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BACKGROUNDER: LCBO SUPPORT FOR ONTARIO CRAFT BEER

 

August 17, 2017

Ontario craft beer has been an enormous success story in recent years and LCBO is proud to have been able to play a role in that. Since first being introduced to the market in 1984, locally brewed, small batch beer has steadily gained popularity and market share to become one of LCBO’s fastest-growing product categories.

Sales of local craft beer were $88.5 million in fiscal 2016-17, up more than 27.6 per cent over the previous year. Changing customer preferences have helped Ontario craft beer become an increasingly popular choice for beer drinkers over the years. The buy local movement has helped buoy sales, as has the development of unique flavour combinations that appeal to people who might otherwise have preferred a different beverage.

Pricing: Microbrewers benefit from a lower LCBO mark-up rate, as outlined in the Table below. A beer manufacturer is considered a microbrewer for a sales year if its worldwide production in the previous production year is not more than 50,000 hectolitres or, if it is the first production year in which the brewer manufactures beer, its worldwide production of beer for the production year is not expected to be more than 50,000 hectolitres.

Table 1.  LCBO Beer Mark-Up Rates (March 1st 2017 to October 31, 2017)[1]

 

Draft

Non-draft

Microbrewers (craft beer)

31.82 cents per litre

35.34 cents per litre

Other Brewers

68.31 cents per litre

85.33 cents per litre


Similar tax rates apply to beer sold in other channels than at LCBO (i.e. The Beer Store).  More information on the beer tax can be found here: http://www.fin.gov.on.ca/en/tax/bwt/

Selection: The LCBO is constantly refreshing and updating Ontario craft beer product selection. In the last six years alone the number of suppliers has grown from 31 to 138 (as of July 2017), and is expected to exceed 150 by the end of 2017. As a result, hundreds of different Ontario craft beers are listed at any given time, including both permanent and seasonal listings. Dedicated product calls specifically for Ontario craft beer occur several times a year on an annual basis.

Beer Cold Rooms:
In almost all of our new locations, and in many of the store expansions/renovations, we have added beer cold rooms and devoted more display space to our growing beer selection. The local fridge program provides dedicated refrigerated sections in more than 120 store locations across the province. Stores with dedicated refrigerated sections feature beer from their local communities and regions.

Craft Beer Sections and Growler Stops: In spring 2016 the LCBO introduced enhanced craft beer sections in 25 of its top-selling craft beer stores. LCBO now has two growler stops complete with tasting bars, which feature a fresh rotation of local craft beers and help to promote the growing local industry. The growler stops, located in Toronto and Ottawa, also offer howlers which are a smaller 946ml format.

Merchandising: Displaying Ontario craft beer in prominent areas throughout LCBO stores and grouping all formats (single cans, bottles, multipacks) helps increase customer awareness and promote sales. New Ontario Craft Beer category signage was rolled out to all LCBO stores in June 2015, followed by further enhancements in April 2016. LCBO also uses Ontario craft beer display walls in selected stores, shelf-extenders and dedicated end aisles in more than 50 stores to promote customer-centricity and create interest for these products. As well, special on-shelf displays showcase Ontario’s smallest craft breweries on a rotating basis. Our annual month-long local promotion starting in September also features craft beer-specific promotional opportunities. We also feature local craft brewers in promotional materials, including in the LCBO Shopping Guide, throughout the year.

Expertise: LCBO has about 360 specially-trained “Beer Ambassadors” who share their passion and knowledge with staff and customers alike at the top-selling craft and premium beer stores in our network. The number of LCBO beer ambassadors has almost doubled over the past few years. These specially trained and highly knowledgeable employees learn about the craft beer industry and its practices, as well as beer varieties. They are champions of the local industry and help customers make informed buying decisions. Our team also gives regular seminars to Ontario craft breweries to guide them in conducting business with LCBO. LCBO beer experts speak annually at Niagara College and the Ontario Craft Brewers Conference educating new and potential breweries about the industry and LCBO.

Partnership: About 15 years ago, LCBO began working closely with the Ontario Craft Brewers Association (OCB) to help develop a strategic, long-term plan for its members that would create and encourage awareness and growth in the local craft beer market. The successful alliance has been mutually beneficial to both LCBO and Ontario craft brewers, and most importantly provides our customers with the very best that Ontario brewers have to offer.

[1] The LCBO mark-up is increased annually on March 1 (or the first Monday in March if the 1st falls on a Saturday or Sunday) by the 3‐year average Ontario Consumer Price Index for the 12‐month period ending Nov. 30.

 

 


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Media Contact

Christine Bujold
LCBO Media Relations Co-ordinator
Tel: 416-864-6772
Cell: 416-587-3729