My name is Adam Henderson, and I own and operate a small beer import agency called RainCity Brands. I started my business because I love real beer and I want to help people like me get access to a wide variety of great beer. Besides my love of beer, I also started a business to earn the money and amass the skills required to one day start a brewery, or brew-pub of my own and expand my interests (financial and otherwise) in this industry.
However, there are several Provincial regulations that prevent me from doing this whilst running my current company. Very recently the Liquor Control and Licensing Board and the BC Government are looking at making changes to these rules. As a business owner and craft beer drinker I believe this will increase the number of breweries in the Province, increase the diversification of products available to consumers, and further grow the thriving craft beer culture in BC. Such changes are a boon for consumer choice as they signal a shift away from excessive and arcane Government control; which is the direction we need to move in order to create an environment that fosters and promotes growth and vibrancy in an otherwise stagnant, slow moving industry.
The rules above, restrict the ability of a licensed agent (me), liquor licensee (a bar) or liquor manufacturer (a brewery) from being financially tied to another licensed entity or ‘House’, that might cause each other to favour their respective products. The original rationale for the rules is loosely understood (by me) to be based on a particularly rational fear that large breweries would have attempted to own every aspect of the market. However, these fears were post-prohibition era, and the policies were enacted in the 50’s. Times have changed, and despite these laws the big guys dominated the market anyway, and consumer choice still sucked. So why not loosen the reigns and allow some innovation in the market?
Now, the Government is claiming partly that these changes are being made so that the BCLDB, and the LCLB can focus on public protection and safety. This is a red herring, and it is being done for business reasons, and very likely at the behest of large corporate brewers. Now, if large breweries stand to gain from these amendments, why should self-proclaimed consumer choice advocates like me be in favour of the lifting these ‘bans’?
Many would argue that allowing massive brewing corporations (ie Molson) to integrate vertically, and purchasing position for their products will restrict ‘consumer choice’. We must recognize that the latter is already rampant, and that the former makes a terribly brash assumption that Molson and their peers want to be in the bar or retail business. If ‘buying’ taps or shelf space is such a craft beer killing strategy why isn’t it already working? Bars and restaurants that are likely to favour inducements would already being doing so, as the LCLB admits this break in policy is rampant. But we know from the sales figures that it isn’t killing consumer adoption. Craft beer is thriving, which to me means consumer choice is getting better.
I can understand why some may feel that this isn’t going to create a great culture for craft beer in the Province. But consumer choice is all about having access to many great products, right? Well then, we mustn’t forget that we have a weapon on our side as the proposed changes will also empower a counter-effort by those that wish to offer the products.
For example, I will be able to open a bar that sells my beer, and beer loving bar owners will be able to open breweries or import agencies. And yes, I, and they are likely to ‘favour’ our own products, as we believe they are terrific and that there is a market for them. Just as Rogue Brewing does in their bars throughout Oregon and California. Likewise, should a bar owner in BC believe that a small brewery in Botswana produces the best beer in the world, he or she will now be able to get an import license, and make a business out of bringing it to market.
Like it or not, we’re a bit capitalist here, and it’s money that holds open the door to choice: Crazy people like me try to bring in sour beers from Belgium or start a brewery that makes beer from Chestnuts, and if we don’t lose our shirts in the process, those interested now have the luxury of being able to buy them. That to me, is consumer choice.
It’s not inherently bad that Molson products are in most bars in the Province. But I simply don’t spend my money in those places, nor do my peers. That is horribly bad for Molson, as we spend a lot of money on beer, and our numbers are growing! Molson isn’t actually trying to steal craft beer drinkers away, instead they are throwing money at the very marketing and product strategies that separate our market from theirs, and that money is only helping them appeal to a narrower and narrower market each year. We should be so lucky.
There is a certain degree of fear surrounding these changes with respect to how they affect our fledgling industry, and I can appreciate that. As advocates of consumer choice and Craft Beer, we must give ourselves some credit. We’re not creating some fad, flash in the pan, fly by night craft beer industry in BC. We are creating a passionate and long lasting market bought of fervent enthusiasm that is causing our supporters to ask bars, restaurants and liquor stores to offer better products. They listen not because it’s the right thing to do, or to oppose big business, but because it makes business sense and because people want choice. That’s why I am not worried. Changing these policies around “Tied Houses” is just one very small step in removing the Government regulation that strangles our industry, but it’s an important one that will see many new establishments opened to the delight of choice-thirsty consumers in British Columbia. I cannot wait to see it happen, perhaps through the windows of my own, legal, “Tied House”.
