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Doug Ford's Buck-A-Beer plan made beer prices in Ontario go up, expert says

Doug Ford's Buck-A-Beer deal was supposed to save people money but, according to one Ontario beer writer, it has ended up making beer in the province more expensive.

Jordan St. John says the price for a 24-bottle case has gone up about 10 per cent

Doug Ford's Buck-A-Beer deal was supposed to save people money but, according to one Ontario beer writer, it has ended up making beer in the province more expensive. 7:49

Doug Ford's Buck-A-Beer plan was supposed to save people money but, according to one Ontario beer writer, it ended up making beer in the province more expensive.

Jordan St. John has written about this in his Ontario beer industry outlook for 2020. He also looks at trends showing how much people are drinking and what sort of economic impact breweries are having in our towns and cities. St. John writes about Ontario beer and hosts a podcast called Ontario Craft Beer Guide: The Podcast. 

He spoke with the CBC's Conrad Collaco about why beer prices rose when Ford brought in his Buck-A-Beer plan. You can read an abridged and edited version of the interview or listen to the full audio interview by hitting the play button above.

Jordan St. John, host of Ontario Craft Beer Guide: The Podcast

Why did Buck-A-Beer make some beer more expensive?

When they tried bringing in Buck-A-Beer there was a concept attached to the beer market in Ontario — a minimum price floor and the minimum price floor had an annual escalator. It was basically a formula that kept up with the Consumer Price Index and it made sure that the minimum price for beer would increase year-over-year by a small percentage.

It turns out that in order to make Buck-A-Beer feasible you had to remove that escalator which means that breweries are now just able to charge whatever they'd like to and when the large brewers are given the option between making more money and charging less, they always choose making more money.

Despite the emergence of the craft beer industry do the large brewers still control most of the market?

Yes. They're probably looking at something like 60 per cent of the volume in the province. I think if you look at Moosehead and Brick, who are their largest competitors, that's probably 10 per cent of the market. And then there are 10 per cent imports. And I think craft beer is edging upwards towards 20 per cent.

Are we seeing the price hike largely confined to the major brewers?

This is the amazing thing. When you're talking about minimum pricing you're talking about value brands which are usually at the beer store. The price index I work with is, basically, the price of 24 bottles. In January 2018 that would have been $34.50. As of this winter it's now $37.95. So, it's a 10 per cent increase and the same one for premium brands as well.

Buck-A-Beer didn't last long

That is considerable especially for people who thought they were getting a deal when Buck-A-Beer was promised.

Yes. Buck-A-Beer lasted very briefly and I think it was sometimes available on long weekends but that was about it. It's always a question of getting what you pay for.

How many of Ontario's craft beers are making money?

The craft brewing industry is kind of an interesting one. People get into it because they're passionate about it which is not always the best way to start a business. In some cases what you end up with are engineers, for example, who don't have any experience in sales and they do relatively poorly because of that. Sometimes you end up with salespeople with little experience making things and it takes a number of different competencies in order to make the thing work. But I would say probably the majority of craft brewers in the province are making money. Some of them are not. And my advice to them would simply be to cut their losses, really. There's usually not a very gentle way of saying that. With the market the way it is I think there are something like 400 brewing entities in Ontario.

Maybe we need to find a way to connect the engineers with the salespeople.

Well that would be fantastic. It would be like Tinder but for breweries. Maybe we could just call it Brewer.

What sort of economic impact do these small breweries have in the communities where they brew and sell?

Well, this is the important thing really. It's basically a fundamental reordering of the craft beer market in Canada. We're really just a beer market. If you think about 40 years ago, in 1980 you had three large brewers controlling the entire market of the country. That's Labatt, Molson and Carling. That's top down and that's sales across the entire country. And we've sort of inverted that. It's now from the bottom up. You've got a brewery in more or less every neighborhood. I know in Hamilton for example, you've got several — like six or seven — different breweries most of them very high quality. They are part of the community. They take part in events and support local charities.

It's kind of a different model. And it seems to be working really well. It also means that they're employing people not only as brewers but also for hospitality in the tap room, in the bottle shop. You've got people supplying them with items, hops, grain, different cans and bottles. Things like that. All the supply chain jobs are dependent on those small breweries as well. You're talking about thousands of jobs across the country.

The amazing thing to me is that in addition to the changing face of Hamilton you've also got just some incredible quality. People, when they think of Hamilton, they probably talk about Collective Arts or Merit on James Street but there's also Clifford Brewing which won Canadian brewery of the year last year. So, it's not as though it doesn't come with a certain amount of local pride and a certain amount of just, really impressive work on the part of these people.

Trends for 2020

What are some of the trends you expect to see this year?

Well, one of the things that's very popular in the United States, and it's making its way here as we speak, is hard seltzer. It's very popular down there to the extent that it is actually out-selling Budweiser, which is kind of the national beer. It's low calorie. It's gluten free. It tends to be fruit flavoured and that makes it very popular. Probably, it will not impact craft beer very much. I think, though, that for people who are interested in light beer like Coors Light, Bud Light, Michelob Ultra, that extremely low calorie version, for example, it is the kind of thing that can be quite damaging to market share.

The province has focused on making changes to alcohol policy. Is there anything you still want to see fixed?

Well, there's one thing I'd love to see which is changed excise structure for cider production. Cider is this unfortunate middle child. It's a fruit-based beverage, so they tax it like wine, but it's consumed like beer. People are ordering pints of cider rather than wine glasses of cider. 

So, in a province where we have this many apples and this many orchards being grown it kind of makes sense that we should have a more robust cider industry than we do. Michigan, next door for example, seems to have some advantage over us on that playing field. I'd quite like to see cider taxed more like beer so that we would have a more robust cider industry within the province. 
A sign hawking artisan beer at a festival during Ontario Craft Beer Week. (Supplied by Kaitlin Butt)

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