another flatlandBEER rant?…sigh…

Sometimes I start a Facebook post, and it ends up as a blog-worthy rant: case-in-point => yesterday’s Post on the Flatland BEER Facebook page.

(Since I now have a blog, I should probably stop myself halfway into the FB rant, and head over here to complete it. I’ll get the hang of this whole InterWeb thing one of these days…)

The rant started off innocently enough – a good news story on increased liquor sales in Saskatchewan. The key point of the story? Sask saw the second fastest growth in Canada across all liquor categories, according to Statistics Canada. This is a good thing… I should be happy about this. But somehow I managed to rant anyway… I guess it was the pejorative comment the Saskatchewan Liquor and Gaming Authority (SLGA) spokesperson inserted when referencing beer:

Customers in recent years have been purchasing better products, moving into more of the premium brands in all categories,” said David Morris from the SLGA. “And that might be wine and spirits or even beer [my emphasis].

Mr. Morris’ comment implies a certain attitude towards beer – perhaps he’s reflecting general public sentiment, or perhaps he’s reflecting SLGA’s attitude… either way, I find it irritating.

Regarless, progress is progress – right? The Saskatchewan government has undoubtedly taken major steps to modernizing the antiquated liquor laws in this province (servers can even wear Spandex around alcohol without worrying about a liquor inspector shutting the business down – this was an actual issue the government previously saw fit to regulate… much to the joy of several media outlets).

The next big step? Make accessing Saskatchewan-made beer (liquor and wines) as easy in Sask as it is to access Sask beer in Alberta. And easy, it is: walk into virtually any full-scale liquor store in AB, and you’ll find multiple styles of Saskatoon’s Paddock Wood Brewing Co. (Paddock Wood is also available at The Beer StoreLCBO in Ontario).

This is a public policy issue, that SLGA and Brad Wall need to address — despite significant improvements to the province’s liquor laws in the past couple of years, brewers, distillers & winemakers still report difficulty in getting their products into SLGA stores due to:

  • systematic red tape;
  • local managers who simply aren’t interested;
  • an apparent preference by SLGA for the Molson, Labatt & Sleeman (aka: Molson-Coors, AB InBev & Saporro);
  • poor support to regional #CraftBeers;
  • SLGA stores not rotating stock properly… especially important in quality beer; and
  • not refrigerating local beers, even when the local guys offer to supply the fridge… despite doing so for the macro brewers

Other provinces – such as BC, Ontario & Quebec have implemented “local-first policies.” These don’t mean major producers are turfed, it simply means local producers essentially get first first of refusal to shelf & SKU space… especially important in high-traffic aisles of the store.

Is this policy working? Well when you look at the Brewers Association 2014 World Beer Championship winners, the 7 Canadian winners are from three of the provinces with local-first policies in their public liquor system: BC (2), Ontario (1), and Quebec (4). Correlation doesn’t mean causation… but it’s a theory worth exploring

Baby steps, I know. And we do see some excellent stores & store managers (Normanview in Regina has a great refrigerated section, and South Albert consistently seems responsive), but this shouldn’t be up to individual consumers lobbying individual store managers to bring in interesting, unique, local products… the public liquor system was explicitly created as a public policy vehicle: this is well within the SLGA’s mandate.

[end rant]

Crowdfunding a Brewery?

Saskatchewan becoming the first province in Canada to permit equity crowdfunding got a fair bit of play in the media shortly after its announcement late last year. To date, the excitement hasn’t translated into many (if any) tangible results – but adapting to anything new takes time.

I believe equity crowdfunding provides an amazing opportunity to grow the already booming craft brewing, distilling, and winemaking industry in Saskatchewan.

Before I get into why I believe this, let’s step back & run through exactly what “equity crowdfunding” is. A generally accepted definition of crowdfunding is:

“the practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the Internet.”

