Liberals look to loosen the grip on the grape
Privatization czar developing strategy to put wine on supermarket shelves
Premier Kathleen Wynne’s privatization guru, Ed Clark, will publish his formula for getting wine on Ontario supermarket shelves before the end of the summer.
In a wide-ranging discussion with the Star editorial board Friday, the man who is bringing beer to grocery stores by Christmas said he is already aiming toward the next frontier in liberalizing Ontario’s alcohol retailing.
“The wine guys will have read this report and said, ‘Uh-oh,’ ” he said with a chuckle about his panel’s 63page review that was released Thursday.
The review will usher in the sale of beer in 450 of Ontario’s 1,500 supermarkets over the coming years, loosening the privately owned Beer Store’s stranglehold on the industry.
Clark, the former TD Bank CEO, also recommended the sale of 60 per cent of the Hydro One transmission utility, which will net $4 billion to bankroll transit, in a separate 38page report.
But he conceded his next round of reforms — which will also modernize the publicly owned Liquor Control Board of Ontario with expanded online sales and specialty boutiques — will be challenging.
“Just the trade rules themselves are quite complicated,” Clark said, referring to the fact that the privately owned Wine Rack and Wine Shop supermarket kiosks enjoy “grandfathered licences” that are exempt from the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the North American Free Trade Agreement (NAFTA).
Those 268 licences are “a huge asset to the Ontario wine business, but it’s just that they’re a huge asset to a very small number of companies in the wine business,” he said of their owners.
“I don’t want to just blow up those licences because having the ability to have licences in grocery stores that are dedicated to Canadian wine is a really valuable asset, so you’d never give that away for free.”
Those wine shops should be “repurposed into co-op type stores so the whole industry can benefit,” said Allan Schmidt, chair of the Wine Council of Ontario and president of Vineland Estates Winery.
The beer deal, which will increase the share of craft beers in Beer Stores to 20 per cent, could work for Ontario’s VQA wines, added Schmidt.
“A lot of the hard work’s been done in the beer model.”
Clark said he must come up with a solution that helps Ontario winemakers while somehow getting other foreign wine in grocery stores.
“There’s probably more sensitivities in the wine world than there is in the beer world, in the sense that we were dealing with three of the world’s largest international beer companies, so obviously they weren’t going to go back and protest any deal (with trade challenges),” he said of the foreign parent companies Labatt, Molson and Sleeman.
“When you’re dealing with a lot of small French (wine) producers or California producers who are quite prepared to use the trade weapons so you have to be very careful.”
Clark’s comments came the day after the government said it would enact all of his privatization and liberalization suggestions while deciding what size of store is big enough to accommodate alcohol sales.
“That is the million-dollar question,” said Gary Sands of the Canadian Federation of Independent Grocers, which is worried independent stores could lose out to chains.
Sands also wants Clark to set up a separate system for bidding on alcohol sales licences so independents don’t have to bid against chains. “Our pockets aren’t that deep.” The beer changes will be legislated in Finance Minister Charles Sousa’s budget next Thursday.
In Barrie, Wynne toured the Flying Monkeys Brewery, where she joked “the beer is going to be flying off the shelves” due to the liberalization.
“I have to tell you, I am not a big beer drinker. I just need to confess that, but I have a lot of friends who are happier with me this morning than they were yesterday,” she told reporters.
“The Beer Store owners maybe are not among those people who are happy with me.”
“The wine guys will have read this report and said, ‘Uh-oh.’ ” ED CLARK PRIVATIZATION GURU