Ending Ontario’s beer retail monopoly could cost taxpayers dearly

Canada – Ontario is expanding the sale of beer, wine and cider to almost 300 corner stores this summer as part of Premier Doug Ford’s push to liberalise liquor rules in the province. The bill, which was passed on 6 June 2019, entails ripping up an agreement with The Beer Store. The retailer has already signalled it will fight the move in the courts.

At the end of May 2019, the province’s Progressive Conservatives tabled legislation that would terminate a 10-year contract with The Beer Store, which was signed by the previous Liberal government in 2015. The deal permitted an expansion of beer and wine sales to hundreds of grocery stores. The Beer Store, which is co-owned by brewers Molson, Labatt and Sleeman, operates 445 outlets across Canada’s most populous province.

As the government sees it, the current agreement is a sweetheart deal for the brewers, protecting their monopoly that is a bad for consumers and businesses.

Media say that scrapping the deal could trigger steep financial penalties, but the legislation contains provisions to nullify any such costs.

The Beer Store, however, suggested it will fight the legislation through the courts.

When the brewers signed the deal in 2015, they agreed to spend about CAD 100 million (USD 75 million) on capital investments in Beer Store locations, freeze prices on most of Labatt and Molson’s products for one year, and give more shelf space to small brewers.

The deal also allowed The Beer Store to keep the exclusive right to sell 24-packs and most 12-packs in the province, while grocery stores would only carry six-packs. What is more, the agreement opened up ownership of The Beer Store to smaller breweries.

The Beer Store and its union have embarked on a PR campaign to prevent the sale of beer in corner stores. The union, representing The Beer Store’s 7300 employees, warns that the new legislation could hit taxpayers hard and lead to the loss of thousands of jobs.

The Conservatives have also announced a number of loosened alcohol restrictions, including allowing alcohol to be served at 9 a.m., seven days a week, letting people consume alcohol in parks, and legalising tailgating parties near sports events.

The Liberal opposition is against tearing up the agreement with The Beer Store right now and favours negotiating a transition.

The Canadian Federation of Independent Business and Retail Council of Canada has applauded the proposed legislation.

The bill has not yet been proclaimed into law, and Economic Development Minister Todd Smith has said the government will continue to negotiate with the brewers who own The Beer Store regarding its plan.