Expanding Beer Retailing in Ontario
Ontario is permitting the sale of beer in grocery stores, providing consumers with more convenience and improved choice. These measures represent the most significant changes to the province's alcohol retailing sector in nearly 90 years.
The Premier's Advisory Council on Government Assets, chaired by Ed Clark, has examined and made recommendations on how to unlock significant value from key government assets and generate lasting public benefits for the people of Ontario.
In response to the council's recommendations, the province will expand the sale of beer to Ontario grocery stores, provide additional retail support to Ontario's craft beer industry and enter into a New Beer Framework with the Beer Store. In addition, the Liquor Control Board of Ontario (LCBO) will strengthen its retail practices, increasing benefits and return for all Ontarians, and the government will take steps to maintain Ontario's strong commitment to social responsibility.
The government intends to introduce legislation that would, if passed, permit implementing the following changes to the way beer is sold in Ontario:
- Up to 450 locations will be authorized to sell beer in urban population centres across Ontario.
- All new locations will have set hours of operation, create a designated beer retail section that could be cordoned off, and ensure that staff are appropriately trained to sell beer to the public.
- Ontario will enter into a new 10-year framework with the Beer Store that returns the Beer Store closer to its original co-operative roots.
- The new agreement will particularly strengthen the position of small and craft brewers, including those based in Ontario. This will include improved placement, shelf space and other marketing practices in the Beer Store locations.
- The Beer Store will see substantial reforms to its board and governance to increase fairness, transparency and accountability. All brewers with manufacturing facilities in Ontario will be offered a meaningful opportunity to become equity shareholders of the Beer Store and an independent Beer "Ombudsperson" will be appointed to address brewer and customer complaints.
- The successful Ontario Deposit Return Program will remain in effect until 2017 and will be extended to the end of the initial term of the New Beer Framework with the Beer Store on revised terms, including reducing the Beer Store fee by $1 million.
- The Beer Store will spend $100 million in capital over the next four years. The majority of the funds will be invested to enhance the customer experience at their retail outlets.
- The Beer Store will also adjust its policies for sales to certain small licensees (i.e., restaurants and bars), allowing them to buy limited quantities of beer at consumer retail prices to better meet their inventory needs.
In addition, the industry's largest brewers have separately committed to comply with the government's request that they cap to inflation the price at which some of their most popular beer products are sold until May 2017, subject to a material change in the marketplace.
Ontario consumers will pay prices for their beer that are at or below the lowest prices in Canada.
To enhance the consumer experience, improve convenience and provide more opportunities for suppliers, the province has directed the LCBO to:
- Create a best-in-class e-commerce open marketplace. This new online retail experience will expand the assortment of products available to consumers by allowing domestic producers, suppliers and agents from around the world to list products for purchase for pickup at local LCBO stores or for home delivery.
- Create new boutique formats for niche products, craft beer and specialty spirits within LCBO stores. These new store formats will cater to local communities; sell alcohol in different formats such as re-fillable beer containers called "growlers;" allow previously unavailable products to be purchased immediately at LCBO stores; and, be fully integrated with the LCBO's new e-commerce platform.
- Expand product offerings at LCBO retail stores, including the sale of 12-packs of beer on a pilot basis in 10 stores across the province.
- Implement a new pricing and mark-up strategy that respects Ontario's trade obligations while providing additional value to the LCBO. This approach will allow suppliers to maintain control over their retail prices while achieving greater revenues on behalf of all Ontarians.
The council will continue to work with the LCBO over the coming months as they develop and implement these proposals.
Other Alcohol Retailing
The council also advised that it would need more time to provide detailed recommendations on how to implement changes to the sale of wine in Ontario. As these changes announced today are implemented in the coming months, the government and the Premier's Advisory Council on Government Assets will be working closely with the wine and spirits sectors to further modernize alcohol retailing and distribution in Ontario, and see how to expand its retail presence also. The government expects to have more details later in 2015.