Economics

Collusion in Ontario’s Beer Market

This week, the Toronto Star exposed a collusive agreement between the Liquor Control Board of Ontario, which has a monopoly over liquor sales, and The Beer Store, a privately-owned quasi-monopoly that controls 80 percent of the province’s beer sales.

In the confidential document from 2000, the LCBO agreed not to compete aggressively against The Beer Store. Specifically, the LCBO agreed not to sell beer in packages larger than six-packs, and to refrain from selling major-brand beer directly to bars and restaurants.

The Beer Store is a favorite target of criticism by Ontario beer drinkers: beer is expensive; and the stores have a Stalinist look and feel, with service to match. The province’s taxpayers also have reason to complain. The Beer Store currently takes in about $1 billion a year—most of which goes to the big breweries—which could go instead to the provincial government via the LCBO.

So why hasn’t this 14-year-old collusive agreement been torn up by the current government, which is now headed by a different party? The answer is lobbying. The breweries have lined up an impressive array of lobbyists, many of whom have ties to the party now in power.

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The Friday Mash (Discovery Day Edition)

On this day in 1492, Christopher Columbus became the first European to set foot on the island of Hispaniola. December is celebrated as Discovery Day on the island’s two countries, Haiti and the Dominican Republic.

And now….The Mash!

We begin in Loudoun County, Virginia, where beer tourism is stimulating the local economy. The county has eight breweries, with 16 more in the planning stages.

Black Friday has become the number-one day for beer releases. As you’ve probably figured out, most of these beers are stouts and many of them are barrel-aged.

SABMiller, the world’s second-largest brewing company, still lacks a global brand. Its launch of Pilsner Urquell was a flop, and Heineken said no to a takeover offer.

Bottles and Cans, a liquor store in Chicago, is offering an adults-only Advent calendar. It contains 25 beers, each of them to be enjoyed on the weekdays leading up to Christmas.

European Union officials want Japan to open its market to imported beers. Arcane Japanese rules, such as a ban on ingredients like coriander seeds, act as “non-tariff barriers.”

Minnesota’s Excelsior Brewing Company has brewed a saison beer with pondweed and zebra mussels. The brewery insists that “minuscule” amounts of the invasive species were added.

Finally, Shoes & Brews, a runners’ gear store in Colorado, offers an incentive to get into shape. The store, which has a liquor license and 20 taps, bases the price of your first beer on your time in an 800-meter time trial.

The Friday Mash (Grand Ole Opry Edition)

On this day in 1925, “Grand Ole Opry” radio show aired for the first time on WSM, a Nashville radio station. The Opry’s home, Ryman Auditorium, attracts hundreds of thousands of visitors from around the world.

And now….The Mash!

We begin in Kalamazoo, where Bell’s Brewery is selling glassware designed for Oberon. It’s called the American Wheat-Witbier Glass, and is made by Austrian glassware maker Spiegelau.

Mike Nichols is best remembered as a film director, but more than half a century ago, he and Elaine May created and voiced animated commercials for now-defunct Jax beer.

The Brewers Association has put together an infographic with statistics on the size of each state’s craft beer industry: number of breweries, production, and economic impact.

As it turned out, Pabst Blue Ribbon wasn’t sold to the Russians after all. The group that acquired it didn’t involve Oasis Beverages, itself the biggest independent brewer in Russia and Ukraine.

British lawmakers took the first step toward scrapping a centuries-old rule that requires “tenanted” pubs to buy their beer from the brewery that owns them.

An app called Next Glass has been called ”the Pandora for beer”. Using a mass spectrometer, the Next Glass lab staff use a mass spectrometer to analyze beers sent to the lab by Beer Census.

Finally, Jay Brooks’s blog linked a 1929 Mickey Mouse cartoon, ”The Galloping Gaucho,” in which Mickey enjoys a beer. Presumably he was outside the U.S., where Prohibition reigned. However, temperance groups couldn’t have been thrilled about a cartoon character drinking alcohol.

Why Brewpubs Are Giving Way to Micros

In 2005, when Maryanne and Paul toured the state researching Michigan Breweries, most of the establishments they visited were brewpubs. Now a solid majority are microbreweries. It turns out this is a national trend.

