Origins Of Ontario’s Beer Wholesaling Cooperative

Jordan has posted an excellent article this evening on the current state of the sale of beer in Canada’s biggest province, Ontario. Thirteen and half million Ontarians are served their beer through two large entities: (i) The Beer Store which is owned by the big brewers and (ii) the Liquor Control Board of Ontario, a provincial Crown corporation. Sure, you can buy your beer at a microbrewery, you can home brew and you can even still go to a brew-your-own place. But you really buy beer from the big two outlets. Brew-your-own or “U-brew” businesses are good to keep in mind as we think of how to move forward. In our book Ontario Beer, we pointed out that in the mid-1990s, “brew your own beer” businesses held a position comparable to small breweries today until they caught the attention of big beer. At a 1996 Federal hearing on taxation of major Canadian industries, Sandy Morrison, President of the Brewers Association of Canada complained about the lack of any imposition of taxation or regulation on these businesses:

These brew-on-premises outlets now have an 8% share of the British Columbia market and a 3% share in Ontario, which is the largest beer market in Canada. In total, they account for about 10 million dozen-cases of beer a year. The production from these unlicensed, unregulated mini-breweries exceeds that of the micro-breweries across Canada, and certainly in the two provinces concerned.

Brew-on-premises business were full-scale commercial operations that focused on government alcohol tax avoidance. Lost tax revenues in Ontario and BC totaled $69 million according to Morrison. Soon thereafter the law was changed. Regulations as well as taxes were applied. As can be expected, market share collapsed. The interests of the government and big brewing aligned to pressure the young upstarts.

There are echoes of more than the mid-90s in the situation today. The immediate origins of both the LCBO and The Beer Store date to the mid-1920s. After a series of elections and referendums, in 1927 Ontario’s experiment with prohibition ended with the repeal of the Ontario Temperance Act and its replacement with the Liquor Control Act. Along with the new law, the Liquor Control Board was founded. The province was once again drinking full strength booze in their homes – albeit after purchasing their drink at a government controlled store and transporting it in a sealed package. In the same year, Brewers Warehousing Co. Ltd. was founded as a brewers’ distribution collective. The provincial government retained control of the sale of wine and spirits through the LCBO, but beer was retailed by hundreds of mom-and-pop stores. Initially, the brewers were involved only in wholesale operations, jointly warehousing and distributing their product to stores operated by private contractors. In 1940, the brewers bought out the retailers and took over the stores, changing their name to Brewers Retail Inc and, more recently, changing again to The Beer Store.

Another thing was happening at the end of the 1920s. A corporate giant was starting out his career. Starting with next to nothing other than a few years in the financing business, E.P. Taylor had a plan to acquire and merge a large number of regional and local brewers with the goal of controlling half the brewing capacity in the province. Virtually all Ontario’s firms but Labatt and the breweries controlled by the Doran family in the north were his targets. His goals made perfect sense for the times. Breweries were operating at under 25% capacity. They were technological dinosaurs. By 1931, Taylor already controlled 27.5% of all Ontario beer sales. By 1950, he controlled 50% of the provincial beer market compared to 20% for Labatt. His deal making reached beyond Ontario. He shared a correspondence with H. William Molson, president of Quebec’s most famous brewery which dated back to 1932 and, in 1942, Taylor suggested quite an arrangement:

Don’t you think for the duration of the war we should arrange to divide the business in the two provinces in a fixed proportion and cut out most of the waste? I fully realize that your Company is not as extravagant in Ontario as some of the rest of us and you are certainly in an enviable position in that regard. At the same time I think that if you gave leadership to a proposal for pooling the business until after the war, everyone would feel inclined to work something out.

“Waste” was a theme for E.P.Taylor. In September 1939, he spoke to a meeting of the Brewers Warehousing Company. As war had just been declared, the tone was certainly patriotic but it was also entrepreneurial. Taylor argued that the lowest price possible for beer should be established to decrease “wasteful selling expenses” while increasing sales, volume and taxes for the war effort. Profits would also rise. While not the start of the concept of commodity beer and radically controlled distribution, this statement certainly places it at the centre of Ontario’s way forward. When you think of The Beer Store today you need to hear E.P. Taylor’s words from 1939 – “wasteful selling expenses” – ring in your ears. As Jordan put it today:

The Beer Store’s organization is such that it works in your favour if you are a very large company. The fact that your beer can only be sold in predetermined locations and that the organization that runs those locations stocks those stores from centralized warehouses means that you don’t have to pay for delivery, storage or a sales force. It’s a gigantic savings. The large breweries don’t generate profit from owning and running The Beer Store and this is something critics frequently fail to understand. The monopoly is not profitable for the owners because it extracts profit on sales. It is profitable for the owners because it saves a frankly ridiculous amount of money on outlay.

