Lots of changes are brewing
Beer in grocery stores is hardly the only development coming for Ontario drinkers
It’s been almost 30 years since Ontarians were first told they would be able to buy beer in a grocery store, and it’s finally about to happen.
The big news — that brews are coming to your grocery stores and possibly in time for the 2015 holiday season — was revealed weeks ago. But wait, there’s more! A lot more. “The days of monopoly are done,” Premier Kathleen Wynne said at a news conference Thursday. She said the suite of reforms is also just the beginning, as the province sets out to reform wine and spirit sales as well.
The government’s plans to reform booze sales and overhaul its electricity sector are expected to wring $5 billion out of existing assets for the provincial Trillium Trust, which funds infrastructure and transit.
Here’s what you need to know about how alcoholic beverage sales might be about to change:
DOUBLE THE OUTLETS
The province will sell licences to 450 grocers across the province, which will essentially double the number of beer-specific retailers from the 447 Beer Stores across Ontario. These retailers will only be allowed to sell six-packs or single beers. Their licences will require social responsibility training, special hours, separated closed off areas for the beer, and annual sales per outlet limited to $1 million. The licences will be phased in; 150 outlets should be open by May 1, 2017.
NEW AGREEMENT FOR THE BEER STORE
The Beer Store’s previous deal with the government was lambasted by critics and craft brewers for giving three foreign-owned brewers too much control over an antiquated system that didn’t offer the best experience. It also means The Beer Store will remain the destination for your empties and deposit returns, but the new agreement will save the LCBO $30 million a year.
A NEW TAX ON BEER
Instead of a franchise fee for the Beer Store, the panel opted for a new tax on all beer sales in the province. The new tax means the price of a 24-pack will increase 25 cents every Nov. 1 for the next five years, a decision Clark said was made in fairness to the big brewers. To try to ensure that’s not passed onto consumers, the new Beer Store agreement ensures prices for the most popular brands will not increase before May 1, 2017, which makes up about 50 per cent of all beer sales.
BEER OMBUDSMAN
A Beer Store Ombudsman will field customer and brewer concerns alike. The new framework will also open up the structure of The Beer Store to check the power of the big brewers. The board of directors will now include four independent directors appointed by government. One of these directors will hold a tiebreaking vote.
MORE SPACE FOR CRAFT BREWERS
The Beer Store must set aside 20 per cent of all shelf space, merchandising, marketing and promotional programs for small brewers, under the new agreement. They currently have about 7 per cent. It must also establish “craft” as a category and scale costs of listing beers to the size of the brewery producing it.
BEER STORE $100-MILLION MAKEOVER
The bare-bones Beer Stores will be getting a $100 million facelift, with at least 80 per cent of that money committed under the new agreement going to retail store improvements. The new deal also requires all new stores to be open concept and self-serve format.
GROWLERS ARE COMING
The LCBO will soon start offering “growlers,” which are refillable beer containers that often hold between 750 millilitres and a litre. They are common in other parts of Canada, especially in the Atlantic Provinces.
LCBO ONLINE RETAIL
The LCBO will launch a new online store that will offer consumers more choice, especially those who don’t live near one of the large, bigbox style LCBO stores with massive spirit and wine offerings. It will offer both in-store and home delivery.
NICHE BOUTIQUES
The LCBO will also launch new niche and specialty boutiques for craft beer, wine and spirits, such as whisky. The report says these boutiques will be include in LCBO stores, as opposed to separate retail outlets.
NEW PRICING AND MARK-UP STRATEGY FOR LCBO
The panel is working with the LCBO to capitalize on its pricing and mark-up strategy to increase profits. “That won’t affect consumers,” Clark said, “that’s really a strategy of taking it (revenue) out of producers, not consumers.”
12-PACK PILOT IN 10 STORES
LCBO stores can currently only sell six-packs of beer and singles, whether cans or large bottles. This was written into the old Beer Store agreement to help protect its sales of 12- and 24-packs. Now the province will test-run allowing 10 LCBO stores to sell 12 packs and could eventually ramp that up to 60. Why is it such a small fraction of the retailer’s 651 locations? The panel states, “This initiative may significantly erode the economics of The Beer Store, especially in light of the Council’s proposal to sell beer in grocery stores.”
RESTAURANT RELIEF
Bars and restaurants have long complained The Beer Store charged them more than the retail price for bottles, and they were not allowed to buy their beer like a consumer. About 9,000 small pubs and restaurants (who sell fewer than 250 24-packs of beer a year) will now pay the same price as consumers.
NO WINE IN YOUR SUPERMARKET
Though the suds will flow through supermarket checkouts, you still won’t be able to grab a Beaujolais with your baguette. The panel requested more time to look at the wine issue, given it contains its own complexities as there are almost 300 private wine stores in the province that were grandfathered into free trade agreements.
SPIRIT OF CHANGE
The panel will also continue work on reforming the sale of spirits. It will conduct consultations and analysis “in parallel with our work on wine retailing and to bring forward proposals on future directions at the same time.”