the prohibitively high listing fees at the Beer Store. I wouldn’t be surprised if the bill inspired many breweries to invest in expanding their on-site retail stores into large specialty beer stores.

This is, of course, if the Raise a Glass to Ontario Act is passed. Unfortunately, the province’s track record with beer laws until now has been piss poor.

Contract brewing

The sheer number of start-up breweries out there (more than 100 in Ontario in the last few years alone) inspires a lot of collaboration. Many head brewers learned the ropes working at other breweries. Many small breweries ship their kegs on trucks owned by the bigger crafters like Beau’s, Mill St. and Wellington. Canning lines are few and far between. And, most intimately, many start-up breweries are contract brewers: they make their beer in somebody else’s facility.

The cost of opening a brewery is somewhere in the $1 million area . That’s a big investment to make before you can even test out your first product. That’s why most small breweries start out as either nanobreweries, like Motor Craft Ales, or contract brewers.

Since few craft breweries keep their brewhouse at capacity 7 days a week, they can help to pay off that massive capital investment by renting out their unused capacity to others, so many of Ontario’s producers actually work together on a day-to-day basis, sharing equipment, trucks, knowledge and maybe even yeast.

Yet for some reason there’s a stigma against contract brewing, which has led to the Alcohol and Gaming Commission of Ontario (AGCO) enforcing a law which excludes them selling their beer to Special Occasion Permit (SOP) holders such as beer festivals, one of the best ways for start-ups to reach new customers. The law only serves to hurt the smallest of Ontario’s brewing companies, which seems to be a trait shared by most of Ontario’s beer laws.

(It’s interesting to note here that contract brewers, because they don’t own their own brewhouses, also can’t open an on-site retail store, so their options are very limited.)

To privatization or not to privatize

For some reason the stigma against beer among law-makers extends beyond just contract brewers, for example: as of May 1st, Ontario wineries can now sell their wines at farmer’s markets. Why not breweries? Many craft brewers have taken cues from the wine industry, and many craft beer drinkers prefer to buy in single bottles anyway. It’s about time we do away with the “wine is classy, beer is trashy” stereotype.

The debate over privatization of alcohol sales is being most visibly played out in the PR smear campaign between the Beer Store and the Ontario Convenience Store Association (OCSA), but the black-and-white narrative they’re shaping is not the reality of the situation.

The question is not “should we sell beer in convenience stores?” – as the Raise a Glass to Ontario Act shows, there are plenty of different ways to reform the province’s alcohol retail system. Neither would privatization be a death sentence to the Beer Store – it will remain a distribution machine for its owner breweries (AB-InBev, Molson-Coors and Sapporo).

And let’s not blame the LCBO for this. Most of the stupid laws that hurt local brewers as well as craft beer drinkers fall under the jurisdiction of the AGCO. The LCBO is primarily a retail chain and, in my opinion, a really good one. It has its flaws, but at least the LCBO actively responds to changing consumer interests, unlike the Beer Store.

To privatize alcohol sales in Ontario does not mean the end of the Beer Store or the LCBO. It just means that our beer, wine and cider industries can grow on their own terms, sell directly to their audiences, and leave the LCBO and the Beer Store do what they do best.

Session #92: I Made This

I haven’t participated in The Session since I hosted #80 a year ago, “ Is Craft Beer a Bubble?” but now I’m back to answer Jeremy Short’s excellent question:

“How did homebrewing change your view of beer? Do you like beers now that you didn’t before? Do you taste beer differently? Does homebrewing turn you into a pretentious asshole?”

Before answering the first question, I’ll answer the other three: yes, yes, and maybe.

I never liked domestics. I drank liquor and wine. But even before I loved beer, I was fascinated by it’s role in society, by its history and it’s significance, by pub culture. Before I loved the pint, I loved the idea of the pint.

So I did it backwards. It wasn’t craft beer that got me into homebrewing, it was homebrewing that got me into craft beer. When I started homebrewing about 5 years ago my journey to beer nerd-dom had just begun.

But when that first batch brewed from a kit turned out so very terrible, I knew there must be a better waym and I began to obsessively read everything I could find about brewing. I wasted massive chunks of my days pouring through, memorizing recipes and comparing dozens of different ones for each style of beer to see how they did and didn’t differ from eachother.

Pretty soon I was writing all my own recipes and inviting everyone I knew to collaborate on brew day so that I could share my obsession and show people how easy it was.

To get back to the question at hand, first and foremost my palate wouldn’t be anything close to what it is if it weren’t for homebrewing. I used to taste a lot of beers with a friend of mine and it was very clear that he tastes beer like a beer drinker and I taste beer like a beer maker. I taste beer through the lense of brewing, as if I’m trying to reverse engineer the recipe, naming the malts, the hops, the yeast, etc.

That means that I have very little patience for flaws, fermenting too hot being the main offender in my experience. So maybe I am a pretentious asshole, but I’d say I’m more like a bass player who cringes when he hears somebody play bass badly, especially if I’m paying for the pleasure.

