Tales of The Vancouver Island Craft Beer Creep: Part 1

You may be asking yourself, what could I possibly mean by ‘craft beer creep’? Could I be talking about the guy at the bar leering from behind his chalice of porter? Perhaps this is the guy who scoffs at your choice as you stand in the liquor store line with a 12-pack of Bud? Or is this that irritatingly outspoken person on the internet, going off about how this year’s ‘hot beer’ isn’t nearly as good as it was last year? Or could it be something else, something completely different?

Pardon if I go a bit geeky on this next bit, but anyone who has played the Zerg in the globally popular game, Starcraft, will have seen the term ‘Creep Colony’. For the uninitiated, a creep colony spreads out ‘creep’ on the play surface, making it able to place new buildings on it, and spreading out the species’ (the Zerg’s) influence on the game. (For more on ‘creep’ see the Starcraft Wiki.) I’m using this analogy for craft beer because of a trend I am starting to see develop on Vancouver Island.

The Next Wave: Darby’s Pub

Transforming an established neighbourhood pub is not an easy thing to do. In fact, if serving up the old formula brings in enough bums on seats throughout the week to make a bit of a profit (because the real money is in the attached cold beer & wine store), then why change? Change may upset the apple cart, annoying your macro-drinking staff and alienating your bread and butter – the regulars whose habits the staff know well enough that they automatically deliver what is wanted. Why take a risk by throwing a monkey wrench in that well-honed machine that has taken a lot of time and money to develop?

You know you’ve walked into one of these places when you have a déjà vu experience that teleports you back to the eighties, only there is no shine on the brass, the floor coverings are looking well-worn, the furniture has stains and nicks, the walls have tape residue from old posters, and there’s a certain stale smell that seems to follow around post-50-year-old blue collar bachelors. You may see a number of the latter who have made the establishment their surrogate living room because it offers the basic things they seek to satisfy them – cheap beer, fried food, women to serve them without complaining, sports on the TV, and companions to argue over sports and politics with. And if the establishment truly does function as a neighbourhood pub, they will turn to look at you, wondering what sort of force you represent to their social oasis.

VCBW Myths and Lost Opportunities

Maria Dobrinskaya and Mayor Gregor Robertson toast with me the launch of VCBW with some Central City Roach at the Alibi Room Hoppapalooza. (Brian K. Smith photo)

Now that a couple of weeks have passed by since the inaugural Vancouver Craft Beer Week has finished, there’s been time to get feedback in various shapes and forms. Given that we sold out most of our events, that the mayor officially proclaimed Vancouver Craft Beer Week and came to celebrate the festival kickoff with us, and that the mainstream media gave VCBW some good coverage, one could deem it a success for craft beer. Nevertheless, VCBW did not work for some. I want to address a few of the issues that have come to my attention, especially some myths and misconceptions that result in lost opportunities.

First off, I want to point out this was the first such festival for Vancouver; in fact, for Canada. You never get everything right on the first go, but you hope to be in the ballpark (see above). In getting third parties on board, it also didn’t help that we had the Olympics, the Playhouse International Wine Festival, Dine Out Vancouver, and the playoffs as a significant combined distraction. Under the circumstances, one may have to forego the ideal and opt for what is expedient. Next time around, we hope parties will get involved early enough so that we can achieve the ideal for the 2011 VCBW.

Electoral Rhetoric on Beer Prices

I’ve recently heard people claim that the NDP, if elected, will raise taxes on beer (something that the Liberals already did to all liquor on April 1). This is false. The NDP have said they would reduce the discount to private liquor stores from 16% to 10%.

In response to this and the NDP’s vow to raise the minimum wage to $10, the Alliance of Beverage Licensees of B.C. (ABLE), a provincial advocate group for approximately 1,000 private liquor stores and pub owners, claims this will force them to raise prices by 25% or more, translating into an additional $3.00 on a $12.00 six-pack. However, ABLE Executive Director, Kim Haakstad, said that the $3 figure came from discussions among group members, not from any economic study to determine a more precise impact.

Taking their cue, Liberal leader Gordon Campbell said on May 4, “I can tell you this. I am not drinking beer. But if they put a $3 cost on a six-pack of Diet Coke, I’d be mighty upset.”

Again, the NDP are not saying they will do this. They claim that their policy will level the playing field between government and private stores, raising $155 million in government revenue over the next three years. This will have no affect on the price of liquor in government stores, but it may certainly be aimed at protecting the BCGEU’s union jobs.

Recall that Campbell increased the discount to private stores in 2007 from 13% to 16%. Al Arbuthnot of the ABL said at the time, “We presently sell more than 50% of the beer in the province and it will allow the operators to be a little more competitive with the government stores. I think you will see prices come closer in line with the government stores.”

I don’t know about you, but I never saw that happen in the private stores I go to. So if prices were already 10-20% higher in private stores before the increase, where did the savings from the additional 3% discount go? Doubtful the staff got a raise as ABLE is against raising the minimum wage.

ABLE also does not support private rural agency stores getting more of a discount than their current 10%. According to the Kamloops Daily News, ABLE’s Haakstad argued that there’s no business case for giving rural stores the same discount as other private stores. “Rural agency stores are set up to service the community,” she said.

