Ontario opens sales of beer to grocery stores

By Antonella Artuso, Dan Brown, QMIAgency

Premier Kathleen Wynne explains the changes from the Premier's Advisory Council on Government Assets on Thursday, April 16, 2015. (MICHAEL PEAKE/Toronto Sun)

Premier Kathleen Wynne explains the changes from the Premier's Advisory Council on Government Assets on Thursday, April 16, 2015. (MICHAEL PEAKE/Toronto Sun)


Your grocery list is about to get a whole new look.

Soon, you’ll be able to add your favourite brew to your shopping list and pick up beer at hundreds of grocery stores across the province.

That’s because Premier Kathleen Wynne moved Thursday to scrap the Beer Store’s near-monopoly on suds sales in Ontario as part of the largest shakeup of the province’s alcohol laws since the Prohibition era ended in the 1920s.

The Wynne government is loosening the rules at the same time as it served notice it will sell off a big chunk of Ontario’s power grid, raking in the billions it desperately needs to whip the province’s deficit-ridden books into shape.

But while the move will expand beer sales to as many as 450 mid-size to-large grocery stores, the details are thornier, including:

  • An additional 50-cent tax on each two-four of beer
  • For the first two years, the province will force beer companies to eat the price hike and not pass it along to consumers
  • To police the new system, a new “beer ombudsman” position will be created
  • Those expecting corner-store sales of beer and wine are out of luck; the province isn’t budging on that front.

One local craft brewer was greeting the announcement with guarded optimism.

Dave Reed, co-founder of Forked River Brewing Co., says the No. 1 problem for a small brewery like his is distribution.

“Any expanded visiblity and presence is good,” Reed said. “Distribution becomes the ­roadblock.”

But he’s concerned about the many questions raised by Wynne’s plan: “Are they allocating good shelf space (in grocery stores) for craft beer?”

Reed says a beer like his might be a better fit in chains such as Farm Boy, Remark and Sunripe, depending on the details of the plan.

“Everything gets very complicated,” when dealing with big distributors, he said.

Darren Smith, head of Ontario Craft Brewers, said it will be status quo as far as variety store sales go. “It’s made pretty clear that it’s not going going to happen,” he said.

According to Smith, 20% of the shelf space in grocery stores will be devoted to small brewers. “Slotting fees at the grocery store are proposed to be outlawed,” he said of the practice of buying space in grocery outlets.

As for the beer ombudsman, Smith imagines the position will be given over to an independent person who will investigate complaints about the new system.

Khalil Aloul, owner of Westminster Variety in London, says he believes businesses like his should be allowed to sell beer and wine — to compensate for the loss of tobacco sales. “Why not? The tobacco and smoking is going down.”

Aloul says it’s been more than a decade that the Ontario government has been dancing around the issue of beer in corner stores.

Regardless, Wynne painted the move Thursday as a game changer. “The days of monopoly are done. This is the biggest shake up to the sale of beer in Ontario since we repealed prohibition in this province and that was in 1927.”

Critics suggested the changes to the alcohol system were just beer goggles through which to view the real shakeup announced Thursday: sale of a $9-billion stake in publicly owned Hydro One.

Progressive Conservative finance critic Vic Fedeli predicted both beer and electricity prices will rise over time.

Hydro One doesn’t set electricity rates and prices for customers “should” go down as a result of the sale, Wynne said.

NDP Leader Andrea Horwath said her party intends to fight the sale of Hydro One, which she predicted would be a financial disaster for taxpayers and ratepayers.

“People are maybe going to have easier access to beer, but they’re not going to be able to keep their beer cold because they’re not going to be able to keep their fridge plugged in because they won’t be able to afford hydro,” Horwath said.

The premier’s handpicked public assets council released its final report Thursday on how to “unlock” the value of Hydro One, LCBO and Ontario Power Generation (OPG).

The council’s “top priority” was to improve beer retailing in the province, and it suggested changes in addition to grocery store sales to make it easier to promote homegrown craft brewers.

On Hydro One, the report calls for the sale of 60% of the utility, with no individual shareholder able to purchase more than 10%.

“The province should proceed immediately with a sale or merger of its interests in Hydro One Brampton Networks Inc. to or with Enersource Corp., PowerStream Holdings Inc. and Horizon Holdings Inc.,” the report says.

Clark said the province will lose ongoing Hydro One income due to the sale, at least $100 million to $150 million annually, but will see improvements in its overall bottom line thanks to improved performance by the economy.

The Wynne Liberals expect a one-time windfall of about $4 billion for the Trillium Trust, and another $5 billion will be used to lower the debt in the electricity system.

The Trillium Trust will be used to pay for infrastructure such as transit and roads.

12-Pack of Brewing Changes to Beer Market

  1. Beer sales in up to 450 grocery stores.
  2. New 50-cent beer (tax) on two-fours but price controls on most popular brands until May, 1 2017.
  3. LCBO allowed to do 10-store pilot project to sell 12-packs.
  4. Small restaurants/bars to be able to buy beer at the same, cheaper price offered consumers.
  5. Craft brewers with two production sites to be allowed to set up retail at both.
  6. The Beer Store to open ownership beyond three foreign companies.
  7. Grocery stores allowed to purchase beer from LCBO at big discount.
  8. Grocery stores would sell only six packs or less, and have limited sale hours.
  9. ​Extend Ontario Deposit Return Program beyond 2017.
  10. Create a “beer ombudsman.”
  11. Allow small brewers to pool delivery, which is currently prohibited.
  12. The Beer Store will invest $100 million to upgrade stores.

(Source: Ontario government, Premier’s Advisory Council on Government Assets)

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