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The Real Reason Your Beer Costs More Than It Should

thestar.com — Imagine a store where most of the products are kept in the back. You order from the cashier. The products can't be sold below a legislated minimum price. And the overwhelming majority are made by one of three large companies, which also own the store. Surprisingly, few consumers know this is the set-up.

Who dugg this? Made popular Jul 6, 2008

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  • brstilson, on 07/05/2008, -8/+57What Canada needs is a thriving micro/homebrew movement like we have here in the U.S. I can go to the local chain supermarket and have at least half a dozen local beer brands to choose from. There is a hell of a lot of competition in the beer market here, which means the average price for a 6-pack of macrobrew here is $5-$6. Having all that competition also makes the large brewers look into creating more specialty/niche brews. Microbrewing is the reason the big brewers are now making Blue Moon, Killian's, Miller Chill (gross), and Bare Knuckle Stout. The big guys still dominate the market, but they are well aware of the small regional breweries as well, and they know that some people are starting to gravitate away from the pale lager swill they've been pushing for decades.

    As far as prices though, it's really shocking how Molson/Labatt/Sleeman's are allowed to jack up the prices on their competition's product like that. Over $30 for a case of Coors is unheard of over here. People would riot. Well, maybe not riot, but you'd see a definite rise in beer theft that's for sure. At any rate, that's what I'd pay for a case of good microbrew.
  • bigbill780, on 07/06/2008, -6/+48...in Canada. Sin tax baby. That liver transplant the government paid for doesn't come for free.
  • Wisgary, on 07/06/2008, -0/+35You don't understand the priorities of the US. Alcohol is unfortunately something much, much more likely for people to rise up and go crazy about than, I dunno, getting ***** by the government.
  • supermanred, on 07/06/2008, -8/+30Have you ever BEEN to Canada? In Ontario any beer store carries over 400 types of beer. Ive been to the US and in most grocery stores or other places where you can buy beer there are little more than 10 flavors available.

    Come up to Toronto and enter a Beer Store outlet, then comment on Digg.

    And as far as "people would riot" you are living in a dream world. The Patriot act passed without a riot, I doubt 30 dollar beer would cause the US to riot when removing all your rights and freedoms didnt. Give me a break, lemming.
  • mrsammercer, on 07/06/2008, -1/+19In Ontario you're paying almost 37 dollars for a case of Coors Light?!?!?!?! Highway Robbery. That's not even right, I don't care what the tax laws are. It's like 16-20 bucks here and I'm less than 100 miles off the border from Ontario in the US.
  • Ryan2845, on 07/06/2008, -1/+17You really expect a grocery store to have 400 brands of beer? They have to make room for, you know, like fruit and cereal and stuff...
    We have liquor stores too...and they have plenty of brands of beer...
  • Rikkochet, on 07/06/2008, -0/+12The microbreweries are thriving in Canada - a few years ago I thought it was the US that desperately needed it, but it seems it's all in the marketing.
    I suspect the US is the same as in Canada - "beer drinkers", the people who enjoy a good beer, will buy microbrews or the more "premium" major brands. "Beer swillers", aka the unwashed masses who buy beer to get drunk and because drinking beer is manly, gravitate towards the mainstream ass brands (Molson Canadian, Budweiser, etc). And those guys go through a hell of a lot more beer than the other camp. A hell of a lot more.
    Am I wrong? Next time you're in a liquor store, stand around a few minutes and look at who is buying what beer. The swillers pretty much stand out.
  • PeppermintPig, on 07/06/2008, -1/+13It's a sad day on digg when the facts get buried.

    I guess people really do get the government they deserve.
  • jamend, on 07/06/2008, -3/+14The article is all about how a few large businesses operate the distribution of beer in Ontario, how they use their position to set high prices, and that the government has very little to do with it.
  • iammzac, on 07/06/2008, -4/+14lol, flavors.
  • WoollyMittens, on 07/06/2008, -0/+8/me stamps arcooke with "Poor impulse control" across his brow.
  • HonkingAntelope, on 07/06/2008, -0/+8A 24 pack in Quebec usually can cost $25 or less.

    Also, we have tons of microbreweries here for anyone thinking otherwise.
  • rdldr1, on 07/06/2008, -2/+9Good article, however this article is more for Canadians. There are no Beer Stores in the USA.
  • inactive, on 07/06/2008, -0/+7Stop assuming that because its like that in Ontario it is like that in the rest of Canada. Stupid easterners.
  • PeppermintPig, on 07/06/2008, -2/+9Government subsidizing of beer would still require the use of taxation, if you follow that logic, and people who know better would still resent the government for doing it.

    If you want to ruin something, let government subsidize it.
  • Opiate, on 07/06/2008, -1/+8***** you?
  • bitterbug, on 07/06/2008, -2/+9So you end up with watery American beer, AND you get taxed to hell at the border.
  • supermanred, on 07/06/2008, -9/+16What makes beer expensive is government. ***** them, taxing the only thing that makes us forget what jackasses they are for a while.
  • bitterbug, on 07/06/2008, -0/+6@twofiveone
    Just make sure your Health Card doesn't fall out of your pocket while engaging in drunken stunts. Walk into a hospital without one, and you're pretty much out of luck unless you're dying.
    I had three fingers slashed to the bone, the tip of one practically severed, and they wouldn't touch me until my family arrived with my OHIP card in hand.
  • Asheis, on 07/06/2008, -2/+8yeah... they really should have added a subtitle: IN CANADA.

