The foreign brewers who own The Beer Store may be price-gouging Ontario bar and restaurant owners
Coors Light, Budweiser and Molson Canadian aren’t particularly pricey brands of beer—unless you own a bar or restaurant in Ontario. For the province’s tens of thousands of liquor licensees, these premium beer brands come at huge markup.
Take a case of Canadian. For a restaurant or bar, a two-four costs a staggering $44.75, about 30 per cent more than its retail price of $34.95. Labatt Blue, inexplicably, costs almost 50 per cent more than the retail price. This would be strange, but not necessarily fishy, if the markups were consistent across beer brands, but they’re not. With few exceptions, the markups apply exclusively to brands produced by Molson-Coors, AB InBev and Sapporo. Those are the three foreign-owned mega-breweries who own The Beer Store and have a virtual monopoly on beer sales in Ontario.
The issue came to light last month, when the Canadian Restaurants and Foodservices Association raised the price discrepancy to members of Ontario’s Standing Committee on Finance and Economic Affairs. The CFRA is determined to keep raising the issue until they get a satisfactory answer. So far, there’s been no answer at all. “CRFA has never been offered an explanation for why the owners of The Beer Store decided to charge Ontario licensees more than the general public for their products,” says Jamie Rilett, vice president of CFRA Ontario.
For its part, The Beer Store pleads ignorance. “We have absolutely nothing to do with prices,” says president Ted Moroz. Rather, individual brewers set their prices through the LCBO, and The Beer Store is notified of price changes on a week-to-week basis. In fact, Moroz claims that he first realized the discrepancy was so large when the issue was raised by the writer of this article. “I was surprised,” he says. “I didn’t realize the prices were so much different for home consumers.”
LCBO communications consultant Lisa Murray confirms that brewers can set basically any prices they want. “Beyond confirming that the price change requested is above the minimum price,” she says, “LCBO plays no role in setting these prices.”
It’s possible there are valid reasons for the price discrepancy. One independent brewer—Toronto’s own Steam Whistle Brewing—also charges a markup to licensees, albeit a more conservative one. Steam Whistle’s pilsner costs about $50 a case for licensees, whereas it retails for $46. According to reps for the brewery, the extra four dollars covers certain services provided to bar and restaurant owners, like beer delivery or draught line cleaning, as well as branded glassware, signage and other promotional materials.
Steam Whistle is the exception, though. “By and large,” Rilett says, “Ontario’s craft and independent brewers price their products the same for both retail and licensees.” Some Ontario craft brewers even give licensees a deal. That’s the case with Guelph’s Wellington Brewery, which offers its brew at a discount to bars and restaurants—an intentional strategy employed by the brewery to build its brand. “We offer our beer to licensees at a reasonable cost in order to ensure that our products are widely available at bars and restaurants,” explains general manager Sarah Dawkins. That, the CRFA maintains, is the natural relationship between retail and wholesale pricing. “[The current system] runs counter to every other business input, where wholesale prices are significantly lower than retail,” Rilett says.
As of publication time, Labatt’s had not responded to multiple requests for comment and Gavin Thompson, head of corporate affairs for Molson Coors Canada, would only say that “Given the competitive nature of our business we do not comment on our pricing strategies.” We were unable, then, to obtain a response from The Beer Store’s foreign owners about why they are charging Ontario licensees such a dramatic markup on beer.
At least one Ontario restaurateur, Rino’s Kitchen owner Rino Bortolin, has begun boycotting The Beer Store in light of the seemingly shady pricing tactics. It remains to be seen if other licensees will follow his lead.
In the meantime, Rilett says the CFRA will continue to make noise. “We’re not asking for the moon here,” he says. “We don’t expect the owners of The Beer Store to actually provide wholesale pricing, but it’s ridiculous that they are charging licensees up to 50 per cent more for a case of beer than they charge the public.”
20 thoughts on “The foreign brewers who own The Beer Store may be price-gouging Ontario bar and restaurant owners”
Uh, try to see it for what it is. There’s a reason the province of Ontario has legislated them into this position. The province of Ontario is taking a kickback, regardless of what party is in power. Our government is corrupt. It really is that simple. You know why The Forum and Children’s Village at Ontario Place were demolished for the Molson Amphitheatre? You’ll see it has LCBO ties, through and through.
