Privatization czar, brewers to discuss Beer Store

Province hopes to implement ‘franchise fee’ on breweries

Ed Clark, Premier Kathleen Wynne’s privatization czar, will soon meet with brass at the major breweries to discuss the future of the Beer Store, the Star has learned.

But officials with Labatt, Molson, and Sleeman might want to bring their chequebooks as Clark has already warned them that Queen’s Park is expecting a “franchise fee” — among other concessions — if the 448-outlet private monopoly is to remain intact.

In an attempt to keep their lucrative cartel arrangement, the three foreign-owned brewing giants on Wednesday announced they were willing to sell a minority ownership stake to Ontario’s 80 or so craft brewers.

Microbreweries would pay either $100 or $1,000, depending on how much beer they produce, and get a share in the provincewide chain and a small say in its operations.

Currently, AB InBev, Belgian parent company of Labatt, and U.S.based MolsonCoors each own 46 per cent of the Beer Store and Japan’s Sapporo, owner of Sleeman, has 8 per cent.

While Ontario Craft Brewers, the association representing 50 of the smaller producers, has officially panned the offer, at least a dozen microbreweries have already expressed interest in buying in.

Jeff Newton, president of Canada’s National Brewers, the industry association that represents the Beer Store, confirmed Thursday further talks would be held with Clark and his advisory council on government assets.

“Given the Beer Store’s major announcement this week that it is welcoming all Ontario brewers, large and small, to become owners of the Beer Store . . . additional meetings will now take place to ensure Mr. Clark understands the new policies and how they can strengthen this industry,” said Newton.

“It has always been the Beer Store’s goal to co-operate with the advisory council and ensure its deliberations are grounded in facts.”

During a campaign stop in Sudbury on Wednesday, Wynne played down the significance of the breweries’ surprise olive branch, which was designed to ease the political pressure on them to improve market access for craft beers.

“We have at this time a mission with Ed Clark who is reviewing this and other questions,” the premier said in French while campaigning for the Feb. 5 byelection in the city.

“We are going to wait on his report. This information that we have today is just a small part of this discussion,” she said, noting Clark’s final recommendations would be implemented in Finance Minister Charles Sousa’s spring budget.

“So the information that has come up today from the Beer Store will be part . . . of the discussion that Mr. Clark is having with his commission on the assets and on revenue.”

Clark was not available Thursday, but the former TD Bank chairman has made it clear the cash-strapped province expects Labatt, Molson, and Sleeman to fork over a “franchise fee” without raising prices for consumers.

“Their position is that they can’t afford to absorb a tax,” he said in November when his blue-ribbon panel released a 77-page interim report, titled “Retain & Gain: Making Ontario’s Assets Work Better for Taxpayers and Consumers.”

“If we do decide to charge a franchise fee of some sort (and they say) they don’t have any room, they’re just right up against the wall here and they don’t have a dollar to give . . . we’re saying, ‘Well, then that means you’re really saying is that this franchise that you have is worthless. Would you then give it up?’ ” the long-time Bay Street titan said.