Sometime during 2013, the number of micros exceeded the number of brewpubs; and, since the middle of 2012, more than three-quarters of newly-opened establishments are micros. Bart Watson, chief economist at the Brewers Association, identifies three reasons why this is happening.

  • First, a number of states, such as South Carolina, have passed “pint laws” that allow breweries to breweries to sell full pints of their beer on-premise.
  • Second, the growing popularity of food trucks makes it possible for customers to enjoy something other than salty snacks at their local brewery.
  • Third, a brewery owner doesn’t have to enter the restaurant business, which eats up capital and poses additional challenges. Running a brewery is hard enough.

Does Crowdfunding Work?

Earlier this year, Stone Brewing Company sought $2.5 in capital via the Indegogo website. Some wondered why an established brewery would turn to crowdfunding, but CEO Greg Koch answered critics by spelling out what investors in “beer futures” would receive. Stone met its goal in six weeks.

There have been some 800 beer-related crowdfunding campaigns, and their success rate has been slightly higher than average.

Indiegogo’s CEO has advice for breweries and other businesses that are looking for funds: be honest, communicate regularly with investors, and stay in touch even after successfully raising capital.

The Friday Mash (Earthquake Edition)

Today is the 25th anniversary of the Loma Prieta earthquake, which killed more than 60 people in the San Francisco Bay Area. Because it occurred minutes before Game 3 of the World Series, it became the first major earthquake to be broadcast on national television.

And now….The Mash!

We begin in Melbourne Beach, Florida, where a house inspired by beer bottles is on the market for $2.95 million. And it’s built to withstand hurricanes.

Louiville mayor Greg Fischer wants beer to join bourbon as a tourist attraction. He’d also like a bourbon-barrel beer festival and the revival of Kentucky common beer.

Are you a beer aficionado? James Grebey of Buzzfeed.com has compiled a list of 21 warning signs. Warning sign #6: You have a very, very deeply held opinion about pumpkin beer.

Now that legal marijuana is gaining momentum, economists are looking at legalization’s effect on the beer industry. Some think higher spending on pot will mean less spending on beer.

The Pretty Things Beer & Ale Project is blowing the whistle on Boston-area bars that take bribes from breweries. The practice is illegal, but violators are rarely punished.

Jason Momoa, who played Khal Drogo in Game of Thrones, wants to brew beer in Detroit. He bought a 100-year-old former General Motors building, part of which will house his own brewery.

Finally, scientists have discovered that fruit flies love brewer’s yeast. A gene in the yeast releases a fruity smell that attracts the flies which, in turn, spread the yeasts to new habitats.

The Friday Mash (Seven Years’ War Edition)

On this day in 1756, Prussia’s king Frederick the Great attacked Saxony, beginning the Seven Years’ War. The conflict, which took place on five continents and involved most of the world’s powers, is better known to English-speaking North Americans as the French and Indian War.

And now…The Mash!

We begin in Germany, where the Mallersdorf Abbey’s Sister Doris has been a master brewer for nearly 40 years. She’s one of Bavaria’s few “ladies who lager”–and Europe’s last beer-brewing nun.

Beer historian Tom Acitelli credits a 2002 cut in the excise tax for the profusion of small breweries in Great Britain. He also credits a 1976 beer tax cut for America’s small-brewery boom.

NASCAR’s Jeff Gordon is a wine lover, but he also has a taste for good beer. Gordon recently showed up at Dogfish Head Artisan Ales, whose 61 Minute IPA really impressed him.

For years, Mexico’s brewing industry had been dominated by two large corporations, but change is slowly coming, thanks to the federal government’s efforts to curb monopolies in key industries.

Iowa officials are pondering what to do with the 150-year-old beer caves underneath I-380 in Cedar Rapids. The forgotten caves were exposed by this summer’s heavy rains.

Barrel-aged beer is becoming more popular, and brewers are looking beyond traditional bourbon barrels. Now they’re starting to age their beer in barrels once used for Scotch, rum, and wine.