Yes, kids, your government is selling out for their own reasons, on your dime. But since we are Canadians, we do what we’re told.
Don’t vote for Wynne. She’s a weak pushover like the rest of ’em.
So the poor, abused bar/restaurant buys Molson Canadian for the outrageous — outrageous! — price of…wait for it…$1.86 a bottle! And then turns around and sells that bottle to Joe Patron for $5 or more! That’s a markup of 300%. And in doing so, the bar rolls in the HST to the sticker price AND charges Joe Patron HST on top of his beer. Yes, somebody is getting gouged here, but it ain’t the bars and restaurants. Would Ben Johnson analyze how badly customers get reamed by bar markups? Or would that make some enemies out of his friends in the hospitality biz?
Ha! Fair point, Bill.
I guess I just figured everyone knows about the crazy markups in bars where people pay $90 for a $30 bottle of wine or even $200 for a $48 bottle of Grey Goose, whereas these markups for licensees aren’t typically as well discussed publicly.
Aside from maybe one or two bartenders in places I used to frequent before my son was born, I don’t have any “friends in the hospitality biz..”
I will say though that profit margins for restaurant owners are typically razor thin–something you can’t say for large breweries.
Anyway, I assure you I’m alliance free and happy to make enemies wherever a story requires it.
Appreciate the reply, appreciate your wisdom, appreciate the challenges of running a profitable establishment, and appreciate the major brewers hold a major trump card on licensee pricing for popular brands. But $1.86/bottle off the delivery truck for a so-called premium brand like Canadian does not seem to be too onerous on bars when they easily recover the cost (at least) three times over. I can only imagine that profit margin is much higher on draft kegs. In addition, as you point out, there are plenty of indie/craft brewers happy to undercut major brewers when supplying bars/restos. Nobody has a gun to their head here; the licensee supply chain seems fairly competitive from the angle of available brands and pricing options. It would be interesting to read a post/article on which Toronto bars have the most ridiculous markups. That’s where you’ll find the “shady pricing tactics” I think.
Ben…not sure that it is right to call Molson Coors “foreign owned”. Fact is that the Molson family is still involved in the business…seventh generation to be exact. Molson and Coors merged as “equals” in 2005. Molson and Coors families basically split control of voting stock (two class structure on shares). At the time of the merger there would have been a lot of public shares held by Canadians…and they are “owners” too. It truly was a merger of equals, both companies valued about the same at the time, equal board representation, gavel swings every two years (Andrew Molson currently Vice Chair but was chair the past two years prior to Pete Coors taking gavel for the next two years). 3000 employees in Canada and a lot of support for major and local sponsorship. At the time of the merger press in Canada said that the Molsons sold out…press in the US said the Coors family sold out…smiles…perfect example that it was a merger of equals. Molson is the oldest continuously operating brewer in the Americas…something we can all be proud of as Canadians…the heritage continues. This “foreign owned” thing continues to rub me the wrong way when you reference Molson Coors. @FergDevins (former Molson Coors executive)
I dont think I have seen a bottle of blue for less than $5 or $5.50 since I was in university. They are upset at paying like forty cents more per bottles but still have the gaul to mark it up by at least $3 and say they are being gauged?
The definition of ownership is very concrete. The company is incorporated in the States. They pulled the covers over the eyes of Canadians because they manage a brand name called “Canadian”, which they couldn’t have seen being American. Employee location is irrelevant and is actually put into legislation by the old large brewers in Canada. The press can be bought to make it seem as if something happened, and you say it’s a perfect example. It is not. Molson’s is a company that continues to break laws, buy politicians, and keeps competition from happening in Ontario (at least). Even at 50% ownership by Coors, their control in the Brewer’s Retail is just plain wrong. What rubs me is that the industry operates illegally in light of this control, and nobody seems to GAS.
And yes, I come from the brewing industry as well.
