The Ongoing Odysseys of Canadian Breweries Retailing Their Products
When certain grocery stores in Ontario made beer sales available in mid-2017, many consumers felt that nearly a century of temperance-influenced selling regulations were finally coming to an end. Despite many in the brewing industry seeing this as a grand benchmark for beer-focused bureaucracy unraveling, they also acknowledge other issues to contend with. This is particularly still the case in the realm of retail.
“Craft and small batch beer accounts for twenty percent of beer sales through the Liquor Control Board of Ontario [LCBO],” said beverage industry consultant Austin Shynal. “And that’s doubling every three to four years, so there’s a glut of beer options for drinkers, but the LCBO, the Beer Store, and the big breweries control what you see on the Ontario shelves.”
Licensed through the provincial Alcohol and Gaming Commission, Shynal has been involved with sales through many Ontario breweries, including Railway City, Bell City and Ironwood Cider. Now, working solo at 416Consulting.ca and TheNiagaraSommelier.com, Shynal has helped alcohol producers contend with Ontario’s beer retailers and has seen the challenges up-and-coming brewers have to face trying to get their beer sold on the commercial marketplace.
“Some breweries can’t meet the purchase requirement the LCBO puts on them,” he said. “Ontario is arguably the most regulated for retail in the world, so if a brewery can make it selling here, they can make it anywhere. After we can fully understand and master our domestic marketplace, only then can we conquest elsewhere.”
Outside Ontario, brewers’ retail matters aren’t necessarily any easier.
“We have the Nova Scotia Liquor Corporation [NSLC] to contend with,” said Big Spruce Brewing’s brewmaster and co-founder Jeremy White. “They have been good to us as we didn’t have to wait long to get retail approval and we have been able to retail our three core brands here plus our seasonal batches as well. But it’s still a struggle and there are a lot of limitations, since you can only sell through four private licensees that the NSLC have in place, and there are always further provisions breweries have to contend with.”
Curiously, White spoke about a key unexpected retailing matter Big Spruce encountered as it grew in scope and production: meeting the huge beer production demands of their governing body.
“It’s that age old saying of ‘Be careful what you wish for’,” White said. “The NSLC and other provincial monopolies control many of the breweries’ destinies—once they get in the retail environments, the breweries are required to continually produce the beer to meet the demand in place. We got lucky and were able to put in more tanks at our brewery to get that production volume met. But some other breweries haven’t been as successful or able to do that.”
For new breweries or existing ones facing continual retail challenges, Shynal advised on working locally and focusing efforts small at first, including focusing on key planning matters while also engaging in a bit of outsourcing.
“With so many expenditures at all levels of production and sales, new breweries need to save capital, so it’s good to focus on having a concise business plan, doing trade shows or guerrilla marketing, and brewing offsite to meet demand rather than spending so much time acquiring a bricks-and-mortar facility,” he said. “Most importantly, they need to get onto applying for necessary licensing. When it comes to selling growlers or cans, you can operate a retail outlet right out of the facility you eventually work in. A retail store in a brewery isn’t on LCBO hours, so you can stay open until nine or eleven at night, be open on Sundays, that kind of thing. Combining retail with on premise consumer consumption will also maximize both profitability and long term brand loyalty, including special events and club memberships.”
On the subject of retail growth inter-provincially or internationally, White added, “We get special orders for beer in other Atlantic provinces like New Brunswick and Newfoundland, and we’re attending a beer festival in Vermont in March 2018 to see what retail possibilities are in the US. But we’re going to keep operations small for a while yet and proceed with caution.”