{ 12 comments… read them below or add one }
I get some of your points, and would agree with them instinctively without being familiar with the problems, ie. why shouldn’t a pub owner be able to import beer from Botswana if that makes sense.
Where I disagree is I believe legislation like this has seen most every pub in Britain turned into a quaint ersatz shadow of an independent pub due the big brewers buying up every drinking establishment they can. What’s to stop the same here?
This legislation seems a pretty good defense against Labbat/Molson hegemony.
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Having lived in the UK when the big breweries did buy up many small pubs and sold their products exclusively, I do think that it can happen here. One of the worst offenders in England was Labbat or at least the conglomerate they were apart of at the time. I saw more than a few small breweries have to shut down or sell to the bigger breweries. And consumer choice did get restricted.
I think that to completely abolish rules will hurt craft beer which barely has a toe-hold in the market as it is. There needs to be some control over the big, national breweries and conglomerates whose greed know no boundaries.
What if the Donnelly group sold it’s bars to Molson? Would the author support one beer company owning 20 liquor primary licenses?
Molson already has shown an interest in the bar business, The Commodore Ballroom was at one time in their control and may well be again.
What about the really big venues, like Rogers Area or BC Place, or the Convention Center. They already have exclusivity agreements with them, but shutting out Craft Brewers in major tourist arenas is a distinct possibility.
Thanks Keith and Paddy, I think a lot of people share your sentiment, but I also think that there is a lot of mis-understanding about the situation in the UK, it’s causes, and it’s relevance to our market at home.
First of all, only 16% of the UK’s 57,500 pubs were brewery owned in 2007 (the most recent data I could quickly find). 53% are owned by large pub companies and 31% are independent. Is that what we are afraid of?
Now, it used to be much worse. Breweries had many decades to grab up pubs, and they did. Then the UK (thanks to CAMRA) enacted the Beer Orders in 1989. This restricted the number of pub that the large breweries could own, and forced them to allow a guest tap. However the Beer Orders were revoked in 2003, as the industry had been altered substantially by that time, (new breweries, competition, new pub formats, consumers new what real beer tasted like, etc…) and thus there was no more need to ‘mandate’ consumer choice – because consumers wanted it and it made business sense to appeal to them. That’s where I think we are as British Columbians, and why I feel we don’t need the protection.
One more consideration when making a comparison of BC to the UK is to understand what a pub is. We don’t have ‘pubs’ here, at least not like the UK does. The sale of beer in BC is simply not the same environment. The establishments in BC that sell liquor are mostly restaurants. You can’t open a restaurant in Vancouver that just has a bunch of tables and chairs and a deep fryer. It won’t be successful. However, that model works quite well in the UK, and 80% of their population frequent these establishments weekly. My point is that there is a LOT that goes into running a successful restaurant in Vancouver, and not so much into running a traditional ‘pub’. And I believe those that are afraid of a company like Molson successful pulling off a full scale invasion of Vancouver’s food and drink scene are a lot more afraid than they should be. We must remember to give due credit to all the amazing places our city’s talented people have created in order to compete with an already prominent onslaught of shitty beer choices in bars/restaurants/pubs that AREN’T owned by a big brewery.
This isn’t a silo’d issue, so it does make it hard to debate. I’ll admit that and I’ll also admit that due to the above there is a greater danger of the big guys impacting smaller townships. But we need to counter this with local breweries and brewpubs, not protectionist regulations. There is a lot of room for competition right now, we just need to make it easier for people to enter the industry, and I believe these changes accomplish that too.
Like I said before, even if the big guys do buy a few places, who cares. I actually think they should be able to, goo for them, they earned it. But there is no danger whatsoever of them dominating our scene. And the same laws that enable the above will promote all kinds of innovation that will dramatically offset any loss of consumer choice imposed by a few bars falling to the ends of the macros (don’t forget – most already operate like they are owned by them anyway!)
Thanks Michael, and yes, I would support that if those parties wished to do such a deal. I’m well aware that what I’m advocating will open the door to such possibilities. I can’t get into it now, but the liquor vs. food primary issue is very important too.
