Posted tagged ‘Human Resources’

Day 588

April 16, 2013

Exam Week.

First up was Human Resources. Relatively straightforward and short, just 40 multiple choice questions.

Next was Beer Industry. This exam featured a mix of multiple choice, short answer and long answer, and was “open book”–we could bring in notes, reference books, a laptop connected to the internet, a smartphone Angry Birds exam app–anything we wanted. As always with an open book exam, you’ll generally do well if you know the material well enough that you only have to fact-check an item or two and you have relatively well-organized notes. Open-book exams are big trouble for the people who have to look up all the answers.

Two more exams tomorrow, so time to get studying! No time to even have a beer or write a blog entry. (As you can see, I lied about at least 50% of the last sentence. And possibly more.)

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Day 584

April 13, 2013

I shed a tear/For I have no beer/What a wretched fate/To cogitate

As you may have guessed, the last day of lectures started in Creative Writing with a brief look at poetry.

In Human Resources, we ended the semester with the process of union-labour contract negotiations and the collective agreement. (I thought it was highly symbolic that my pen ran out of ink near the end of the lecture. I went through almost a dozen pen refills over the past two years while taking notes.)

And in Sensory, my group presented the slide show of our taste results that I had put together yesterday; we then listened to the presentations of other groups.

And that was it. Done. Completed. Finished. Nothin’ left.

Oh, except for five exams next week.

(Cue ominous music)

duh Duh DUHHHH!

Day 581

April 9, 2013

Third-last day of lectures.

In Human Resources, the process of union certification, and other things you need to know if you work in or will be a manager at a union shop.

In Beer Industry, Jason Fisher reviewed the semester. Key metrics. The AGCO. How to get a beer on the LCBO shelves. Compare and contrast the LCBO and TBS. Key trends in craft brewing. What type of beers I should be making (or not making) if I’m a brewpub, a contract brewery or a bricks & mortar brewery.

And like so many courses before this, another entire class spent thinking “Wha…? Did we really talk about that?”

Day 577

April 8, 2013

I try to keep my competitive instinct under control, but it tends to surface for things like trivia contests and Rock Band... and chocolate. Our Creative Writing teacher had no idea what she was unleashing when she announced the prize for a quick in-class competition would be chocolate bars.

My vision turned red. MUST EAT CHOCOLATE!

The contest really was quite simple: working in groups of five, we had ten minutes to write the opening lines to a piece of bad genre fiction.

Here’s the thing: I am a grandmaster of bad genre fiction.

Western: The hard sun blazed from the big sky as Dusty rode his deep-chested dun into the small, nameless town in the Sierra Madres, his namesake trail of dust settling on the listless men lounging on benches in front of the saloon as he dismounted. The sheriff stepped out of his office and looked Dusty over with hard eyes, but the cowboy, dog-tired from days on the trail, didn’t stop to talk. Pushing back his white ten-gallon and settling his six-shot hawgs more firmly in their holsters, he strode through the batwing doors of the saloon into the dim interior. Seconds later, shots rang out…

Detective: I looked at the clock on the stained office wall. Although it only read nine a.m., it was probably eleven o’clock somewhere, so I poured myself an eyeopener, then settled back to either read the pile of bills on my desk or contemplate life as a lousy joke. I had just settled on the latter when my next client walked in, a tall cool blonde poured into a tight red dress. “Are you Jimmy Drake the private eye?” she purred, not batting an eye at the open bottle of whiskey. “That’s what the sign on the door says, sister. Drag up a seat and I’ll pour you some breakfast…”

Fantasy: Argalain the Pirate paused as he crested the mountain pass, bewonderment crossing his face at the terrible sight before him. A giant serpent, fangs glistening with black venom, hissed in anger at the unwanted intrusion, the fainting maiden caught within its coils forgotten for the moment. With a cry, Argalain loosed his magical sword Madralin, honed by elvish smiths in the fires of Nithond, and swung it about his head as he charged into battle…

Science Fiction: Argalain the Space Pirate paused as he teleported into the mountain pass, bewonderment crossing his face at the terrible sight before him. A giant serpent, fangs glistening with black venom, hissed in anger at the unwanted intrusion, the fainting fembot caught within its coils forgotten for the moment. With a cry, Argalain activated his laser sword, honed by elvish technicians on the planet Nithond, and swung it about his head as he charged into battle…

You see what I mean. When it comes to bad writing, I can write with the worst of them. The contest was pretty well over before it had begun. Mmmmm, chocolate.

On to Human Resources, where we are finishing up the last few classes with some consideration of union labour laws in Canada.

