Rise of the “Big Three”
(Part two of the history of The Beer Store)
Brewers Retail’s three largest shareholders (Canadian Brewers Ltd, Labatt, and Molson), were not only able to gain a stronghold on the Ontario’s beer industry, but came to dominate the national market as well. There were several key factors at play that empowered big breweries to effectively engage in the consolidation of the brewing industry through interprovincial trade barriers, the federal government’s lenient approach to takeovers, as well as provincial authority over retail sales and distribution.
Interprovincial Trade Barriers
At the heart of it, interprovincial trade barriers were designed to be protectionist, meant to prevent smaller breweries from getting edged out by competitors in other provinces. The “big three” breweries viewed these barriers as a golden gate to decentralize production across multiple provinces, thereby reinforcing their position within the national beer market.
After the Second World War, Labatt, Molson and Canadian Breweries Limited engaged in a series of brewery acquisitions, building plants in many provinces across Canada. With a growing national presence, these large corporations were able to curate a small number of brands with mainstream appeal, like Labatt Blue, Molson Canadian and Carling Black Label.
Canadian Breweries Limited & Price Fixing Allegations
Following Canadian Breweries Limited’s (CBL) purchase of Frontenac Brewery in 1951 and National Brewery of Quebec in 1952, an investigation was launched into the company for creating a monopoly within Canada’s beer industry. The Canadian Restrictive Trade Practices Commission charged CBL with forming an illegal combine through a series of mergers, significantly diminishing price competition to the detriment of the public consumer.
The case against CBL was tried in Ontario’s Supreme Court in 1959, where the defense successfully argued that alcohol prices were already extensively regulated through legislation thereby protecting public interest. The notion that provincially controlled beer prices provided a sufficient safeguard against the creation of a monopoly was entirely untrue. As Craig Heron aptly points out in Booze: A Distilled History, “…the breweries jointly set the prices, which the boards then simply rubber-stamped, and use their provincial warehousing organizations to discipline independents and keep out foreign competition…”
The chief justice concluded that CBL’s actions did not violate Canada’s Combines Act, a ruling that would ultimately empower large corporations to continue with expansion plans to further dominated the Canadian beer market.
Creating National Brands & The Stubby Bottle
By 1961, the products of the “Big Three” aligned in that they tasted uncannily similar, and were now being packaged in the same standardized “brown stubby” bottles. The stubby bottle, unique to Canada’s beer market, helped to streamline production, as well as providing more effective storage and easier distribution.
In 1969, Canadian Breweries Limited was renamed Carling O’Keefe, after it was purchased by a subsidiary of Rothman’s. With deep pockets for promotional spending, the Big Three were able to create national brands backed by high-level and sophisticated advertising campaigns.
At its peak in the late 1970s and early ’80s, Labatt, Molson and Carling O’Keefe controlled well over 90 per cent of the Canadian beer market. In Ontario, the Brewer’s Retail (renamed the Beer Store in 1985) was owned almost exclusively by the same “Big Three”, who controlled virtually all of warehousing, sales and distribution of beer throughout the province. Independent brewers, fed up with the monotony and near monopoly of national beer sales, began to rise up, brewing beer with quality ingredients, character and real flavour.
The beer landscape has changed considerably since the 1980s, and the Beer Store is set to close many of its locations over the next several years. A follow-up chronicling the decline of the Beer Store to come – though perhaps after a much-needed palate cleanse.
(Leah is a Toronto based freelance writer as well as the Beer Boss and a server at C’est What)