I’m unsure; are you suggesting that the Donnelly Group is currently doing good things for Craft Beer and consumer choice? I believe they are already selling the same stuff they would if they were owned by Molson! I certainly don’t see them as champions of the craft beer cause, not by a mile.They have one bar with a decent beer list (New Oxford). No offence to them, as that model works well for them and they should pursue what makes them money. But I don’t spend my money there, there are tonnes of other options and we should support those. Molson or Donnelly? Same diff. Until either one sees the numerous benefits of offering real and/or craft beer they will continue to operate that same way. I’m advocating changes that will open the market for their competitors to do things differently. These guys aren’t doing what people are asking for. I cannot understand why people don’t see this as a tremendous opportunity – Let them play their game, we focus on ours.
Craft beer has a long way to go before we’re in Stadiums. It would be great, but is that really the next crucial step for us? (I suppose sometime we should define what it is we all want anyway?)
Why are craft beer advocates afraid of letting Molson do their thing?? It’s so different than what we’re doing. It’s like Blue Water Cafe worrying that McDonald’s is opening in Yaletown! There’s always going to bars selling Macro beer. No matter who owns them.
What we need to be worried about is how the rules and policies in BC PREVENT innovation by all of the places we actually want to support.
Hi Adam
As a Brit who now lives here, I have to say that your view of British pubs is a bit different to mine. The figures from mid 90’s and before might find alot more tied houses, that thankfully partly due to the Beer orders and the changing market with a more demanding consumer these have changed significantly. Even without those laws I doubt we would go back to the bad old days of dreary tied houses with 2 beers on tap. Those pubs would not survuive.
As for your vision of the deep fat fryer being the main source of cooking food…when did you last go to a British pub? the early 1980’s? While I’m sure there are a few of those still around, most successful pubs that have survuived the recessions of the last decade and a half have progressivey served better and better Gastro pub food, or at the very least well made traditional British pub grub. The range of small craft brewery offerings in many pubs has grown significantly over the last 15 years, and is result of the reduction of tied houses. The only tied houses which still succeed are those owned by mid sized craft brewers like Young’s and Fuller’s and offer a great range of their beers as well as frequently changing guest ales from elsewhere, but I don’t think BC has craft breweries with that sort of size to prevent the likes of Molson and Bud dominating a market which already needs more freedom from the power of the big (bland) players. If Buying taps is illeagal then the Liquor board should enforce the law not change it to fit in with unscrupulous practices!
BW – Thanks. The only thing I don’t agree with you on is your second last sentence. BC breweries can compete and win, despite not being as big as Fuller’s.
Otherwise, I think we have the same outlook. I agree that the UK had problems, and that the Beer Orders helped greatly. My quarrel is that people are making unfair comparisons of BC now to the UK of old when they argue against tied houses.
The 80’s was in fact the period to which I was referring with my deep fryer comment. I was being a bit facetious, but my point is that we don’t have ‘pubs’ in BC today like they had in the UK 30 years back. So it isn’t fair for people to refer to that era as justification for outlawing tied houses. (btw, I was last in Scotland & Ireland in 2009, London in 2008)
Tied Houses are once again legal in the UK (this is what I’m advocating here), and as you admit the situation is currently much better in terms of selection and the quality of establishments, in general. It’s certainly not the apocalyptic beer wasteland everyone is afraid will occur here. Now, I do recognize they got there because of the Beer Orders, but they started in a very different place then we are today. I believe we can have the same outcome because we are more similar to modern day Britain than to the Britain of the 80’s. But why does everyone compare us to the 80’s version?
Why not allow some flexibility but still have restrictions on tied selling. Forexample a brewer can own a bar and a bar owner can import beer, but there would be restriction on the % of tied selling. There should be restrictions on the # of establishments a bar owner can have. It makes the beer scene so mediocre that Donnelly Pub Group dominates the bar scene in the city with there themed characterless bars.
Ya, so allow flexibility but restrict the conglomerates from tieing up the beer market. There could be lower taxes for small breweries and increasing taxes as the brewery volume grows. Lower taxes for brews made on the pub site. If brew is made on site that the tied selling rules would be more flexible without brew on premises then a minimum amount of competitive product would have to be on tap at a similar price.
Does Vancouver have any bars? Last time I was there, it was only restaurants. Everyone sits down and has to eat in order to drink this is not a definition of a bar in my opinion.
So maybe 10 bars in all of Vancouver and 5 of them from the Donelly Pub Group. Makes life easier I guess but a little boring.
I believe the bigger problem in our city particularly and our province in general, is that consumers are generally clueless about what is and isn’t legal.
You cannot walk into a Food Primary (restaurant) and “just have a drink”. Unfortunately the vast majority of restaurants do allow this – which has created a general misunderstanding towards imbibing drink.
