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Buck-a-beer falls flat with Barrie brewers

Barnstormer, Flying Monkeys and Redline brewers say their fans will continue to come back to craft beer
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Premier Doug Ford’s resurrection of buck-a-beer days might be resonating with many people, but it’s falling flat in local craft-brewer circles.

Buck-a-beer was a campaign promise during the election and leading into the summer heat, but it's getting the cold shoulder from craft brewers and doesn’t necessarily translate well into reality, says Peter Chiodo, founder and brewer at Flying Monkeys Craft Brewery in downtown Barrie.

“I think he meant well, but he’s not a brewer, so I can’t expect him to understand the cost structure of a brewery,” Chiodo said of Ford’s campaign promise, which he's coming through on. “I think there’s a bit of a gap.”

It was announced this week that buck-a-beer will be back again in Ontario by Aug. 27.

“I think it’s a campaign slogan, but I wouldn’t say it’s a clever one,” Redline Brewhouse owner Kari Williams quipped during an interview with BarrieToday. “Unfortunately, it’s not well thought out.”

The government is lowering the minimum price floor to $1 for any beer with an alcohol volume below 5.6 per cent.

The minimum retail price for beer was $1 in Ontario from 2005 to 2008 until the previous Liberal government increased the minimum price.

“We are not subsidizing brewers, as the opposition claims,” Simcoe-Grey MPP Jim Wilson said in a news release. “We are working with brewers and giving them the option to lower prices for consumers. There are no financial incentives from the government and the tax portion of the cost of beer is not being reduced.”

Wilson said the Progressive Conservative government was elected to “eliminate job-killing red tape and put people first.”

“Buck-a-beer is part of our commitment to change alcohol retailing across the province, including expanding the sale of beer and wine to convenience stores, grocery stores and big-box stores,” Wilson said.

Dustin Norlund, owner, founder and president of Barnstormer Brewing on Yonge Street in Barrie, says a lot has changed in the world since buck-a-beer was last modified in 2008, including the strength of the Canadian dollar.

“Going back to buck-a-beer is probably more truthfully like 60 or 80 cents a beer in this era,” Norlund told BarrieToday. “I guarantee you it’s not a good picture.”

At Barnstormer, which opened in December 2013 and now employs 60 people, Norlund says more needs to be done other than just returning to buck-a-beer, which won’t help brewers in Ontario, which is an “unbelievably expensive place to do business.”

“The alcohol policy here in Ontario is lagging, to say the least,” Norlund said. “If we’re indeed going to modernize and change the alcohol laws, let’s really change it. Let’s get us up to date so we can compete with other provinces and the United States.”

He says he’d start by eliminating the Beer Store.

To encourage brewers to lower their prices in time for the Labour Day long weekend, Premier Ford has launched the Buck-a-Beer Challenge. Any brewer who agrees to lower their prices on or after Aug. 27 will, for a limited time throughout the year, receive LCBO promotional considerations, such as discounts, in-store displays on end aisles and shelf extenders, or advertising in LCBO flyers and newspaper inserts, according to the province.

But the folks at Barrie’s Redline Brewhouse in Barrie’s south end want no part of it. Williams says it “defies the purpose of being a small business.”

“It doesn’t respect the purpose of our business: we’re looking to provide craft, and I say that in capitals and in quotes,” she said.

“We all pay what we need to pay to be in the LCBO,” Williams added. “So there is now a suggestion that, even with paying, we won’t get premium space, and it’s an extremely competitive market.”

Local brewers also say the premise of selling a beer for one dollar is a fallacy, except for large multinational companies that operate outside of the province.

“Respectfully, I don’t even know if the big guys will be able to manage the cost structure, just because everything goes up every year,” Chiodo said. “The price of hops, the price of malt. It’s just not really viable from an economic perspective for any brewery.”

Williams says a lot of corners would have to be cut to make, and sell, a beer for a buck.

“The only possible way to even come close to a buck-a-beer is to use artificial chemicals and flavourings, so very inferior-quality ingredients to do what they call ‘high volume’ and then cut it with water,” she said. “It’s a cheaper way of production and it provides a very cheap quality beer.”