I don’t brew professionally, so I don’t want to buy a beer from someone who can’t brew as well as I can.

Snob alert.

Bringing Back LCBO Alcohol?

I like the LCBO. It’s not without its flaws, but living in Montreal has really made me appreciate the LCBO’s attitude toward beer. Quebec is 99% devoid of any non-Quebecois craft beer. For 360 days per year the beer culture is isolated, the 5-day Mondial de la Biere festival being the one and only time local drinkers can expand their horizons.

Having said that, a recent suggestion that the LCBO should resume distilling their own spirits, a practice that ended in 1996, strikes me as laughable. Folded into an article filled with Orwellian language and a curious amount of righteous indignation, the suggestion seems to be at odds with the writer’s poor opinion of the LCBO, described as “our humble and benevolent alcohol overlords”.

If you really hate the LCBO so much why would you want them distilling their own spirits? It seems to me that liquor control and liquor production are best kept separate. LCBO producing their own beverages would cause the same conflict of interest that I have vocally decried about the Beer Store.

If you think Ontario’s alcohol retail is bad now, just imagine if the LCBO were operated like the Beer Store. Since they discontinued their line of spirits almost 20 years ago, the LCBO has only gotten better at serving the discening drinker. The one thing they do best, their selection, is the one thing that LCBO alcohol would put into jeopardy.

Today in Beer Laws: No Contract Brewers at Beer Festivals

For a variety of reasons, brewers rarely participate in political discussions, and I respect the attitude of just getting on with making (hopefully) good beer. But Left Field Brewery, which opened last year in Toronto, has piped up to call everyone’s attention to another absurd piece of legislation with is stiffling the growth potential of small start-up craft brewers.

Left Field Brewery: Why we won’t be serving beer at festivals this summer

It’s a good time too. The Beer Store debate is as heated as ever and the amount of people who are going to pay attention to beer politics in Ontario is probably at an all-time high. And this latest tidbit is news to me:

It’s recently been brought to our attention by the AGCO that as a contract brewer, we’re only allowed to sell beer to three parties; The LCBO, The Beer Store and Licensed bars & restaurants. That list specifically excludes Special Occasion Permit (SOP) holders … including beer festival organizers.” – Mark & Mandie of Left Field Brewery.

The irony is that even Left Field Brewery is an SOP holder, since they’re co-hosting the dim sum festival YumCha! this weekend – meaning that they can’t serve their own beers at their own festival.

SOP holders would also cover any markets and private events on top of major beer festivals like Cask Days, which in this market of near-monopolistic beer sales are one of few ways that new breweries can get their beer into the hands of potential customers.

“Events and festivals are the single best way for us to sample our beers with the public and are one of our few opportunities to interact directly with beer drinkers.”

So what is this all about? Left Field Brewery is (for the time being) a contract brewer, which means they make their beer at somebody else’s brewery. This is actually pretty common. When I volunteered with a brewing company in Melbourne, Australia, there were at least four breweries that worked out of the same facility. It’s a reality and it’s a necessity in the craft beer world.

The cost of opening a brewery is somewhere in the $1 million area. That’s a big investment to make before you can even test out your first product. That’s why most small breweries start their lives either as contract brewers – since only the largest of brewers actually keep their brewhouse at capacity 7 days a week – or as nanobreweries like Motor Craft Ales.

For some reason it seems there’s a stigma against contract brewing. Left Field’s beer is “brewed at licensed breweries, has been lab tested by the LCBO and is consumed safely at over 60 bars and restaurants every day,” why should they be treated any differently than other brewers?

The law only serves to hurt the smallest of Ontario’s brewing companies, which seems to be a trait shared by most of Ontario’s beer laws.

Follow-Up: Long Live the Beer Store

I have this sinking feeling that the March issue of my beer column in The Windsor Independent is going to be the most widely-read thing I’ve ever done. That being likely, I want to clarify something: The Beer Store is not the villain of the piece.

Even in the short amount of time since my article made the rounds, it has become increasingly obvious that the Beer Store is a heartless, fear-mongering enterprise that will stop at nothing to maintain its monopoly on private alcohol sales in Ontario. Case in point, the new Beer Store-managed Twitter feed “Ontario Beer Facts” (@ONBeerFacts), where they play fast and loose with the definition of “Facts”.

2014415-beer-store-adWorse yet is their 80s PSA-inspired TV ad in which they suggest that convenience store clerks are evil, pedophilic incompetents.

This contrasts with my experience in Vancouver last week at the (privately owned) Brewery Creek Liquor Store. I asked a staff member which beers were must-trys for somebody only in town for a couple days and he basically gave me a crash-course in BC beer. He was passionate, articulate, and really knew his shit.

Would you get that kind of treatment from a Beer Store clerk? No chance. That kind of behaviour could get them fired – no joke! Beer Store employees are prohibited from recommending anything, probably because the owners, Molson and Labatt, know that no educated beer drinker would ever recommend their products in good faith.

Keep reading…