In the last couple of years, the province of Ontario in Canada opened up online beer sales, where residents could either buy from the government-run LCBO (Liquor Control Board of Ontario), or directly from the craft brewers who offered the service.
While this might seem a great way for craft lovers to support their local brewers, the truth is it’s still a major pain to try and buy beer online now just in Ontario, but Canada-wide.
The Reach of Craft Breweries
As a Craft Beer lover living in the Waterloo Region of Ontario, I will admit that I am spoiled. We are effectively the hub of the Ontario Craft Beer movement outside of Toronto, and it seems that multiple new efforts are being launched every year.
That being said, I’m well aware (as our blog highlights) that there are outstanding Craft Breweries creating new and outstanding new brews all across Canada and internationally. Unfortunately, due to logistics, it can be very hard to try the new and exciting one-offs that these breweries create, because many are not sold widely.
Even some of my favourite Ontario breweries, such as Sawdust City in Gravenhurst and Nickel Brook in Burlington, whose mainstay beers are carried in LCBO locations across the province will not widely distribute many of their brews due to limited supply.
Gone are the days of choosing simply between a “lager” and an “ale”.
Supply, Demand, and E-Commerce
The supply and demand phenomenon is one of the more fascinating aspects of the Craft Beer scene.
With social media and word-of-mouth creating an ideal platform for inexpensive advertising in 2018, Bellwoods Brewery in Toronto (which has arguably the most beautiful labels that I have ever seen) really does not have to spend any money to market their outstanding annual Motley Cru brew (or brews, plural, this year).
I spoke with friends a couple of weeks ago, in fact, who showed me photos of the multiple city block lineup of Craft Beer aficionados who eagerly anticipated the release, like Boxing Day shoppers, seeking a deal. It is fabulous and incredible.
It speaks to the culture of Craft Beer and how it has widely permeated the masses – many of whom would not have dreamed even five years ago of camping overnight for a bottle or two of “beer”.
The advent of online shopping is nearly as old as the internet, but the increased demand in recent years is the reason why Amazon CEO Jeff Bezos is the world’s only centri-billionaire.
Consumers want convenience, variety, and reliability. The one thing that we cannot purchase is time, but online shopping helps us to at least more effectively allocate our time. We can order groceries, gifts, household supplies, and now, Craft Beer(!) online.
For Craft Brewers, many of whom started with home brewing that escalated to a full business, the cost and logistics of online ordering has been a hinderance in the past. In recent years, technology has really advanced to catch up with small businesses.
For myself in my law practice, I utilize an online platform that allows me to accept credit card payments that can be directed either to my General or Trust account without ever touching a client’s credit card.
It is extremely low cost, simple, and allows my clients to make payments from the comfort of their couch, if they so desire.
For other small businesses with inventory to sell, Shopify and similar e-commerce platforms have provided similar ease for such businesses wanting to branch out into the online world.
With a platform that can be seamlessly integrated at low cost into the existing online platforms of Craft Breweries, it is easier than ever for small batch brews to be enjoyed near and far.
Of course, this is not without logistical challenges for Craft Breweries. For many breweries, such as Barncat Artisan Ales in Cambridge or the aforementioned Bellwoods Brewery, it just may not be feasible.
For Barncat, the owners still maintain day jobs outside of their magnificent brewing, and the nine retail hours a week are sufficient to disperse their fine ales. They have reached a stasis with respect to supply and demand and further hours or the unknown and potentially vast amount of online orders could result in insufficient supply.
In the case of Bellwoods, while they have two retail locations, two brewing locations with many tanks, and a brewpub, they have similar concerns about entering the online marketplace. With a very high quality product, much of it being in limited production, the risk of overselling is real.
Hope: An Online Ordering Boom in Ontario
Barncat and Bellwoods are certainly not the exception with respect to supply and demand concerns and the online marketplace. However, there are many Craft Brewers in Ontario who have expanded their reach in the past 1-2 years and it has worked quite well.
Some, such as Sawdust City and Half Hours on Earth in Seaforth are able to manage customer expectations by disclosing the exact inventory amount of a particular product.
It seems like somewhat of a bold move, but most Craft Beer consumers will understand that for one-offs, once this number reaches zero, they have missed their chance.
It is human nature to fear scarcity, so seeing that there are only 100 bottles of that 18-month oak-barrel-aged ale can also double as an ingenious marketing ploy for brewers (full disclosure: I’m speaking from personal experience).
The expansion to the online marketplace is clearly working for many breweries in Ontario. In fact, Ontario Beverage Network maintains a list of Craft Brewers that offer online ordering for home delivery, which now exceeds thirty brewers.
