Toronto Star

Fees to sell beer are far too steep, small grocers say

Independen­t businesses believe high rate for licences will price them out of the market

- FRANCINE KOPUN BUSINESS REPORTER

Independen­t grocers say they are being asked to pay the same big fees as retail giants like Loblaws in order to sell beer and it’s effectivel­y going to keep them out of the market.

At an informatio­n session held Wednesday, Ontario grocers learned that getting a licence to sell beer will cost them $7,000 per store each year, regardless of the size of the operation.

“It seems like they’re just paying lip service to the idea of independen­ts being able to sell beer,” said David La Mantia, owner of La Mantia’s Country Market in Lindsay.

Giancarlo Trimarchi, a partner in Vince’s Market stores in Newmarket, Uxbridge and Sharon, calculated that he’d have to sell $233,000 in beer a year to pay the fee. “We’d have to sell 54 six-packs a day.”

The province announced in September it would begin accepting bids from grocery retailers interested in selling beer, ending the monopoly held for decades by the Beer Store.

“It seems like they’re just paying lip service to the idea of independen­ts being able to sell beer.” DAVID LA MANTIA OWNER, LA MANTIA’S COUNTRY MARKET, LINDSAY

Atotal of 60 licences will be granted this year, 12 of them to independen­t retailers across the province.

But the details revealed Wednesday shocked grocers.

“It was a showstoppe­r for a lot of the independen­ts,” said Gary Sands, of the Canadian Federation of Independen­t Grocers, who watched the Internet seminar held by the LCBO and the Alcohol and Gaming Commission of Ontario.

Commission spokeswoma­n Eva Innes said the $7,000 fee will support the regulatory framework establishe­d to manage the new retail channel for beer, including a robust inspection process. “A fee of $7,000 to obtain an authorizat­ion from the AGCO in order to sell beer in grocery stores was establishe­d based on what it will cost to regulate this new line of business, ” she noted.

The $7,000 fee isn’t the only stumbling block for independen­ts.

Grocers who get a licence must also obtain a letter of credit for $150,000 in order to buy product from the LCBO.

“If they don’t pay, that’s when the letter of credit is drawn upon. It’s only as a matter of insurance. It’s not drawn upon unless they don’t make payments,” said Christine Bujold, media relations co-ordinator, corporate communicat­ions, for the LCBO.

Keeping $150,000 tied up may not be a problem for a corporatio­n with millions or billions of dollars in sales. But independen­t store owners don’t have access to the same kind of credit big corporatio­ns do.

Steve Sharpe, of Sharpe’s Fruit Market in Campbellfo­rd, a 25,000square-foot operation, was hoping to sell products from the local ChurchKey Brewing Co. if he won a licence.

Then he found out about the $7,000 fee and met with his banker to find out how much it would cost to maintain a $150,000 letter of credit. It would cost him about $3,375 a year.

“I think the whole thing is flawed. What the government is really looking to do is to have us do this for nothing. To do it for no profit doesn’t make much sense,” Sharpe said.

Grocers say they won’t be making a big profit on the alcohol. They have to bid competitiv­ely for the licences and the feeling is that the grocers willing to keep the least amount of profits for themselves will win, although the basement for profit has been set at 3 per cent.

Grocers will have to invest in renovating areas of their stores to sell the beer, retrain existing staff and, in some cases, hire new staff old enough to sell alcohol.

Only seven independen­ts and 18 large grocery stores in the GTA will be granted licences in the first round of bidding.

“If our competing store, Zehrs, gets a licence and we don’t, we’ll be at a huge competitiv­e disadvanta­ge,” said Trimarchi, referring to his store in Uxbridge.

Zehrs is owned by Loblaw Companies Ltd. “It just seems so unfair and wrong.” And just as unfair, he pointed out, if he gets it and Zehrs doesn’t.

“It should be done in the proper competitiv­e spirit. I feel like it’s not a free market. They’re picking and choosing who’s going to win.”

In response to questions from the Star, the Ministry of the Attorney General of Ontario released a statement.

“Throughout this process, our government has worked to make sure that small and independen­t grocers had the opportunit­y to sell beer in a way that made sense for them. That’s why we ensured that a number of the licences will be reserved specifical­ly for small and independen­t grocers. In the first tranche of licences for example, at least 12 licences are reserved for small and independen­t grocers,” wrote Ministry of the Attorney General spokeswoma­n Judy Phillips.

“Selling alcohol is a public trust that our government takes very seriously. It is absolutely critical that Ontario’s standards for social responsibi­lity are always met as we move forward with the next steps in modernizin­g our beer retailing system.

“We have been clear that as we expand beer sales, we will require that retailers follow strict rules for the safe sale of alcohol and the Alcohol and Gaming Commission of Ontario (AGCO) is a vital part of our government’s commitment to maintainin­g our high standards of social responsibi­lity.”

 ??  ?? The Star revealed the province’s plans to sell beer in 450 grocery stores.
The Star revealed the province’s plans to sell beer in 450 grocery stores.
 ?? CHRIS SO/TORONTO STAR ?? Giancarlo Trimarchi, a partner at Vince’s Market groceries, wants a level playing field for retailers when it comes to selling beer in Ontario.
CHRIS SO/TORONTO STAR Giancarlo Trimarchi, a partner at Vince’s Market groceries, wants a level playing field for retailers when it comes to selling beer in Ontario.

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