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Increasing Consumer Convenience and Choice

Backgrounder

Increasing Consumer Convenience and Choice

Ministry of Finance

Ontario is expanding beer sales across the province, starting with up to 60 grocery store locations. 

Eventually, up to 450 grocery stores could sell beer. The Province has established specific criteria for eligibility and allocation of grocery store authorizations to achieve fair representation of grocers and ensure distribution across Ontario. Defined eligibility criteria and competitive allocation ensure fairness and best value.

To be eligible to sell beer, each grocery store must meet a number of characteristics:

  • Location sells a full line of food products;
  • A minimum of 10,000 square feet of retail space is occupied by food products; and
  • Location is not primarily considered a pharmacy.

Grocers that are interested in being authorized to sell beer will submit confidential bids to the LCBO. Successful bidders will be authorized to sell beer by the Alcohol and Gaming Commission of Ontario (AGCO). The AGCO will be supported with sufficient resources to ensure the effective monitoring of the new beer in grocery store channel.

The first round reserves at least 12 potential authorizations for small grocers (under $1 billion worldwide revenue). Authorizations are distributed across four geographic regions: 16 for the West; 25 for the Greater Toronto Area; 13 for the East; and 6 for the North. Each region also has a set number of authorizations reserved for small grocers.

No single grocer can win more than 50 per cent of available authorizations per region, or more than 40 per cent of total available, ensuring that at least three large and three small grocers win at least one authorization. This is critical to the government's commitment to fair representation.

The bid process will help get the best value for Ontarians. Eligible grocers will submit confidential bids for their margin rate on beer sales, between 3.00 and 9.99 per cent.

Once authorized, grocers will enter into a wholesale supply agreement with the LCBO.  The LCBO will be the sole supplier of beer for grocery stores.

Expanding access, responsibly

As committed in the 2015 Budget, the Province has mandated in law requirements related to the socially responsible sale of alcohol, including:

  • The sale of beer adheres to standard hours and beer is to be located in a single designated section of the store;
  • Beer sold in grocery stores cannot exceed 7.1 per cent alcohol by volume;
  • Beer will be sold in a six-packs or less, up to 750 mL per container;
  • Staff selling and handling beer in grocery stores must be a minimum of 18 years of age;
  • Staff must be fully trained to ensure Ontario's standards for social responsibility are always met;
  • Staff will be responsible to ensure that customers under the age of 19 and intoxicated adults do not purchase beer.

As a government agency, the AGCO will have oversight for these regulations.

Ontarians will pay the same price for beer regardless of where it is sold. Beer will continue to be subject to minimum price requirements to encourage responsible consumption.

New beer framework - Leveling the playing field

The new beer framework agreements generate real value for Ontario's beer consumers and manufacturers, particularly expanding market access to small brewers. Specifically, the agreements:

  • Increase transparency of the Beer Store and return it to its cooperative roots by opening up ownership to all Ontario-based beer manufacturers;
  • Give governance rights to any qualifying Ontario brewer and establish roles for four independent directors who will approve key polices related to brewer neutrality, approve transactions between the Beer Store and its owners, and participate on all board committees;
  • Set 20 per cent minimum shelf space and marketing expectations for small brewers in the Beer Store network, including the creation of a new Ontario Craft Beer Category;
  • Establish a new rate sheet to deliver savings for all brewers in the Beer Store network other than the current brewer-owners;
  • Allow small brewers' to pool deliveries and improve efficiencies;
  • Allows small brewers with two production facilities to open an on-site retail store at their second location;
  • Are expected to generate $100 million in additional government revenues annually, via the new Beer Charge, at maturity in 2019.  

 

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