In Sensory, the various groups presented beers as if the class represented a tasting panel, and gathered information about the various beers tasted. We have a week to collate the results and make a presentation to the class as well as a written report.

Unfortunately the tastings took so long that I had to discard my plan for the evening. Mark Murphy, who graduated from the first Brewmaster class a year ago, has become the very first graduate of the course to start his own brewery. He recently joined forces with his wife to form Left Field Brewing, a contract brewery with cleverly baseball-themed beers like 6-4-3 IPA. Alas, the launch party was in Toronto, and by the time we got out of our final class, it was far too late to make the 150-km trek around Lake Ontario during rush hour.

I’ll just have to wait for another Left Field event and buy two of Mark’s beers.

Day 574

April 3, 2013

In Human Resources, we covered discipline. Yes, when an employee has broken the rules, you, the manager, have to decide what discipline to invoke–anything from a verbal reprimand to dismissal.

It was pretty straightforward stuff.

Last week in Brewing Industry, we had a visit from the president of The Beer Store (TBS), who told us what a warm and fuzzy place TBS is for craft brewers.

Today, we had a visit from two representatives of the Liquor Control Board of Ontario, Leanne Rhee, Category Manager (Beer & Cider), and James Hume, Product Manager (Beer & Cider). Not surprisingly, they were there to tell us what a warmer and fuzzier place the LCBO is for craft brewers.

Like TBS, the LCBO is big business in Ontario, the largest purchaser of alcoholic beverages in the world, doing $4.3 billion in sales last year via 617 stores and 5 distribution centres. Beer actually only makes up about 20% of their total sales, or about $914 million last year.

And like TBS, the LCBO has also evolved over the years. Up until the 1980s, LCBOs were horrible places. You walked into a harshly lit room with a counter at the back and a single table in the middle of the room. There were no bottles on shelves, just a list of available products on the table, each with a product code. You wrote the product code on a slip of paper and took it to the cashier behind the counter, a man in a short-sleeved white shirt and fake bow tie. He looked at you suspiciously. If you passed muster, he went into the back, emerged with a bottle of something, quickly slipped it into a brown paper bag, took your money and handed you your ill-gotten goods. You emerged from the store and slunk home to have a shower in a vain attempt to wash away the sin of alcohol.

Needless to say, LCBOs are now much friendlier places with a distinct “boutique” feel–much nicer that The Beer Store. However, whether you decide to place your product in TBS or LCBO (or both) requires some number-crunching on your part. As we heard last week, TBS has a rather stiff placement fee and volume fee that adds up to tens of thousands of dollars for each SKU you want on their shelves. However, once you’ve paid your fees, you get to keep the entire sales price of the beer. (So if you sell a six-pack for $12.95, you keep $12.95.) You also tell TBS which stores will carry your product.

The LCBO, on the other hand, has no placement fee, but they keep part of the purchase price–they decide how much they will keep–and they decide which stores will carry your product.

TBS versus LCBO–which one will be more profitable for you depends on the number of products you want to sell, where in Ontario you want to sell them, and how much volume you plan to sell.

Leanne and James were good enough to share some of the thinking that goes into their purchases of beer each year. First of all, beer is treated a little differently than wine and spirits. For instance, if you’ve been in an LCBO, you know that spirits are subdivided by type (vodka, gin, rum, etc.) with the premium brands placed at eye level, while less profitable discount brands are placed on lower shelves. Wine is grouped by country and region. In contrast, beer is all grouped together at the back of the store, subdivided by packaging rather than by place of origin or type.

Why the back of the store? Partly for the same reason that dairy products are placed at the back of the grocery store–so you are forced to walk by all the other groceries to get to them. Yes, beer is the eggs and milk of the grocery store. While spirits provide the best profit margin, beer is what drives traffic to the store. Get people to walk by the wine and spirits on the way to pick up a 6-pack, and you have an opportunity to up-sell them the latest spiced rum or birthday-cake-flavoured vodka.

(I’m not kidding about the birthday-cake-flavoured vodka–I saw it at a recent party. But I digress…)

In addition, the beer at the back of the store is closer to the warehouse, meaning workers don’t have to carry those heavy cartons of 6-packs as far.

What are the latest trends in beers, as seen by the LCBO? Single serve cans, especially 500 mL cans, have been hot sellers over the past five years, and now make up 36% of all beer sales at the LCBO. Craft beer itself is the fastest growing segment at the LCBO. Strangely, another hot seller has been discount brands of fizzy yellow industrial beers. (Sigh.)