    Beer prices aren't bad here, and the beer we do have is excellent.
  • smurfsahoy, on 07/06/2008, -5/+11Something like 90% of Canadians live less than 50 miles from the border. Just drive over and buy a bunch of cases of beer.
  • PopcornDave, on 07/06/2008, -1/+7Really? If you screw with the life, liberty... okay the pursuit of alcohol. you'll have the populace up in arms.
  • kinseyincanada, on 07/06/2008, -0/+5you think Ontario is bad? here in BC a 30-pack of Kokanee runs about 48.50. But at least wwe have Granville Island Beer a very nice micro-brewery.
  • kinseyincanada, on 07/06/2008, -0/+4@bitterbug

    Are you serious? ive been to a hospital in Ontario with a broken arm and all the asked for was an address and name.
  • PeppermintPig, on 07/06/2008, -0/+4But it doesn't make sense. If most Canadians live near the US border, then it's just a matter of grabbing the cheap beer.

    Beer makers would have an incentive to lower their prices, unless they figure they have loyal customers who will buy the same brand wherever it is. But even then there should be some market forces causing the prices to lower, especially considering the exchange rate in Canada.

    This strongly suggests government regulation and taxation is effecting the price.
  • scoottie, on 07/06/2008, -2/+6Nothing costs more than it should. Everything costs whatever the company can make the consumer pay for their product. You don't like the price find it cheaper or don't buy the product.
  • mrsammercer, on 07/06/2008, -0/+4Wait...$37 is still too much for a case of Coors Light, especially considering that you're in Canada and it's not getting shipped overseas. I wouldn't think this particular tax could be attributed to Canada's universal health care system, though. It sounds like the brewers are just reaming people and local legislators don't have the will to stop them or are in their pockets.
  • Scheissen, on 07/06/2008, -0/+4RTFA
  • JettaMan, on 07/06/2008, -0/+4I'm Canadian, and I'll be the first to tell you that Canadians are behind the curve when it comes to understanding free markets. Hopefully we'll eventually surpass the US with deregulations and such, but we have a long way to go. We've had well over 40 years of this mentality that taxes, regulations and crown corporations are good for us.
  • Strungout, on 07/06/2008, -3/+6Actually the main supermarket chains Safeway and QFC carry a ***** of different beer, and not just from the main beer conglomerates. Anyone with half a brain would've have noticed the increasing availibility of microbrews in stores in the U.S.

    Out of all the times I've been in Canada, I've yet been in a store that stocks "400" types of beer.
  • thegreat59, on 07/06/2008, -0/+3In Puerto Rico we have a saying of how to keep people happy we call it the three B's "Bebida, baraja, y baile. Which is drink, cards, and dance. I think when a government overly controls the alcohol market, especially beer, and makes it too expensive for its poorer citizens you are definitely asking for problems.
  • BoneStamp, on 07/06/2008, -3/+6Canadians sort through 100s of Obama, Hilary, McCain, Ron Paul...etc articles a day and you can't skip over a couple Canadian iPhone and beer articles? And you wonder why the world hates Americans... thanks for continuing to give Americans a bad name. To Canadians, I know you think most Americans are *****, but that's only because there are a few and those are the ones that you remember... most Americans are nice, just like you!
  • arcooke, on 07/06/2008, -4/+7I hate high prices on anything.. BUT..

    If beer were a lot cheaper than it is now, I guarantee I'd be an alcoholic by now. When I drink, I drink a lot.. If a 24-pack was $10, I'd be drunk every day. In some twisted, messed up way, I'm kind of glad beer is a little pricey.
  • PAStheLoD, on 07/06/2008, -0/+3Monopoly is far easier to bust than cartels. Monopoly starts at 80% (or so) market share.
    Cartels are just natural for businesses from an economic point of view.

    There's Joe's brewery and you've got a brewery, and no one else. You've got half of the market (obviously the other half is Joe's), and you're both evil-greedy bastards (well, you might not be, but then you'll find yourself out of your own company really quickly, except if the company is 50%+1 share yours.. but that's more than unlikey, because of the banking system, etc.. ).

    There are multiple scenairos.

    So you sell beer for $1 and Joe sells, for $0.8. Well, people are thirsty and then pick, so they'll buy Joe's more (thus with time giving him more-and-more market share).. so you go to $0.8 too. Joe goes to $0.5 .. you follow.. until someone drops out of the bussiness because it's no longer worth to sell beer, because it costs more to produce than you can sell it for. Simple but very-very unlikely. Because as a market grows over a certain volume (say .. $1 bilion) there're always factors like brand-loyalty, marketing, public-reach, exclusivity, etc.. so you stay in bussiness, but Joe'll become monopoly. Effectively rendering you out of the big bussiness.