It is important to bear in mind that this list would not have even existed only four years ago, so the growth is palpable. This is despite the undisputed fact that beer is heavy, which correlates directly to shipping cost.
Some brewers, such as Sawdust City, offer free or discounted shipping over a certain purchase amount. Others will deliver for free, locally.
For others, they have worked out precise shipping costs with Canada Post to ensure that at a minimum, consumers will be paying the actual shipping cost without inflation, in the interests of transparency.
In my experience, this very rarely exceeds $20 (pro tip: combine orders with friends or colleagues to split the cost of shipping – I see you, Olivia!).
We should all be happy, right? We can have new, exciting, and often-rare Craft Beers delivered right to our home or office. The future is now, right? Not exactly.
Trade Regulation (Inhibition) Across Provincial Borders
It took until July 2016, only two years ago, for the LCBO to enter the world of e-commerce. It is no secret that sales and importation of alcohol is strictly regulated, and for good reason.
We want to be sure that it is not getting into the hands of minors, and there are risks inherent to online sales. Canada Post allows for checks and balances, with such orders requiring photo identification to be provided by someone over the age of 19.
The biggest limitation to the growth of online sales and reach of Craft Breweries is Federal legislation.
Unless being distributed by provincially regulated bodies such as the LCBO in Ontario (and other narrow exceptions that do not typically apply to Craft Breweries or consumers), the Importation of Intoxicating Liquors Act strictly prohibits the transportation of alcohol over provincial borders.
This legislation flies in the face of s. 92 of the Canadian Constitution Act, 1867, which delegates regulation of alcohol to the provinces. It also seemingly contradicts s. 121 of the Constitution, which guarantees free trade across Canada.
The Supreme Court of Canada dealt with the latter issue in an April 2018 decision, R v Comeau, 2018 SCC 15.
The Respondent in the case, Mr. Comeau, was caught in a New Brunswick sting of individuals bringing alcohol back from Quebec, contrary to New Brunswick’s Liquor Control Act, which prohibits the possession of liquor not purchased from the provincial regulator (s. 134(b)).
The Supreme Court published a plain language summary of the decision, which contains more of the procedural history.
Despite the fact that the law in essence inhibits free trade among provinces, the Supreme Court held that the law did not violate s. 121 of the Constitution because the primary purpose of the legislation is to prohibit holding excessive quantities of liquor from suppliers not managed by the province.
That is, the purpose of the legislation is to serve the province’s choice to control the supply and use of liquor within the province. Effectively, the Supreme Court unanimously upheld the provinces’ rights to form a monopoly and insulate alcohol trade within the provinces.
This is serious blow to the growth of the Craft Beer scene outside of the respective provinces where brewers are located.
My Opinion – Why Do the Laws Get in the Way of Common Sense?
I am a criminal defence lawyer exclusively, so I’m the first to admit that business, tax, and trade laws are not my area of expertise. Certainly, none of this blog is intended or should be taken as legal advice.
It is, however, my strongly held opinion that laws should be based in some sort of common sense and logic.
Frankly, I see no logic in having restrictions that prohibit my friend Eunice in British Columbia from buying a Superflux locally and mailing it to me to try in exchange for a tasty Barncat (and this is a conversation that we often have when drooling over each other’s Facebook and Instagram posts).
Or why my friend Kyle in Newfoundland cannot send me a delicious new offering from the Quidi Vidi Brewery in St. John’s (though don’t get me wrong – if you read my review of their Calm Tom’s DIPA, you’ll know that it was worth the seven-hour roundtrip flight in and of itself!).
There is just no logic to this. The tax money would be staying locally, and the brews would be for personal use. If we are keeping it within Canadian borders, what is the problem here?
Craft brewers can, of course, make their product available to the provincial liquor control boards to distribute, and Ontarians can find many great extraprovincial and international beers available through the LCBO online ordering system.
However, there is anecdotal evidence that the process to get beers approved for sale is convoluted and complex. It also leads to a loss of control of the distribution of the product, and is undoubtedly more costly to involve a third party in sales.
Moreover, with many microbreweries turning over new products on a weekly or semi-weekly basis, the red tape of dealing with a provincial regulator can inhibit much of the hype-based marketing that I mentioned above, reducing some of the charm and excitement of the industry.
Since this is an opinion piece, and not a legal analysis, I’ll close with a question.
With so many outstanding beers being brewed in towns and cities, small and large, from sea to shining sea – when will we finally be able to share more readily with our friends and family across this great Nation?!