OK, so what makes Saskatchewan’s new legislation unique? Kickstarter, Indiegogo, and other platforms have been used to crowdfund start-ups, charitable campaigns, humanitarian efforts, etc for years. Sask’s legislation allows for equity in a company (i.e.: ownership/ shares) to be offered in return for an a crowdfunding investment. Typically, offerings of this nature would go through extensive (and expensive) regulatory review and approval – these obstacles could be show-stoppers for a small craft beer start-up.

cropped-cropped-Logo-No-Line21Saskatchewan isn’t the first jurisdiction to permit equity crowdfunding – Ontario has dabble it’s feet; and several US states have legislation in place to permit and regulate equity crowdfunding. In fact, CrowdBrewed is a US website devoted to equity crowdfunding breweries. All About Beer magazine wrote a great article about the crowdfunding model and it’s application to the craft brew scene.

Equity crowd funding provides a unique opportunity to raise capital – in return for equity – with significantly less red tape.

Note I said “less” red tape – not none… SK’s financial regulator still reviews the structure of crowdfunding websites, and of offerings that are going live. The interesting thing about the regulatory review is that the government uses the phrase “no news is good news” when discussing regulatory approval. So long as a crowdfunding website submits the required logopaperwork 30 days before going live (10 days, in the case of a business wishing to equity crowdfund), they are good to go if they hear nothing from the government by the stated go-live date. For those who have dealt with red tape before, this element alone is huge! Unless the government explicitly says no within the 30 (or 10) days, Approval is implied.

So, what at the rules the home brewer with a dream of one day running a craft brewery (or the bathtub distiller hoping to produce craft spirits) has to play within? To my mind, the three items of key interest to Saskatchewan entrepreneurs are:

  • Both the business and the investor must be located in Saskatchewan
  • Businesses can make two, six-month offerings of $150,000 each over the course of a year.
  • No person may invest more than $1,500 in an offering.

Despite facing some regulatory hurdles, equity crowdfunding provides quite the opportunity to float an idea to the masses, garner support from like-minded craft beer drinkers, and (hopefully) join the Saskatchewan craft beer boom (3 new breweries in 2013 and at least 2 new ones confirmed for 2014).

The idea of many people providing (relatively) small amounts of money is something most Saskatchewan folks can relate to – Kinsmen TeleMiracle is an excellent example of crowdfunding. For nearly 40 years, TeleMiracle has taken to the airwaves one a year for 20 hours straight. Over the course of these 20 hours, the telethon raises immense amounts of money through multiple small donations. $5.3 million was raised in 2014, amounting to about $5 for every resident in the province. 

Just to the east of the Saskatchewan border rests an example of a start-up brewery hoping to leverage crowdfunding to kickstart their business. Prodigal Sons Brewery (Twitter | Facebook) announced their intention to start a brewery near Winkler, Manitoba last week. They are currently running an Indiegogo campaign to raise funds in support of the brewery. At the moment, they haven’t raised any funds – so if you think it’s an interesting idea, consider supporting the campaign (deadline is June 3, 2014).

Of course, an even more stereotypically Saskatchewan way of starting a brewery is the Co-operative model. And the co-op is exactly what a group of folks in Saskatoon are hoping to use to get their brewery off the ground. If you haven’t had heard of Temperance Brewing Co-operative, have a look at their Facebook page & give them a Follow on Twitter (hopefully we’ll be hearing more about them soon).

So what’s this post about? It’s about my desire to see new craft brewers, distillers & winemakers enter the Saskatchewan market. The liquor landscape in Saskatchewan has changed a fair bit over the past 20 years, and some of the most dramatic changes have occurred in the past 2 years. I suspect some of the opportunities have been lost in the shuffle. There are amazing home brewers making the leap into the world of Saskatchewan craft brewing… but there could be more lurking in the woodwork, unaware of the options available to them, and the support that exists in the community.

We’ve shown time & again that we support causes we believe in – from the Roughriders (through thick & very, very thin); to TeleMiracle; to a university professor starting a small, unlikely brewery in an old Regina building…

The future of private liquor retailing in Saskatchewan?

I’ll preface this post by saying that effective & responsive Crown Corporations (and government entities) can play an important role in the marketplace. ATB, SaskTel, Manitoba Hydro, and public Liquor Boards/Commissions (such as the SLGA in Sask, LCBO in Ontario, or SAQ in Quebec) play multiple roles in the market. Key among these roles is achieving a public policy objective.

