As a public-relations gesture, the decision by Ontario's foreign-owned beer cartel to sell a small piece of the Beer Store to smaller rivals is inspired.
The three multinationals that own the Beer Store are at war with Kathleen Wynne's provincial government, which is eager to loosen their near-monopoly on the Ontario beer market.
Offering local breweries preferred shares in the Beer Store, seats on the board and a new fee structure addresses some of the concerns raised by beer industry rivals and a provincially appointed panel, headed by former bank chief executive Ed Clark.
But it's a far cry from the fundamental deregulation that would deliver the kind of retail freedom consumers in many parts of the country, and the world, take for granted.
The deal, announced in a news release Wednesday, won't give smaller brewers the ability to sell their product to consumers, where and how they want.
For its part, Ontario's beer monopoly is hailing a "new era" in beer sales in the province.
"The beer store is truly becoming Ontario-owned," said Jan Craps, president of Labatt Breweries Canada, a subsidiary of Anheuser-Busch InBev NV, the world's largest brewer.
That's a stretch.
Small Ontario-based breweries will get an opportunity to buy a preferred share at a "nominal" price of $100 ($1,000 for brewers who make more than five million litres of beer a year). Ownership of the shares means brewers can go to annual meetings, receive financial statements and nominate up to three of the Beer Store's 15 directors.
"At first read, this seems like a red herring," argued Steve Beauchesne, CEO and co-founder of Beau's All Natural Brewing Co. of Vankleek Hill, Ont. "Brewers have been asking for access into the ownership, and this is kind of a nice way to take that [demand] away without offering real ownership."
Ontario's bizarre regulatory regime gives three foreign multinationals control of the main beer distribution channel. Ownership and control will stay in the hands of AB InBev, Molson Coors and Sapporo, which together own 100 per cent of the Beer Store's common shares.
"This is not ownership. These are preferred shares, which is a quasi-form of ownership," Mr. Beauchesne pointed out. "That's really no different than us giving them a loan, with very limited rights."
The Beer Store's owners apparently made the offer without consulting smaller rivals, or the Wynne government.
There are other reasons to be wary of the Beer Store plan.
Yes, this will make the Beer Store's financial operations more transparent to some. It may also offer smaller breweries a fairer fee structure for getting their beer onto shelves.
But the deal perpetuates archaic barriers to the free movement of alcoholic products between provinces. Only Ontario-based brewers would be allowed to acquire preferred shares in the Beer Store, along with the special fee arrangement that comes with preferred share ownership.
And there is nothing in the announcement that fundamentally enhances competition or consumer convenience. Under a controversial 2000 deal between the provincially owned LCBO and the big breweries, the sale of 12 and 24-packs of beer is the exclusive domain of the 447-outlet Beer Store chain, representing the bulk of all retail sales. Six-packs are available at the LCBO.
Ownership won't give smaller brewers the ability to fully control the sale of their product – either at the Beer Store, or through their own retail outlets. Under provincial liquor laws, microbreweries can only sell beer through the Beer Store, the LCBO or directly from their plant.
They'll also have limited ability to change marketing practices that are designed to favour the majors. At most Beer Store locations, consumers must select their beer from a menu at the counter, while a clutch of the province's top-selling beers are stocked in convenient self-serve fridges – brands typically made by Labatt, Molson Coors and Sapporo-owned Sleemans.
If smaller brewers buy into the new ownership model, consumers can forget the idea of ever being able to purchase beer in corner stores or supermarkets. An important lobbying voice in favour of corner store sales will have been silenced.
The Beer Store's "new era" shouldn't be mistaken for fundamental reform. It's primarily an effort to rebrand itself as "Ontario-owned," preserve the status quo, and with any luck, derail deregulation efforts.