Local brewers say they’d rather invest in their employees and their companies than try to hit the buck-a-beer standard.

“Like everything in life, that comes with a price tag,” Williams said. “For me, I’m just trying to make a buck. As a small business and an entrepreneur, I’d like to pay myself a buck a beer, and I’m not there.”

Redline employs 30 people and also has expenses to cover such as increases in rent, heat and hydro.

“One of the things that's more important to me is a living wage for my staff,” Williams said. “A buck-a-beer means I’m taking it from my staff or not giving my customers the quality they’re expecting. It would be no different than food and I’m not a fast-food business.”

Barnstormer's Norlund said it’s next to impossible to put a dollar beer in stores.

“The government takes more than we do right off the hop,” he said. “Between federal excise duty and Ontario beer tax, GST/HST or 13%, they’re making probably eight times what we do on the beer with no risk whatsoever.”

He’d like to see the Beer Store scrapped altogether.

“If we’re going to truly modernize and have a free market, and bottom out the price tag on the beer and allow everyone to compete, let’s really allow everyone to compete,” Norlund said. “Let’s get rid of the Beer Store, let’s get rid of the the archaic rules that the LCBO and the conglomerates have, let’s really let us go out and compete.”

Norlund says buck-a-beer might only appeal to the big brewers.

“If you want to talk about who is going to benefit from buck-a-beer, it’s only going to benefit producers who can produce and still make money at a buck-a-beer,” Norlund said. “My whole beef with buck-a-beer is it doesn’t even benefit Ontario. The people who are going to be able to make money with buck-a-beer are these huge conglomerates that are producing in, say, low-cost jurisdictions.

“In reality, all buck-a-beer is doing is giving these guys that are bringing in beer manufactured in low-cost environments a step up on those of us who are producing here in Ontario,” he added. “That even applies to the big boys like Sleemans who are under the same cost structure as we are.”

STATUS QUO

For now, it will be status quo for craft brewers.

“Craft beer is made of truly exception ingredients,” Williams said. “We’re not trying to exclude anybody, but we are providing an exceptional product and there’s a price point to that.”

Norlund says lowering beer prices will have little to no effect on craft brewers.

“At the end of the day, buck-a-beer really doesn’t apply to the craft-beer scene in Ontario,” he said. “Any consumer who is after something as high quality as craft beer will clearly be getting swill for a buck a beer. We have educated consumers here in Ontario and they’re not going to be confused by a buck a beer.”

Over at Flying Monkeys, which employs 85 people, Chiodo agrees.

“It’s definitely not our price point and it’s cost-prohibitive,” Chiodo said, adding he thinks the days of buck-a-beer have passed. “Taxes go up, everything goes up. I use the example of the 10-cent loaf of bread; those days are over.

“You’re not going to get a craft beer for a buck a beer, that’s for sure. We sell our beer at $3.25 a can, so I don’t think we’ll be going down to a buck a beer anytime soon,” he added with a chuckle. “For our perspective, we just can’t afford to do it, so we won’t.”

Chiodo says people who enjoy craft beers know the score.

“They know what they’re getting and what they pay for with the quality of the craft beer,” he said.

Over at Redline, Williams says her business caters to a different crowd than may be interested in a buck-a-beer product.

“We have a strong, loyal clientele,” she said. “They know they are getting a exceptional quality, in an exceptional environment, when they come to Redline or when they come to most craft brewers. They expect that. They come here for a reason. They’re not coming here for a generic beer.”

INDUSTRY GROWTH

The craft-beer industry continues to grow by leaps and bounds, but Williams says buck-a-beer hinders that progress. 

“There’s a lot of new competition out there, and competition is healthy, but this kind of thing undermines us as entrepreneurs, as business owners, to create businesses and work environments,” she said. 

Chiodo, who has been involved with the craft-beer industry for several years, has seen substantial growth first-hand.

“It’s become its own economic engine,” he said. “It’s phenomenal, probably right around 3,000 jobs.”




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