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 Some were just easy to ignore, claim ignorance, which would then lead to a small change in that outdated policy (as I’m relatively sure happened with Beau’s and direct home deliveries…) etc., etc.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.

 

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s