Pubs in our province, as Adam wrote, are not like what exists in the UK. Not due to their nature of being untied to big breweries, but due to the fact that “going to your local” is something EVERYBODY does in the UK.
Who do you go to the pub with here? Everyday? In your neighborhood? Not likely. If you did go to or frequent a pub – you drove there, which is already a huge unaddressed problem. Pubs have to have huge parking lots..so that you can drink and drive?!
You go to your local choice of restaurant here instead.
This was, in my opinion, caused by the big two when beer parlours and pubs dominated the liquor primary portion of licenses in BC.
Pubs here became a sad mockery of a “public house”, and instead became the home of beer, wings and keno.
Consumers had to choose a cheap lager dominated marketplace ( Canadian or Blue), a local Ale or embarrassingly bad wine. Many chose to go to restaurants instead, of which many unscrupulous operators were more than happy to take their money in exchange for allowing them to “just have a drink”.
Truthfully most consumers are ignorant to how much is controlled without their support or knowledge. ALL beer delivery in the province is dominated by BDL which is a tiny union ( under 500 people ) of delivery workers who used to be employed by Molson and Labatt. Who pays for their wages and free beer allowances?
Who pays for the union workers at your local government liquor store?
Did anybody know that the BC government is the second largest single purchaser of alcohol in the world (after Ontario)? Everything goes back to them.
Would allowing tied houses make consumers more or less likely to choose a generic pub or bar concept? Would anybody want to go to a Donnelly house more so if they were owned by Corona? Not too likely.
How different would the marketplace be?
What do you think happens now?
Cactus Club is already a Molson house vs Earls is already a Labatt house. They own close to 100 “restaurants” between them across BC.
Why the quotation marks? Because everybody you know has gone to one of these locations and “just had a drink”. Were they told that as a Food Primary establishment they had to have the intention to eat or if they didn’t they had to sit in the clearly defined Lounge Area? No they were not. The Casual Fine Dining sector has the majority of seats in the province ( Cactus, Earls, Milestones, Moxies, Browns, Joeys ). These are 300+ seat behemoths who generally allow consumers to believe it’s completely ok and legal to drink and get drunk in restaurants. They are ALL tied houses. Don’t believe me? Order a Budweiser at Cactus or a Heineken at Earls. Good luck.
The big brewers split the import beers between them – and you will not find “the enemy” in each respective chain.
As Adam wrote, this is about business and I welcome the changes – the civilians won’t notice one way or the other as evidenced by 50+ years of ignorant bliss.
Well written and well laid out, however, I can’t say I’m convinced.
As someone who had a front row seat to the craft brewing revolution in Canada (my father started GI brew, the first one) I got to see the cut throat tactics used by the big 3 (at the time) to try and shut them down. From sending in union thugs to try and certify their shop, to outright lobbying against them at the government level to either shut them down or severely limit their production, marketing, sales territory and pricing, they stopped at nothing to remove craft brewing from the market.
Later on, as an owner of multiple venues that sold a considerable amount of beer, it was heartwrenching to see how much extra it would cost to carry great craft brews, or even the familly brand (they had since sold to a larger group in an effort to keep the big 3 at bay, that is another long story I won’t get into here).
The fact was, and is, that each tap represents market share, market penetration, and a tap your competitor can’t get, and they’ll loss lead a small house tap to ensure a craft brewer doesn’t get it. This change in legislation is only coming about due to an aggressive lobby on the part of big breweries, and frankly, anyone who likes choice better get used to having the choice between a Molson’s or Labbat’s brand on tap. That’s their goal, plain and simple.
I respectfully acknowledge your expertise in importing unique brews from Botswana, and recognize that the consumers like us who are willing to pay $12. per bottle for those will continue to do so happily. Recognize, however, that the profit margin in restaurants/bars is rediculously slim, and niche market joints like the ones I owned and the ones you go to are becoming more rare, less profitable and are offering less choice because of that.
If you truly like quality and choice, not just in great beer, but also in great venues, this is an idea fed to us by big brewery lobbyists that absolutely must be fought.
Have to say I agree with Adam and Paul. Allowing entrepreneurs to build breweries, import new beers and brew/sell their own beers seems like the next logical step in craft beer making some sort of upward movement in the market.
I will disagree with Paul in regards to food primary however, as it now provides restaurants with the ability to “lounge” 20% of their seat to be designated as liquor primary and not require the consumption of food. These seats must be clearly diferent from the other seats in the establishment and be deisgnated by the liquor board at the time of licensing. (ie. all the barstools at most earls and Cactus Clubs).