In an interview with The Province, Haakstad also argued that “rural-agency stores are established businesses with other income from groceries and gasoline and marina operations. Our independent stores don’t sell much else besides beer, wine and spirits — except maybe some beef jerky.”

Ultimately, what matters is that a business can achieve enough of a profit for the business owner to make a decent living by providing goods or services that are attractive to consumers. I doubt the intention of rural stores is to run as a non-profit society. Otherwise, they would be constituted as such. And selling more products does not ensure one makes a higher profit/better living. These arguments strike me as being self-serving. Rural agency store owners would probably agree.

So has privatization benefited consumers in B.C. so far? The Consumers’ Association of Canada found that the BC government’s privatization of liquor sales has forced consumers to pay millions of dollars more for beer, wine, and spirits while there is less product selection at individual private stores.

So from a consumer and taxpayer point of view, one could say people are generally worse off than before. Why don’t we hear about it? Why don’t more people buy their beer from a government store than private? Probably because they don’t care enough to be bothered to do anything about it. They are willing to pay a premium for mass-market beer that is readily available in a government store at 10-20% less cost because it is chilled and convenient for them in terms of store hours and/or location.

So be it if one can run a profitable business from this, but I’m not for taxpayers subsidizing mediocrity, whether it’s private or public. Ultimately, I’m for whatever system offers the opportunity for getting the best value and selection. According to Ted Hlokoff, who operates a rural agency store in Anahim Lake, private liquor stores have an average markup of 20-25%. With the 16% discount off the LDB price, this adds up to a margin of as much as 40%. [Note: average figures are not necessarily reflective of a particular business’s circumstances.] By contrast, for government stores, Hlokoff says the margin is 27%. Also, rural stores cannot mark up their products more than 5% above the LDB retail price, but ABLE’s stores can mark up product as much as they want.

So when it comes to beer in BC, I see problems with public, private, and rural stores. People have argued for a fully-privatized system like Alberta, but I’m not sure they have it much better than we do. I’m looking into it…

Lions to Launch Beer of Champions

Russell Brewing, in partnership with the BC Lions, is launching BC Lions Lager on September 4. Although Granville Island Brewing has had their Whitecaps IPA since 2006, this is actually the first time that a Canadian professional sports team has developed a proprietary beer brand.

12-packs of cans will be selling in government and private liquor stores for a recommended price of $19.34. To really be set for the game, however, you’ll need to get your very own beer launching fridge to avoid those pesky trips to the kitchen for a refill.

My prediction? For the Leos to win the Grey Cup, they’ll need to bring out a secret weapon — some IPA!

Shop Public Liquor Stores Campaign

The B.C. Government and Service Employees’ Union ran a radio ad campaign over the B.C. Day long weekend to encourage people to shop public liquor stores — Interior, Vancouver & Victoria. This is not the first time they have had such a publicity campaign. I expect it won’t be the last if they continue to ignore the underlying reason why people are probably abandoning B.C. Liquor Stores for private establishments.

The arguments the BCGEU give for shopping in public stores are larger selection and lower prices. That, however, is very general and doesn’t provide the level of detail necessary to make a proper evaluation. Of all that selection, what is actually relevant to the discriminating drinker? Certainly not the stacks of mass-market lager served six ways.

While there is an overlap in product selection between public and private stores, are people buying mostly from private stores what they can find in public stores? Or are they buying mostly the spec products that the public stores refuse to list until the agent or vendor has actually proven to the BCLDB that there is a sufficient market to warrant it?

Nevertheless, a significant part of the retail equation that the BCGEU neglects to mention in its ad is service. People are willing to pay more for what they perceive as better service. It may simply mean having the ability to buy chilled beer. (In the case of unfiltered, unpasteurized craft beer, however, that is not an option; it is an absolute necessity. Yet, what public store chills their beer?)

More often, people are looking for advice on the right product to buy when faced with much choice. Most public liquor store employees I have encountered know about as much as a Corona connoisseur when it comes to beer. It would seem that their job is more of a warehousing nature than retail service. (“I can tell you where it is in the store, just don’t ask me anything about the product itself.”) Why are public store staff not trained in product knowledge? Is it because the union refuses to take that on? Is it management refusing to incur the expense? Both?

That said, it is true that most private stores are no better with respect to product knowledge. For that, only management is to blame. The only things that seem to be going for these places may be convenient location and chilled product. In that case, you are better off planning your drinking ahead of time and buying from a public store — giving your tipple time to cool — instead of buying from private purveyors of pap on the spur of the moment. These places are merely capitalizing on people’s laziness, not good service.

For my part, I don’t often go into a B.C. Liquor Store these days. The main reason is because they don’t store their beer properly. A secondary reason is because they are not interested in bringing new product in unless someone has already done the work for them to meet their minimum required sales. A handful of private stores are more entrepreneurial and will make the effort to bring in exciting beer. They deserve to be rewarded for the risk, not the public- and private-store Johnny-come-latelys.

For the rest of my beer needs, our brewpubs are more than up to the task of providing fresh, flavourful, natural beer in a variety of styles. They may even have growlers with which I can take a beer home, confident in the knowledge that it hasn’t gone skunky sitting on a warm shelf. Better still, I can talk to the brewer and let them know when I like a beer or don’t like a beer. They may keep what I like or tweak the recipe to achieve something I like. How’s that for service?