    Option number two. You go hunting, fishing, playing poker or canoeing or something else together with Joe. He isn't your enemy, you even like his beer, he likes your's, and you both know, that if monopoly kicks in, then goverment regulations too. Hence you decide to fake competition, and every year find a reason to raise the prices... it doesn't matter what, if you'll have to dump millions of cash into a landfill, it's still better than the option number one. Because in a few years, you'll be insanely rich. And Joe too.

    And who can say, that because you switched to better producing technology/process you shouldn't had to get rid of half of your processing plants and build new ones, thus making the product more expensive? What about introducing totally ***** brands (coke zero.. hello?) every few years? How hard is to keep up the look of innovation, competition? Really? That easy? Yes. Especially in sectors where there're just a few big players (remember the big DRAM module fiasco?) where the chance of a small company being a whistleblower is minuscule. Or if you've an international/multinational firm/corporation/company, then you have much greater freedom at playing with the numbers, reports, presenting your financial situation, market share and such..

  • BoneStamp, on 07/06/2008, -0/+3Does America have a larger problem with alcoholism than Canada? I don't think alcoholics are really concerned about the price. Alcoholics drink until they pass out, whether that's $40 or $60. I know a couple Canadians who are alcoholics and have ruined their family. Maybe if alcohol was cheap they'd at least still have some money.
  • jparkinson, on 07/06/2008, -0/+3It is kind of messed up that you require the card, but I've seen many people get treatment without having it beforehand... at some point you are expected to show it though.

    Also... is losing your healthcard seriously that big of a concern? Are you that retarded that you lose your wallet every time you get drunk?

    I've actually never lost my wallet in my life, its really not that hard...
  • alittleroy101, on 07/06/2008, -0/+3Where do you buy your bears?
  • JettaMan, on 07/06/2008, -1/+4I can't stand the "real costs" people. Just let us keep our earned wealth and we'll spend it on what we want. The real cost is when you start making decisions for other people, then everyone becomes irresponsible. People need to learn responsibility and they learn it by having it.
  • inactive, on 07/05/2008, -16/+19Two words "Government taxation".
  • canadaboy, on 07/06/2008, -0/+3Hey - with humour like that, you might not need to import all your comedians from Canada anymore.
  • jeffiek, on 07/06/2008, -0/+3"and controlling minimum prices "

    FTA - "below a LEGISLATED minimum price." (emphasis added)

    Those are your elected officials signatures on the legislation. They may be nothing more than corrupt tools of the beer companies, but they are NOT the beer companies.

    There are enough problems in the world, and you add nothing to their solution by confusing who does what.
    Governments write laws. Businesses sell stuff. Okay?
  • invinciblechunk, on 07/06/2008, -1/+3Well, I heard that if you find a mouse in a bottle of Elsinore, they have to give you a free case, eh.
  • BoneStamp, on 07/06/2008, -0/+2You can bring 1 case across without paying duty... I used to do it all the time, but it's not exactly convenient for most people. Who wants to drive 50 miles for beer? I'd rather drive 1 mile and pay double.
  • EvilFerret, on 07/06/2008, -0/+2That's strange.....Since health care is free in Canada, wouldn't it be a simple matter of proving you're a Canadian citizen (drivers license?). Why do you need health cards? No seriously, I'm curious.
  • BoneStamp, on 07/06/2008, -0/+2Think revenue!
  • dattaway, on 07/06/2008, -0/+2Its not just beer, its groceries too. Most stores buy multiple brands from one distributor and a handful of vendors for specialty items. The few distributors buy from the few remaining companies, which are often commonly owned by the same investors. Thank trade and globalization, the ineffecient small mom and pop stores have been replaced by a big corporate machine.
  • BoneStamp, on 07/06/2008, -0/+2It has nothing to do with competition, the government regulates the minimum price. I can buy Canadian beer far cheaper in the US than in Canada. To the guy who said the beer selection in the US sucks, my local grocery store has at least 200 choices. It's not "The Beer Store", but you ever try to get "Blue Moon" at The Beer Store? It's made in Toronto and they don't even sell it. 7-11 has it here though.
  • bitterbug, on 07/06/2008, -0/+2@jparkinson
    I wasn't drunk at the time. I'm not much of a drinker. I just wasn't carrying a wallet at the time because I didn't have any need for it. At least so I thought until I was sprinting for the hospital trailing blood down the sidewalk.
    This was in Trenton, Ontario. Maybe they had had a lot of fraud from Americans with Canadian drivers licenses (main reason for Health Cards), because they were adamnant they weren't going to treat me without the card.
    Additionally, it turned out I'm fairly resistant to Lidocaine. So when they used it to numb my wounds in order to apply stitches, it had no affect. Six needles in each finger later and I still had feeling. So instead of trying something else, they just stitched my fingers up with full sensation. Brutal.
  • enri, on 07/06/2008, -0/+2One acronym "RTFA".
  • josephbloseph, on 07/06/2008, -0/+2Oh, don't forget about homebrew beer, the drink of hobbyists, beer enthusiasts, and underage college students who realize that while they aren't legally allowed to buy beer, nobody IDs them if they're just buying barley, hops, and yeast.
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