Bill, you DO realize that 300% markup is indeed normal practice, and has been for decades, right? And those prices are after the 100% illegal promotions that Molson’s/Labatt’s offer bar owners, that the AGC conveniently doesn’t see.
But I do like your reference to the “so-called premium brand” of Canadian. Nothing premium about it. It’s a standard lager. And your take on microbrewers is 100% backwards. It’s the large brewers that try to control everything, and that’s why Brewers Retail is in place. When micros go up against the LCBO and AGC, they see a table with 3 players: Molson’s, LCBO/AGC, and Labatt’s. Believe me, I’ve done it. It’s 100% crooked. There’s a long list of illegal things going on that most people don’t know about. Small brewers can’t afford to play these illegal games and compete using high-quality products that people want. That is the reason Molson’s got into the micro industry. 3 for 1 offers are regularly offered by large brewers, not to mention hardware installations and payoffs.
Supply chain is not competitive. There’s just so many things you don’t know about this. You’re commenting on what you think you see.
Establishments and small brewers deal in small cash. It’s why you don’t see entertainment venues, and licenses for places like the Dome, Canada’s Wonderland, parks the size of Barrie outside Toronto, nor major special event licenses supported by small brewers. The thievery happens in large players that are all part of a worldwide consolidation started by SAB 20 years ago.
Oh, and our lovely politicians are in it as well. Shady, as you put it.
Not sure who you are by your name. If your name is Rico Featherbutt fine. If not, come out with who you are, particularly from the industry. The facts are quite contrary to your opinion expressed here.
First off, I don’t answer to you. Second, the facts are indeed just as I have stated. If you are denying the control of any beer distribution in Ontario, then you don’t seem to realize that it’s in plain view. Ask any microbrewer, they will tell you right out. Second, review the articles over the past 20 years and you’ll see the problems with the industry. Your denial, is just part of that.
Oh the irony where Bars/Restaurants gouge their patrons at 300% when they sell beer at $5+ dollars
They have rent, utilities and employees to pay. If you don’t like it, drink at home. The beer companies on the other hand don’t pay a cent more to produce a product for bars than they do for home use. Restaurants shouldn’t be paying for the big 3’s marketing costs. They sell more than enough to pay for it themselves based on sales volume, without gouging their customers.
Molson, Coors and Budweiser are most certainly NOT top quality beers. They may self-label as premium, just as any food conglomerate can label its products “gourmet”. The labeling does not make it so.
Canada needs to cease allowing monopolies. They serve only those who reap the profits while consumers and other retailers suffer.
Bill, yes, the bottle costs under $2. The bartender or server do need to earn a wage, and there’s rent, the energy and water to wash the glass, insurance, taxes… Restaurants and bars do have operating costs to cover – hence the markups. Most food and beverage service providers make very little profit.
You obviously mean ‘gouged’ i.e. overcharged, extorted.
Why does not the smaller restaurants/establishments just buy the case of beers at the Beer store and save $10 per case. Oh yes, keep buying a few cases the proper way so your liquor license is still valid.
They conveniently print industry cases different. Inspection would have their licenses challenged.
Well, if the breweries are charging 50 per cent more for case of Blue or Coors light don’t you think your cost is going to be higher than what it should be? Think man. The cost is passed on to the consumer….always. If the monopoly wasn’t there your beer wouldn’t be 5 or 5.50. It may be 4 or 4.50.
Restaurants and bars do have other costs….regulations, licenses etc. Employees, insurance, energy, rent, mortgage. It is all factored in to the price of a beer. People pay high prices for lots of alcoholic beverages ($6 for a glass of wine??). But, if the companies that hold a monopoly on beer sales in the province (notice how they limit craft brews in Beer Stores and then buy the upstart, but profitable brewery – see Sleeman’s.) charge 50% more for their beers then there is something wrong. That is why this is wrong on many fronts. I know a few establishment owners and the liquor laws of Ontario (unchanged basically for decades) are onerous and in some cases idiotic which is stifling to their business. Their margin for making money is limited on booze. They make more on food. Besides, if I want to go to a bar, nightclub or restaurant I don’t have to pay the price they want if I don’t want to. I can not drink, drink water or go to an establishment that charges less.
gall not gaul
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