Leanne and James also outlined the submission and acceptance process for new products–something we have covered in other classes–but it was interesting to hear the process from their perspective. For instance, each year they receive over 700 submissions for new products, end up tasting about 300 of them, and approve 150-200. (Last year saw a bit of an up-tick, with 277 approvals.)

Now think about that–tasting 300 new products each year–that’s almost one for every day of the year. I suppose that wouldn’t be bad if the products were tasty. However, I question how the birthday-cake-flavoured vodka slipped through.

Day 559

March 19, 2013

Attendance was a bit light today, perhaps a casualty of St. Patrick’s celebrations two days ago, or perhaps a sign of student exhaustion near the end of the term.

In Human Resources, designing compensation packages. That includes financial considerations, of course (which can further be divided into direct rewards: wages based on your position; and indirect rewards: benefits that all employees of the company receive, regardless of position.) But rewards can also be non-financial–perhaps there’s an employee recognition program, or the availability of flex-time or job-sharing.

Determining wages will depend on how much can your company afford, what your company’s compensation objective are, the perceived worth of each job and the employee’s relative worth. This will be balanced by the current labour market, the level of wages in your business sector, the current cost of living, the possible effect of collective bargaining, and of course the legal minimums required.

In Beer Industry, we had a visit from Ted Moroz, President of The Beer Store (TBS), the Ontario entity formerly known as Brewer’s Retail. This venerable institution was founded in 1927 at the end of Canada’s Prohibition. While the Ontario government quickly passed laws giving itself the exclusive right to manage the sale of spirits and wine (a monopoly the Liquor Control Board of Ontario still holds, generating over a billion dollars a year in revenue to the provincial government), the brewers of Ontario–about 50 at the time–lobbied to retain control of beer sales. Over the years, the number of brewers shrunk as the larger ones gobbled up the smaller ones, until there were only two left–Molson and Labbatt. About ten years ago, Sleeman got big enough to buy a share of The Beer Store as well. What many Ontarians don’t realize is that all three of these entities–and the profits generated by The Beer Store–are  now owned by foreign multinationals.

Beer is big business in Ontario, and The Beer Store handles about 70% of that business, with 2300 full-time and 4600 part-time employees working in 440 stores and 8 warehouses, generating $2.7 billion in sales annually. Of those 440 stores, 254 are the old-style “In & Out” stores, so named for the signs on the curb marked “In” and “Out”, in case you can’t figure out how to get your car in and out of the parking lot. Inside, you walk up to the cashier, tell him what you want, he mutters something into a microphone, and a few seconds later, with an ominous thunder, your case of beer comes sliding through a curtain along a set of rollers. (For those of you outside Ontario, I am not making this up. Back when alcohol was considered a social evil, the shopping experience was designed to be as unpleasant as possible.) Almost 100 other stores have been redesigned as “Ice Cold Express”–the cashier at the microphone remains, but against one wall there are cases of the most popular brands that customers can now grab themselves rather than have to order from the man with the microphone. Another 83 stores are much more modern self-serve stores, often giant walk-in refrigerators stacked with cases of beer. And two new stores in Toronto are “beer boutiques” catering to the urban pedestrian crowd.

There are certainly advantages to being in TBS. You know everyone walking into the store is looking for beer (as opposed to the people entering an LCBO, who might just as easily be seeking out spirits, wine or cider.) The TBS also has an efficient warehousing and distribution service second to none. As Ted Moroz pointed out, they can deliver any listed beer to any store in Ontario within 24 hours.

This doesn’t come free, of course. First, you must pay homage to the gods of standardization–if you want to get your beer into TBS, it must be packaged either in industry standard 341 mL bottles with twist-off crowns and standard-sized labels or 355 mL aluminum cans. Then get out your wallet: there’s a listing fee of $2800 for each SKU (each label AND each size of package such as 6-pack bottles, 12-pack bottles, etc.). On top of that, there’s a store fee of $235 for each store you place your product in (up to 233 stores. After that, it only costs you $50 per store.) Then there’s a volume fee of $3.77 per case of beer for the first 25,000 hL. In addition, if you want some floor space in the middle of the store for a display, that’s about $200 per store.

So if I want to place cases of my beer in 6-pack bottles in 100 stores, it will cost $2800 listing fee + (100 x $235 store fee)  = $26,300 plus $3.77 for each case of beer.

As instructor Jason Fisher pointed out, this might be tenable for a craft brewer for the first label or two, but get into different sizes of packages and/or multiple labels and the fees will quickly multiply into six figures.

