Ontarians know it simply as The Beer Store.
But the quasi-monopoly beer distributor's official name, Brewers Retail Inc., betrays a lot about its true vocation.
This is a company structured to get beer produced by the three multinationals that own it into the hands of consumers as cheaply and efficiently as possible.
The Beer Store's 447 outlets are about as far as you can get from the world of beer ads – good times with friends, snow-capped mountains and hockey.
It's hard to imagine a less inviting retail experience. Patrons are greeted by noisy conveyor belts, bottle crushers and cases of beer stacked on pallets in dank warehouses. Behind the counter, a lone, harried clerk typically runs the cash and collects empties.
Most of the stores – 330 – have even less. Customers line up at a counter and make their selection from a row of dusty empties on a shelf.
Going to The Beer Store is like a sad walk down memory lane to the heyday of defunct catalogue chain Consumers Distributing, where Canadians would stand patiently in line to buy toasters and hockey sticks kept unseen behind a wall.
Not that efficient distribution is necessarily a bad thing. Wal-Mart does it better than any retailer in the world. Consumers willing to shop the Wal-Mart way get a share of the spoils in the form of low prices.
But The Beer Store is inherently different. It has a monopoly on the distribution of all beer in quantities larger than a six-pack under a deal struck in 2000 between the big breweries and the provincially owned LCBO.
And it is run primarily for the benefit of its foreign owners – Anheuser-Busch InBev SA, Molson Coors Brewing Co. and Sapporo Breweries Ltd., which owns Sleemans. Eighty per cent of the province's roughly $3-billion a year in beer sales are at The Beer Store, and most of that is from the brands of the three majors.
The modus operandi is simple: Break even at the lowest-possible cost of operation. Brewers Retail posted small net losses in 2011 and 2012, the most recent years for which data are publicly available.
Brewers Retail's utilitarian factory-like operation is calculated. The company has little incentive to make the beer-buying experience any more than tolerable. Retail customers have only one alternative, the LCBO, where beer is significantly more expensive.
The company's owners similarly have no reason to create stores that would promote the products of rival beer makers, including the burgeoning craft beer industry.
Quite the opposite. True, any beer maker can get its product into The Beer Store, but the listing fees are steep, arbitrary and do not necessarily reflect the true cost of distribution. Craft beer makers are barred from owning their own stores, although they can sell directly from their breweries and through bars and restaurants.
Ontario's Advisory Council on Government Assets, a government-appointed expert panel headed by former banker Ed Clark, concluded in its recent report that The Beer Store structure steers "unfair value" and "material advantages" to its owners at the expense of taxpayers and consumers.
That's because the benefits of the low-cost distribution regime flow mainly to Anheuser-Busch, Molson Coors and Sapporo. The system is completely integrated and entirely within their control. They can operate all the main levers to boost their own market shares without the hassle of delivering to thousands of far-flung grocery and convenience stores, as they would in a deregulated market.
Why consumers and governments of all parties continue tolerate a system that is at odds with their own interests is, to say the least, puzzling.
Countless retailers have come and gone in the nearly 90 years since Brewers Retail was born, leaving a trail of failed retail formats. Consumers Distributing went bust in 1996. Target Corp. lasted less than two years in Canada.
Now, Ontario has a chance to reimagine the way beer is sold in the province.
Just because it has been done the Beer Store way for so long does not make it right.