Beyond the Pale Brewing Co. has been selling beer out of its storefront location near Ottawa's Parkdale market since the brewery was started two years ago.
The microbrewery's full-bodied offerings, with clever names such as Pink Fuzz and Rye Guy, have won it a loyal hipster following.
But success also created a dilemma that is all-too-familiar to every startup brewery in Ontario. With draft sales growing rapidly, Beyond the Pale has outgrown its cramped retail space and needs a larger industrial location more suited to making beer.
And yet, under the province's arcane provincial liquor laws, the microbrewery can't have both – a plant and a store.
"As a small brewer, I'm not allowed to have another store," lamented Rob McIsaac, 34, co-founder of Beyond the Pale. "We have limited access to the market, and our customers, and it's frustrating."
Mr. McIsaac's frustration is a symptom of a much more serious problem. For dubious public policy reasons, the province continues to let a cartel of three foreign-owned beer giants – Molson Coors, AB InBev and Sapporo – control the main retail channel for beer in the province, the Beer Store.
By granting a select few companies special status, the regime discriminates against everyone else.
And it stifles the sorts of things the government should be encouraging, including innovation, growth, job creation and consumer choice.
While microbreweries operate with their hands tied behind their backs, the owners of the Beer Store can do virtually whatever they want to push their own brands.
"How is it fair that three breweries are allowed to have 440 retail stores and the rest of us are allowed to have one?" Mr. McIsaac wondered. "It doesn't make any sense."
Ontario has so far shown no appetite for stripping the Beer Store of its monopoly.
Former banker Ed Clark, who is heading up an Ontario government panel looking at overhauling key provincial assets, is instead recommending boosting competition by allowing the provincially owned LCBO stores to sell more than just six-packs and imposing a new tax on the benefits that flow to the Beer Stores' owners. Mr. Clark said he's also open to legalizing craft beer specialty stores and he hinted at tighter regulation of how the the Beer Store operates.
"Finding a craft beer at many Beer Stores can be like the game of Where's Waldo? – Hard to spot," Mr. Clark acknowledged when the panel released its initial report last month. "If the Beer Store's monopoly is to be continued, it should be required to treat all producers equally."
Common grievances among small breweries are steep listing fees and store formats that favour the majors. At 330 of the chain's 440 retail outlets, customers must order their beer off a menu at the counter. A limited number of the province's top-selling beers – brands made by the Beer Store's owners – are available in convenient self-serve fridges at the front of the store.
"When I go to sell my beer in Ontario it's hidden behind a wall and Budweiser and Heineken are out in front," complained Cam Heaps, co-founder of Toronto-based Steam Whistle Brewing and chairman of Ontario Craft Brewers, an industry association.
"There is no reason for those walls other than to restrict growth of craft beer. That's very hard to swallow."
Beer Store officials did not respond to requests for comment.
Mr. Heaps said it's not just companies such as Steam Whistle and Beyond the Pale that suffer. It's the wider economy.
Ontario now boasts 90 craft breweries. They control less than 5 per cent of the province's beer market, but account for roughly 30 per cent of jobs and the bulk of the industry's growth in recent years, according to the OCB.
Reform won't come soon enough for Beyond the Pale. It has signed a lease on larger space and will move in February, shutting the store and foregoing lucrative walk-in traffic there.
The Beer Store monopoly, then known as Brewers Warehousing Company Ltd., was created in 1927 to appease temperance advocates and control the sale of beer. It operated as a co-operative, serving all breweries in the province.
Those objectives are relics of another era. And there's little co-operation going on any more.
Ontario should think bigger, and end the monopoly.