This may not be the case for much longer. As Ted Moroz admitted, public opinion is shifting from pro-TBS to anti-TBS. My feeling is that sometime in the next decade, the provincial government will end the Big Three’s 85-year-old beer monopoly and either come up with a new model of beer retail store, or simply allow beer sales in variety and grocery stores.

Until then, craft brewers will have to do the math and estimate if TBS or the LCBO is the best pathway to profitability.

Day 552

March 12, 2013

My nascent career in TV over before it really began, it was back to the brewmaster classroom. In Human Resources: what is a a properly planned performance evaluation according to Management by Objectives (MBO)?

  1. Define job objectives
  2. Set employee goals
  3. Coach frequently
  4. Compare performance to goals
  5. Reward goals achieved

Of course, just following this doesn’t guarantee that it will work. If an evaluation finds deficiencies but there’s no plan for employee training, then there won’t be any improvement. If performance evaluation is limited to annual reviews, with no regular feedback the rest of the year, then the employee will have no idea if he or she is meeting goals set out in the last review. And the whole process needs consistency throughout the company, strong managerial skills, and commitment to the process from upper management.

In between classes, I headed over the to the Teaching Brewery to hand in my final report on my specialty brew. There I learned the sad news–the shive (the large plug) in my 20-litre cask of Blackheart had suddenly popped out, the result of a build-up of too much internal pressure. Although I had carefully calculated the amount of priming sugar to use, probably some unfermented sugar left after the original fermentation combined with the priming sugar to provide too much food for the yeast. Too much food equalled too much CO2. Too much CO2 popped the shive out, sending about half of the cask’s contents all over the floor. Although the assistant brewmaster immediately hammered in a replacement shive, all the CO2 in the cask was lost–when we finally tap the cask, the beer that is left will be as flat as day-old Coke.

Alas. This is what keeps brewmasters awake at night.

Back to class. Two people from the Ontario Ministry of Finance visited Beer Industry to explain all about the beer tax that is due on each and every litre of beer we sell . (Well, almost every litre. It turns out that microbrewers–those that produce less than 50,000 hectolitres of beer a year–can get an annual tax exemption for some of the beer given away at special events for promotional purposes. But I digress…)

We covered the tax rates, which differ for breweries of different sizes. We also covered the various taxes:

  • a basic tax (which has different rates for draught versus bottled/canned beer)
  • a volume tax
  • an environmental tax (exempt if the beer is in a refillable container and the brewer intends to refill the container).

These are collected on each litre of beer sold via The Beer Store, to licensees or in the brewery’s own retail store. (However, beer sold to the LCBO is exempt from these taxes, since it collects taxes directly.)

We also studied the beer tax form each brewer has to fill out every month, line by line.

Filled with new-found tax knowledge, we were given a simple practice exercise: The fictional XYZ Brewery has just started up, and in its first month, it has produced 10 hectolitres (1000 litres) of beer. It has sold some of that beer to

  • The Beer Store (100 six-packs of 355 mL cans, 100 six-packs of refillable 341 mL bottles, and ten 20L kegs)
  • a nearby bar (100 six-packs of refillable 341 mL bottles and ten 20L kegs)
  • The LCBO (100 six packs of refillable 341 mL bottles)

How much tax does XYZ now owe?

Clearly, this was harder than it looked, since very few (if any) students got the right answer. I failed to notice that the bottles were 341 mL but the cans were 355 mL. That 14 mL may not sound like a big difference, but it becomes significant when thousands of litres are involved. Others forgot to add the environmental tax on the non-refillable cans or didn’t properly differentiate between draught and non-draught. Still others forgot to exempt beer sold to the LCBO.

So here are the correct calculations (I think), using tax rates for microbreweries:

  1. Volume of non-draught beer (i.e. bottles & cans): 622.2 L
  2. Volume of draught beer: 400 L
  3. Total volume: 1022.2 L
  4. Number of non-refillable cans = 600
  5. Basic tax  on non-draught = $0.2403/L x 622.2 L= $149.52
  6. Basic tax on draught = $0.2161/L x 400 L = $86.44
  7. Volume tax = $0.1760/L x 1022.2 L = $179.91
  8. Environmental tax (cans only) = $0.0893/can x 600 cans = $53.58
  9. Total tax = $149.52 + $86.44 + $179.91 + $19.02 = $469.45

To save wear and tear on your calculator (since this has to be done each and every month), the Ministry provides interactive on-line forms that automatically calculate the taxes you owe once you have input the various volumes of beer sold.

And then you can sadly contemplate life as you consume one of your very taxed beers.


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