The fine print in Ontario’s new beer agreement

Don’t get too excited, but Ontario is just a few months away from allowing a few dozen grocery stores to sell a limited amount of certain kinds of beer at certain times of day.

If this doesn’t sound like headline-making, Premier-media-availability news, you clearly are not familiar with Canadian liquor law. (Or maybe you live in Alberta — more on that here.)

Ontario’s undergoing its most significant liquor regulation reform since prohibition ended 90-odd years ago.

By the end of the year, about 60 grocery stores throughout the province (26 of them in Toronto) will be allowed to sell beer as long as one-fifth of it is craft beer and all the grocery stories don’t sell more than $450 million combined (in which case the stores selling the most will be penalized).

At the same time, the province is rolling out a pilot program allowing Liquor Control Board of Ontario outlets (just 12, to start) to sell 12-packs of select brands of beer.

This is all in line with a report on modernizing beer sales that came out in April. Since then the province has put in place a Beer Ombudsman and signed a new agreement with the consortium of private multinational brewers that have a government-sanctioned quasi-monopoly on beer sales in Ontario.

Sounds great, right?

Not so fast: The 190-page, 10-year beer agreement “it seems to perpetuate a system that is deeply flawed for no clear reason,” says Brock University professor Dan Malleck, whose book Try to Control Yourself details liquor regulation in post-prohibition Ontario.

“This agreement is unbelievably pandering to the Beer Store system,” he said.

“This is a system that’s trying to preserve the monopoly and enrich the beer store and the brewers.”

The Beer Store, for its part, has cited its “roots in Ontario as a retail cooperative that supports brewers and brings value to consumers.”

“The Beer Store has committed to $100 million of capital spending over the next four years as part of our plan to enhance the Beer Store experience for consumers,” it said in a statement this week.

“We have committed to more space in every single Beer Store inOntario being dedicated to small brewers. And we will continue to support small Ontario brewers with an increased number of free listings near their breweries and reduced fees at other locations.”

The Beer Store also noted its “award-winning recycling program, which saves municipalities $40 million a year in Blue Box costs.”

The overselling penalty

Generally, if you’re in the business of selling a product for money, the more of that product you sell, the better.

For the select Ontario grocery stores given the privilege of selling select types of beer, however, it isn’t that simple.

If they all sell more than about $450 million, or about 1 million hectolitres, or an adjusted, as-yet-undefined amount over the course of a year, they’re obliged to pay a penalty — to the Beer Store, the conglomerate owned by the brewers whose beer they are selling.

It’d be one thing to decide that selling too much beer is bad for public health, and have stores that do so pay a penalty to the provincial government, Malleck said. But the Beer Store?

“It just doesn’t make sense,” he said.

12-pack conditions

For the first time, the Liquor Control Board of Ontario will be allowed to sell 12-packs of beer — with a whole lot of caveats.

• LCBO outlets selling 12-packs must be at least two kilometres away from Beer Store locations.
• If the LCBO wants to open a new beer-selling outlet in a community with no Beer Store, it must give the Beer Store a 90-day head’s up in case the Beer Store wants to open one of its own outlets there.
• If the LCBO’s beer sales are determined by an external accountant to have excessively “cannibalized” Beer Store sales, the pilot project ends:

• The LCBO can only sell 12-packs of the following brands of beer, the vast majority of which are owned by the owners of the Beer Store:
  • Heineken
  • Stella Artois
  • Corono Extra
  • Grolsch
  • Steam Whistle
  • Muskoka Survival Pack
  • Labatt Blue
  • Carling
  • Coors Light
  • Molson Canadian
  • Budweiser

“It’s basically setting it up to fail,” Malleck said.

There’s no shortage of debate on whether it’s advisable, from a public health perspective, to make alcohol more easily available.

But arguments in favour of preserving private monopolies are tougher to come by.

“A lot of the harms associated with alcohol are associated with beer consumption,” says Tim Stockwell, director of the Centre for Addiction Research of B.C.

“Putting it in private hands … is not a good thing.”

Because the new Beer Store agreement is a 10-year contract, Ontario’s unlikely to see significant loosening of those laws over the next few years.

“It’ll be interesting to see if in the next decade there is a new push” for looser booze retailing, Malleck said.

“This is a nice, well needed step. It’s probably the best we could hope for in a political system that is so afraid of changing booze policy.”

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