Ontario should now privatize all liquor sales

The Ford government has finally acted on its promise to allow convenience stores in Ontario to sell beer and wine.

While this will help introduce competition and expand consumer choice, the government should privatize all liquor sales in the province.

In December, the Ford government announced it will not renew its agreement with The Beer Store when it expires in 2025.

The agreement restricts the number of retail stores authorized to sell liquor and grants The Beer Store (a consortium of three large multinational brewers) a quasi-monopoly on beer sales in the province, total monopoly on all 12- and 24pack beer sales, and exclusive right to sell most domestic beers to bars and restaurants.

As of 2022-23, The Beer Store operated 422 retail outlets and accounted for 61.6 per cent of all retail beer sales in the province. Other privately-owned brewers, which are currently restricted to selling through The Beer Store or their own breweries, accounted for 7.1 per cent of sales.

Outside of beer, the Liquor Control Board of Ontario (LCBO) — a Crown corporation that runs the province’s 1,074 government liquor stores and is the exclusive wholesaler for all bars, restaurants and retailers — dominates Ontario’s retail liquor market.

In 2022-23, the LCBO accounted for 99.6 per cent of spirits sales, 85.8 per cent of wine sales and the remaining 31.3 per cent of beer sales.

So, while the Ford government plans to end The Beer Store’s quasi-monopoly (and allow greater consumer choice, more convenient store locations and put downward pressure on beer prices), the LCBO will maintain its dominance of the broader liquor market. Clearly, the Ford government should take the extra step and privatize the province’s liquor sales.

To understand the potential benefits, Ontarians need only look to Alberta.

In the early 1990s, Alberta privatized its government-run liquor stores, which ended the government’s near-monopoly on liquor sales as new entrants were allowed into the market. As a result, the number of liquor stores more than doubled just two years after the province announced privatization, Albertans enjoyed greater access as store locations became more convenient, and retailers offered a greater selection of products.

Today, with more than 1,500 stores across the province (there were 258 pre-privatization), Albertans have access to 31,000 products compared to the LCBO’s 24,850 products. In 2018, the latest year of data, 64 per cent of Albertans lived within one kilometre of a liquor store compared to 26 per cent of Ontarians.

Consumers in privatized markets enjoy these advantages because government-dominated systems are not responsive to peoples’ preferences. To best determine what products to sell, how many to stock or where to locate stores, you need a massive amount of information — more than any centralized decision-maker can know.

On the other hand, the market determines this through individual businesses freely shifting resources based on the wants and needs of customers.

Simply put, while the Ford government has taken steps in the right direction by allowing more competition in Ontario’s beer market, more must be done.

Privatizing all liquor sales would result in more stores, more accessible locations, a greater selection of products and lower prices for Ontarians.