The key descriptors for me are effective, responsive & relevant.


I was looking at the history of Regina’s Bushwakker Brew Pub and noticed that the provincial government took a similar approach to easing the public into the brewpub concept as seems to be playing out with the privatization of liquor sales. In 1989, the Conservative government issued licenses for 4 brewpubs (2 in Regina, 2 in Saskatoon). This served to test public opinion, and to give incumbent hotel Off-Sales time to adjust to the new market reality. Obviously, over time the government expanded brewpub licensing extensively.

(I won’t go into the negative impact the brewpub licenses had on the Sask’s craft brewing scene in this post: summary – “brewpubs” were opened, and garbage product was produced simply to meet the technical requirements necessary to operate an Off-Sale)

Current Status

I see a similar future playing out for liquor privatization:

Options for the Future

So, the government has exited the liquor retailing scene for all new liquor stores. They will continue to operate the existing network of public stores (LBs) – competing directly with the private sector. 03_14_reg_liquorplan_rossromaniuk1At some point, it would seem to make sense to consider flipping the switch & privatizing liquor warehousing/retailing completely (though, this logic could be extended to SaskTel, which has competed directly with the private sector (and a co-op) for years in the provision of television, Internet, local phone, and cellular services… and there’s little indication of a looming  SaskTel privatization).

Privatization of liquor retailing and warehousing is certainly a way for government to have their cake & eat it too: they get out of the expensive bricks/mortar retail operation (and potentially warehousing), but maintain public policy control, and a revenue stream (they still charge markup on products).

Really, I don’t care who sells the alcohol to me (or my pub) – so my gripe isn’t with the public system itself… it’s with SLGA’s attitude: customer service, continuous improvement, responsiveness to changing needs seem almost non-existent. While it’s true that a customer can theoretically order almost any product in the world, there are minimum order requirements & layers of bureaucratic red tape that leaves even seasoned veterans – such as Willow Park Wines (currently SK’s only private liquor store) & Beer Brothers – shaking their heads. Beer Brothers had a near constant supply issue for the first few years of operation – and they quite publicly placed much of the blame at SLGA’s feet (along with some positive suggestions, of course).

As a point of reference, AGLC indicates they had 2,200 products available at the time of privatization. They currently maintain an inventory of over 19,000 products (with 33,000 registered in their system).

In terms of retail, in 1993, Edmonton had 23 liquor stores – they currently have 262 liquor retailers.

Treatment of Regional Producers

The other issue I have with the current system is SLGA’s apparent disinterest in regional brewers & distillers. Saskatchewan producers indicate that getting their Sask-made product into SLGA stores is exceptionally difficult. Molson/Labatt/Sleemans had a strangle-hold on SKUs & SLGA seems exceptionally happy to bend over backwards to stock the macro-brewers’ products.

This is an abdication of the public policy role of government-run liquor system. In theory, the public system exists to introduce elements of public policy into liquor sales – for example, location, hours of sale, and “social reference pricing.”

Paddock Wood BrewingIt is not much of a stretch for the government to implement a public policy preference for local/regional products. This doesn’t mean not responding consumers, it simply means giving a bit of a leg-up to local/regional brewers. We see public policy policies giving preference, or a leg-up, to wine & craft beer producers in BC, AB & ON – why not Saskatchewan producers? I have seen much better selection (& product rotation/refrigeration)  of Paddock Wood’s products in several Alberta liquor stores than I’ve ever seen in a Saskatchewan LB. This is an award-winning brewery…being treated like gold in another province, but like a second-class citizen at home. Sad.

Shared Warehousing?

While it’s nice to see SLGA trying to improve (e.g. marginally improved craft beer selection), it strikes me as too little, too late. Rather than committing to build a brand new warehouse in Regina, it would have been interesting to explore a warehousing partnership with Alberta under the frame of the New West Partnership (especially given that Alberta will break ground on an $80-million warehouse & logistics facility within days). The benefits to Saskatchewan under such a partnership include access to products not otherwise available (due to minimum purchase requirements); reduced overhead costs; volume discounts; and access to a state of the art facility & dedicated logistics partner.

