Is beer in corner stores still a priority?
Before COVID-19, there was beer. Doug Ford couldn’t get enough of it.
Our populist premier is a teetotaller who doesn’t touch the stuff. But our man of the people wanted it within reach for the everyman.
Remember “beer in corner stores?” The campaign slogan juiced Ford’s march to power.
Never mind. Beer is already here — everywhere, in fact, except corner stores.
Thanks to the perfect storm of a pandemic, takeout beer can now be sold by any bar or licensed restaurant on any street corner across the province (not to mention the LCBO and many supermarkets). And so the campaign controversy that bubbled over into a billion-dollar gamble by Ford — exposing the province to massive court damages if he ripped up a binding contract with the Beer Store oligopoly — is fizzling fast.
Ford can thank a quirk of fate for a fait accompli.
In mid-pandemic, alcohol was deemed an essential service for thirsty Ontarians — and a lifeline for cash-starved restaurateurs. The Beer Store went along with change — for the time being.
Post-pandemic, booze is likely to flow for as long as restaurants continue to bleed. Which will be a long time.
It is an inconvenient truth, however, that convenience stores were left high and dry as Ford’s campaign promise was overtaken by events. The Beer Store has also been boxed in by COVID-19 as new competitors siphon off sales.
There may be no turning back. The vast majority of Ontarians like the idea of licensed establishments dispensing affordable takeout booze, according to a poll this month by Campaign Research.
The question is whether the premier is prudent enough to quit while he’s ahead. Is he wise enough to declare victory, now that alcohol distribution has been expanded beyond anyone’s expectations, knowing that the Beer Store is hemmed in by public opinion?
After all, it’s not just their drinking customers who like the new arrangement. All those bars and restaurants now selling takeaway to the public are also commercial customers of the Beer Store, which still presides over wholesale distribution (on behalf of its major owners, the big multinational brewers).
Or will Ford resume his crusade to bring beer to corner stores, knowing that the big brewers — Molson Coors and Labatt — will launch a costly legal battle based on their contract with Ontario’s government? For all the fuss over convenience stores, it has always been a hard sell with questionable trade-offs.
In 2015, Kathleen Wynne finally achieved the liberalized beer distribution that had eluded previous premiers. Aided by former TD Bank CEO Ed Clark, she negotiated access for beer (and wine) sales in supermarkets — which are eminently cost-effective — but rejected the convenience store lobby for fear of raising costs and reducing provincial revenues (from lower supermarket license fees).
It was an elegant compromise that enhanced distribution without litigation. But Ford figured he could do better than Clark ever did.
His new Progressive Conservative government embarked on a high stakes game of chicken with the brewers. Goaded by his former chief of staff Dean French, emboldened by crony Chris Froggatt (a public affairs consultant), enabled by his obedient finance minister of the day, Vic Fedeli, the premier charged ahead.
A year ago, the ground shifted. French quit in a scandal, Froggatt found himself squeezed out and Fedeli was shuffled out of the finance portfolio, replaced by Rod Phillips, who offered more sober advice to a teetotalling premier still drunk on power.
The Tories quietly moved from confrontation to negotiation. Then came COVID-19, which changed the lay of the land.
Now the Beer Store is losing market share and losing money — $46.5 million in 2019 — much as Wynne and Clark privately predicted five years ago when they inked their deal. Now, rather than rip up a 10year contract at the midpoint — and pay the price in penalties that could add up to hundreds of millions of dollars — the Tories are taking their time.
“Time is the government’s friend,” mused one well-placed source.
The longer negotiations drag on, the shorter any breach period in the 10-year deal that ends in 2025, and the more revenue that flows to the big brewers from restaurant and bar sales — diminishing damages claims and making it easier to reach a new understanding. The passage of time also has a calming effect on Ford’s Tories, who may discover that Ontarians like buying beer from restaurants and bars that have varied selections, rather than searching in the back of a convenience store for stale commodity beer.
Asked about recent rule changes in the alcohol sector, the premier acknowledged that it’s working well: “We’ve been pretty flexible — we wanted to make sure that companies can stay open and have the flexibility to deliver their products to the public,” he told reporters Wednesday.
Why add the complications — and court costs — of breaching a contract to bring in corner stores, when Ontarians now have potentially thousands of new points of sale from bars and restaurants? Just as necessity is the mother of invention, a pandemic can be the progenitor of improvisation in distribution.
Restaurants and bars desperately need a boost. But breaking a binding contract in order to shift sales from dilapidated Beer Stores to dreary convenience stores would be like downgrading from economy class to steerage — and paying a stiff penalty for the privilege.
The vast majority of Ontarians like the idea of licensed establishments dispensing affordable takeout booze, according to a poll this month