Finally, the growth of microbreweries might give rise to a new breed of wholesalers. Yarmouth, Maine-based Vacationland Distributors specializes in craft breweries, especially those that have grown beyond the state’s maximum for self-distribution rights.

The Friday Mash (America’s Cup Edition)

On this day in 1851, the first America’s Cup was won by—you guessed it—the yacht America. The “Auld Mug” is currently in the possession of Larry Ellison’s Team Oracle, which will defend it in 2017. That’s quite a ways off, so Ludwig suggests that you pass the time by filling your mug.

And now…The Mash!

We begin in Oslo where, according according to GoEuro’s researchers, a 12-ounce bottle of beer costs $4.50–more than four times what you’d pay in Dublin or Warsaw.

Craft beer is so popular in Michigan that the State Police created a fake brewery, with “microbrews” like “Responsible Red” and “Designated Driver Dark,” as part of their latest anti-drunk driving campaign.

The Golden State Warriors’ Stephen Curry is 26 years old and one of the NBA’s top players, but he still got carded at the local California Pizza Kitchen. Many of us share your pain, Steph.

You might prefer a beer brand because of marketing, not because it tastes better. Participants in a recent blind taste test were only slightly better than random at distinguishing among popular lagers.

Men’s Journal magazine has compiled the ten best beer commercials, starring, among others, The Most Interesting Man in the World, the Budweiser Clydsedales, and the Red Stripe Ambassador of Wisdom.

The polls are open at CraftBeer.com’s annual Great American Beer Bars competition. Voters are asked to choose one establishment from ten nominees in five regions of the country.

Finally, it’s a Great British Beer Festival tradition to show up in costume, like the gent with a Viking hat, those guys dressed up as priests, and a man who came as Prince Harry…Wait a minute, that was Prince Harry!

Are “Crafty Beers” Helping Big Breweries?

According to Tom Philpott of Mother Jones magazine, big breweries such as Anheuser-Busch InBev are following a two-pronged strategy in response to declining market share for their brands. The first is “relentless cost cutting.” After InBev acquired Anheuser-Busch in 2008, it very quickly cut 1,400 jobs, or about six percent of its American workforce. Its focus on slashing costs has continued.

The second approach is rolling out “crafty” beers–the include Shock Top, Blue Moon, Leinenkugel, Killian’s, Batch 19, and Third Shift–or, alternatively, buy up craft breweries like Chicago’s Goose Island. Philpott says this “has been successful, to a point.” The good new is that InBev’s Shock Top and Goose Island sales have surged. But here’s the bad news. According to Bloomberg, craft beers “are taking sales from already-troubled mass-market brands owned by the industry giants peddling these crafty brews.”

The Friday Mash (MTV Edition)

On this day in 1981, MTV began broadcasting in America. Pay attention to this factoid, because it comes up often in pub trivia: MTV’s first video was “Video Killed the Radio Star” by The Buggles.

And now….The Mash!

We begin in Chicago, where Ian Hughes, a brewmaster at Goose Island Brewing Company, is trying to educate people about the importance of clean water, the main ingredient in Goose Island beers.

Canadian actor Seth Rogan got to fulfill his dream of drinking beer from the Stanley Cup. P.K. Subban, who plays for the Montreal Canadiens, earned an assist for pouring beer into the trophy.

The list of exotic ingredients in beer now includes seaweed. Marshall Wharf Brewing Company adds 66 pounds of Maine sugar kelp to 200 gallons of its Scotch ale to brew a batch of Sea Belt Ale.

In Indiana, a newly-passed law lifts the 67-year-old ban on beer at the State Fair, which opens today. Last call is at 8 pm, and fair-goers will be limited to three 12-ounce beers.

Tech companies in Boston are using craft beer to attract and retain talented employees. Journalist Dennis Keohane decided to investigate the tap selection at some of the area’s leading companies.

In San Francisco, a woman in the outfield seats got a rude surprise: a home run ball landed in her beer. Not only was she soaked with beer and out $8, but someone else wound up with the baseball.

Finally, the Michigan Brewers Guild has responded to heavy demand for tickets to the annual Winter Beer Festival by adding an evening session to next year’s event in Grand Rapids.

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