Presumably, Sask could offset Alberta’s incremental costs, and contribute to operational costs. Many of the warehouse expenses are sunk costs – so Sask’s contribution could result in (marginally) reduced costs to Alberta taxpayers/consumers (not to mention, offload the cost to Sask taxpayers of building, maintaining & operating a warehouse and distribution network).

To Be Fair

puppies-n-rainbowsOf course, privatization is not all puppies & rainbows. Over the 20 years since Alberta privatized their liquor system, several reports have examined the impact on selection and pricing.

While it’s true that there is incentive for specialty stores to pop up – for example, Sherbrooke Liquor in Edmonton; and Willow Park Wines & Spirits in Calgary – there are also many examples of stores in smaller centres carrying a narrow selection of high-volume products. These stores are making a market-driven decision to sell the highest volume products. If consumers demanded a particular product, all liquor retailers in Alberta have access to the 19,000 products stocked in the LiquorConnect warehouse… all at the same price – no volume discounts for the “big guys.”

Pricing is also a constant debate – on the one hand, we certainly hear of the incredible deals that are to be had at Superstore Liquor & Costco via loss-leaders. The overall price of a product in Alberta can vary widely … it is the free market, after all. Some reports indicate that Alberta held the dubious honour of the highest liquor prices in Canada (until last year, when Sask edged them out)… despite privatization. Of course, other reports – such as the Mark Milke’s report for the Fraser Institute – debate this point.

The Edmonton Journal & Huffington Post looked at Alberta’s changed landscape, the benefits, and the pitfalls. David Campanella’s paper specifically recommended Sask not follow Alberta’s lead.

On-Balance? Privatize

Saskatchewan consumers are starting to wake up to the great craft beers that are out there. They are beginning to see Molson-Coors, InBev & other macros for what they are: purveyors of low-quality liquid. They are asking for better product selection. SLGA is responding – albeit slowly – by introducing craft beer section with A-list products from brewers such as Rogue, Brooklyn, Half Pints, etc… but the selection is still quite limited, and most LBs still feature very few local products (in fact, the private sector Off-Sales seem more responsive to local producers).

The next couple of years will be very interesting for Saskatchewan craft beer enthusiasts – let’s just hope the provincial government takes a close look at the Alberta experience, and cherry-picks the best features for Saskatchewan consumers.

On balance, I will take my chance on the private sectorif only for the demonstrable improvement to craft beer selection 😉

Why a Canadian prairie beer blog?

The simple answer is because the craft brewing scene is booming on the prairies right now, and the exciting developments are being covered in dribs & drabs in traditional media (for example, via Cody Lobreau‘s column in the Brandon Sun) and on social media… and this is great – but the Ontario, Quebec & BC craft beer scene seems to overwhelm the conversation (for good reason – these provinces have well established craft industries).

history-gs-North Battleford-restored grain elevator-oct 8 2013-1

The fact is Alberta’s craft brewers are quite mature; Saskatchewan has a couple well-established brewers (Bushwakker & Paddock Wood); Manitoba, Yukon & NWT are still quite young. Along with youth comes innovations – and this is what excites me. Not taking anything away from Alberta’s brewers (we have a lot to learn from them), but the growth potential in Saskatchewan, Manitoba & the Territories is huge. In 2013 alone, Saskatchewan saw 3 new breweries (District Brewing; Prairie Sun Brewery; and Bin Brewing), with 2 more (Black Bridge Brewing, and Rebellion Brewing Company) in the works for Spring & Fall 2014 (respectively). Rumours of additional entrants to the Sask market are making the rounds (such as Temperance Brewing Co-operative Ltd. – a co-op brewery (how stereotypically Saskatchewan, eh?))

I don’t know where this blog will go, but I hope to use it as a platform to explore & expose some of the exciting activity currently taking place on the Canadian Prairies & Territories.

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