Hello, Minister.
I’m writing to you today to express my hopes for the alcohol industry reform that is currently tabled for discussion within the province. I’m an odd duck in regards to this situation in that I’m periodically referred to as an expert and have made a minor career out of my ability to explain The Beer Store situation to the general public. I find it’s just difficult enough that people forget how it works on a nearly annual basis.
In addition, I’m the editor of The Growler, which is the Craft Beer magazine of record for the province. I work for Food & Drink (when they pick up my pitches). I am head of a beer program I designed at George Brown College in Toronto, although I’m friendly with some of the people at Durham, closer to you. I’ve written the history of beer in the province over the course of about four books, including two editions of the Ontario Craft Beer Guide.
I know a little bit about beer.
Mostly, what I know is that I am in charge of the map for the province. When I have to move a brewery from open to closed, I have to use the red highlighter. I hate the red highlighter. It represents years of investment of time, resources, ability, money, and someone’s life. Using the red highlighter is a hateful thing to have to do.
I am doing it a lot these days.
This is what motivates me. I went to brewing school and I saw a generation of people that thought change was coming and that they could make a life for themselves opening breweries. In part, this was encouraged by the McGuinty government, who threw a little bit of money at the Ontario Beer Industry in 2011.
Over the course of the period 2010 (when I started) up to now, we’ve had nearly 460 breweries open. 60 have closed. Several have been purchased by larger breweries. Many have merged (you might have seen Spearhead/Signal/Skeleton park in the Whig Standard last week).
This was inevitable with any significant financial downturn. Inflationary pressure on other goods means that the public don’t have the disposable income they once did. Also, the older people who used to buy 24 packs at The Beer Store have aged out of that 1970’s weekend behaviour. They’re, charitably speaking, in their metamucil and sherry years.
My concern is that without reform to excise and LCBO margin as part of the grand bargain around the MFA, we’re going to see a lot of shuttered small town businesses. The breweries that will suffer aren’t Molson, Labatt, or Sapporo. Nor Carlsberg and Royal Unibrew who have bought in just in time to take advantage. We’re seeing closures for people who took a flutter on small batch, bespoke products. They’re now faced with pressures that only a global pandemic and a global recession could have loosed on them.
Minister, it’s not enough to provide them with shelf space. That’s just a temporary stay of execution. They need hope. They need something to fight for; a guarantee of the ability to make a living making their diverse and interesting products.
At the moment, we produce the best beer that has ever existed in this province’s history. The reward for that effort has not manifested in a concomitant increase in market share, and that’s mostly down to financial difficulties on the part of individual companies. Most of the breweries that exist in the province are under 2,000 hL and service a single town or neighbourhood. Despite this, we are beginning to gain traction internationally. Ontario has built a range of breweries and products of which we can truly be proud.
It would not take much. More shelf space. Less Excise for smaller breweries along the lines of the Federal structure. A removal of the 9 cent can tax. A little less markup at the LCBO. I think you could make significant change for a sacrifice of fifteen to twenty million annually in excise while increasing LCBO remittance by billions. I wrote about it over here: https://saintjohnswort.ca/some-thoughts-about-ontario-beer-excise-and-the-mfa/
As I stated, I’ve made a minor career as a beer expert. I don’t make very much money off of it. I don’t really have a dog in this fight, except that I know these brewers. I have seen their struggles and their perseverance and their unwillingness to quit. They believe in what they’re doing. They need some breathing room. Without it, there won’t be anything to tax later.
I would bet you could prevent the closure of a hundred to a hundred and fifty small businesses over the course of the next two years. More if you give the Ontario Cidery docket a little thought into the bargain.
And besides, if you can make it work, you probably never have to buy a beer in this province again.
Thanks for your attention.
Jordan St. John
Really well put, Jordan, let’s hope someone is listening.
You are a very good writer Jordan and this is a well written piece. Factual and timely.
Bravo Jordan!!! The craft beer story in Ontario needs more voices such as yours. Never before has a group of committed individuals done such great work for so little official recognition and government support. I certainly hope the minister listens, and doesn’t just kowtow to the big industrial brewers. Cheers. Sid Huff
I mean, they could appoint me Ale Conner to the province and throw in a pension….
Or, you know. Three days’ vacation in Sarnia.
“Minor” he he. Minors are not suppose to know about beer, this is Ontario after all!
On a more serious note. I have to ask, are these breweries launched on sustainable business plans in the first place? Small businesses fail all the time, sometimes understandably due to externalities like a plague or massive macro-economic shock, but quite often due to optimistic projections and/or mismanagement. While I agree, the regulatory environment is byzantine and problematic, if I were to write a business plan and launch a brewery (or any venture) it would be upon me to take into account the regulatory obligations before deciding if I could make it fly. Something, something, you didn’t know what you were getting into?
Hey. Sorry for taking a while to acknowledge this one.
It’s a very good question. Sometimes when I’m defending my articles, I can get a little rhetorically stuck, but in this case it’s such a good adjacent line of questioning that I’m going to answer as honestly as I can.
A lot of the people who open breweries probably don’t have any business opening breweries. There are people I like and respect who have failed, and it’s at least partially because they came at it from a homebrewing background without the capital or the savvy to understand the business aspects of their business. They start too small or they make a niche product that there is simply no market for in the catchment area of the brewery. They have no walk up customers because they’re in industrial parks. If you look at something like People’s Pint or Little Beasts, one of the first things you notice is that there’s a real quality product being made. The second thing you notice is that you’re pretty unlikely to actually go there.
It’s not like it’s a moral failing. At issue is that beer is a volume sales product. Always has been. Always will be. You can’t sell one beer and make money. You need to sell a case of beer. Sometimes people become enamoured of the artistic side of the business and get in for that reason without understanding the more commercial aspects. It’s possible to do everything for the right reasons and fail anyway. Both of the examples I listed above made fantastic stuff but were not really commercially viable in situ.
And then sometimes, you get Collective Arts claiming they didn’t know about the 500k in excise they were going to have to pay because they contracted to Steam Whistle. That’s a slightly different scale, you know? Also, probably just for rabble rousing publicity.
Well said Jordan