By the late 1950s, E.P. Taylor was arguably the most famous Canadian before Pierre Trudeau came on the scene a few years later. His positive effect on the economy of Ontario and Canada cannot be underestimated. But he stepped away from his role as corporate leader before 1970. In another ten years, loyalty to ale and even Ontario’s beer brands was fading fast. We now live in a marketplace where the best selling beer is Coors Light and The Beer Store is owned by foreign brewing corporations. That all being the case, why retain a distribution model set up in the late 1920s to balance the needs of local brewers with the majority of the population which still had strong preference for temperance principles? None really. None at all. Unless, like in the mid-1990s, the interests of big beer and government revenue are all that matter.

Another Canadian Barley Farm Brewery

This is maybe my hobby interest in this hobby of mine – brewers growing their own barley. This time its in Saskatchewan:

They wanted to go back to farming, too, and were able to buy back the original farm. Lawrence and his family live there today. Most farmers sell their grain wholesale, but the Warwaruks have figured out a smart, sustainable way to add value to the barley they grow. They do this on a much smaller acreage than the typical large-scale farming operation, where 3,000 acres is usually the minimum to make a profit on the wholesale grain market. The Warwaruks’ farm is just over 160 acres. All the barley grown on the farm is used for Farmery products. “If I was to take that barley to an elevator, I’m getting less than $3 a bushel, which is crazy,” says Lawrence.

What is the big deal? New York has farmhouse breweries all over the place. And I suppose that is right. And Lars is studying the farmhouse brewing traditions of Europe and particularly Scandinavia. It’s everywhere already, right? But in New York, a percentage of the hops and other ingredients must be grown or produced in New York State. Not all. And not all on that given farm. It’s a great program but it’s not all from one farm. And what Lars is exploring are really town and country brewing traditions – which is great. But it’s not what I am thinking about.

What I think the Warwaruks and my nearby neighbours the MacKinnons may have in common is that they are involved with (i) family grain operations, (ii) the are using brewing to create a premium value revenue stream to secure the farm from risk and (iii) they are not making overly wrought beers. This model may not scale. It may not ever extend beyond the local market. But it is intensely local. It is malt barley focused. It is also not the result of a funding or a research program. It’s utterly normal.

Any other examples out there? Girardin I suppose.

Ontario: Bar Hop, 391 King St W, Toronto


Being in the Big Smoke for proper reasons, I took the chance to let Jordan pick someplace that I hadn’t been to before. He chose Bar Hop. Over a couple of hours we talked about writing books, the neat and younger crowd, the beers and other gossipy things like who has the unpaid social media interns.

Standing at the bar as we waited for a table, I was handed a pint of County Durham Session Ale. It was in very good form at 4.4%, $6.95. I say pint as it was thankfully in a nonic but I noticed later that the pour was called 18 oz. Which is open and fair and transparent. It also was what most other pubs would serve as a full pour. Soon we sat in the dark and sorta noisy back of the bar. An unidentical pint of the County Durham Session Ale was then placed before me. Jordan leafed through the menu and picked out favourite. A rye saison was very nice. Sawdust City made it. My beer turned out to be another lovely lighter sort of beer but not cask at all, not what I thought I had asked for… or as I saw later was billed for. Nutty, nitro head even… perhaps. It was also quite nice.

The nonic emptied over a half an hour, We had starters. Jordan had almost half a pint of olives placed before him. I had cod cakes. He had a lot of olive. I had just enough cod cake. Then I had a gose. Very light at 3.8% was a slightly salty Sunny D but in an OK way… sorta… he said politely. I mentioned that Toronto seems to like a fruit flavoured core to a beer judging by this and my last trip. Jordan recommended a beer by a very reputable brewer that tasted like bubblegum dissolved in an IPA to me. I handed the rest to him. Sometimes it’s an added ingredient, some sauce. Sometimes it’s that heavy hand with the mango flavoured hop. I prefer beer to have graininess of one sort or another. A beer where the ingredients come together to make flavours composed of them but not of any one of them. Not a fully popular view apparently in Toronto these days but it’s a blip.











We then both got into our main meals, flank steak with salad for me, and both tucked into Kingston’s Stone City wheat ale called Sons of Sydenham. Seeing as Lord Sydenham had, we are told, a pretty debauched life during his short term as Governor General of the newly United Canada of the 1840s, it seemed an odd name for such an evening of light beers. It was, however, clearly the best. You could taste all the beeriness of the beer. It’s was intended in fact to taste of beer which is handy in, you know, a beer. Made the night along with the service, the food, the hum of the room and the strange table manners of the neighbours.

We left Bar Hop and talked some more as we walked. About the impending crisis which could not quite be defined. About the need to have a car. The architect behind that church facade. The idea of having unpaid social media interns.