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Eat & Drink

Cutting through the B.S. in the Beer Store debate

Posted by Ben Johnson / February 18, 2014

Beer Store ControversyThe Beer Store and the Ontario Convenience Stores Association (OCSA) have, as of late, been engaged in a very public and increasingly nasty fight over the state of the province's beer sales.

And while both the OCSA and The Beer Store are making much-repeated arguments on their respective websites and Twitter feeds about what's in the best interest of the public, let's be serious here: The Beer Store currently enjoys roughly an 80% market share of all beer sales in this province and they are unlikely to relinquish it easily. Furthermore, the OCSA doesn't want in on the sale of booze because they think they can offer you a better shopping experience; they want a piece of that action. As 1997-era Diddy will gladly tell you, it's all about the Benjamins. Er, the Bordens, as it were.

So let's cut through the bullshit and take a look at the validity of some of the claims being made on both sides.

THE PRICE OF BEER WILL CHANGE

TBS says
If alcohol sales are deregulated, the price of beer will go up. In a statement accompanying a study that The Beer Store commissioned, Beer Store president Ted Moroz said, "Prices will go up. Make no mistake. Beer, wine and liquor will be more expensive in Ontario."

The OCSA says
In their own study, the OCSA initially said that the prices would go down, noting that the average price of a two-four at The Beer Store was 27 per cent higher than at private retailers in Quebec. The Beer Store (and others) contested these claims, noting that the original study didn't properly take things like taxes into account. The author of the OCSA report then responded with a second study, confirming his assertion that deregulation would mean lower prices at large retailers. So...lower prices, then?

Well no. Here's Dave Bryans, CEO of the Ontario Convenience Stores Association in a video explicitly saying, "Yes, you would probably pay more for convenience because of location [and] because of hours of service." So what the what?

Sniff test
Both sides are bullshitting you a bit. The Beer Store's studies point to jurisdictions like Alberta where the system is entirely privatized and, yes, people pay more. This argument ignores the idea that, if The Beer Store and the LCBO stayed in business alongside some alternative, like convenience stores, there would be increased competition. And when you have competition, prices tend to stay fairly competitive so one business likely wouldn't be able to simply charge whatever they want. They'd hypothetically be forced to stay competitive and the argument can be made that the consumer would ultimately benefit from the increased competition.

On the other hand, you tend to pay for convenience since there's an increased cost associated with increased distribution to more store locations. So what's the reality? Who knows. There's a reason there are conflicting arguments on this part of the debate: It involves predicting the future and, while we can point to other jurisdictions and make educated guesses, it's tough to say exactly how deregulated alcohol might play out in a place where it's been regulated for the last 80 years or so. People can come up with statistics to prove anything, Kent. 14% of people know that.

CHANGE WILL MAKE GETTING BOOZE EASIER FOR MINORS

TBS says
The Beer Store points to the fact that they challenge 3.5 million customers per year and the dubious statistic that 64% of Ontarians believe that sales to minors would increase under a convenience store retail system (Oh, they believe it!). They also point to case studies about minors purchasing alcohol in privatized jurisdictions like BC and New York to show that the instance is higher when alcohol is deregulated.

OCSA says
The convenience stores association points out the fact that TBS's "studies" don't actually analyze their own rate of selling to minors (just how often they "challenge") and they likewise tout their own proven track record for ID'ing customers who are purchasing cigarettes or lottery tickets. They claim they'll do a better job keeping booze away from minors.

Sniff test
I'm going to have to call bullshit all around. Apparently everyone conducting these studies doesn't remember being a teenager. You can tout all the stats you want, but you can't keep teens away from cigarettes and alcohol. To paraphrase Dr. Ian Malcolm, the kind of control you're attempting simply is not possible. If there is one thing the history of teenagers has taught us it's that cigarettes and alcohol will not be contained. Teens break free, expand to new territories and crash through barriers, painfully, maybe even dangerously, but, uh... well, there it is: Teenagers will find a way.

THIS WILL AFFECT BEER SELECTION

TBS says
Ontario has more selection with the Beer Store in place. The Beer Store offers up 420 brands of beer from 100 different brewers and that's more than almost every other beer-selling store in Canada (that's a fact).

The OCSA says
The OCSA never really makes any claims toward improved selection--because they'd be stupid to even try--but anti-beer store pundits like the idea of private retailers being able to choose their selection, including from small craft brewers if they see fit; often pointing to a handful of depanneurs in Quebec that sell great craft beer.

Sniff test
The Beer Store's claims are legit, but still a little funky. It's true that they can't be beat for selection in the rest of the country, but that's something of a dubious distinction given that brewers that want to sell their beer in this province have literally zero other private options. Deregulation likely won't give Ontario a store with more selection; however, some hold out hope that it could give us stores that opt to focus exclusively on American craft beers, Ontario craft beers, maple porters, etc.

There's something to be said for that, but before we go crazy about the idea of craft beer in convenience stores, it's probably important to consider how many artisanal and craft selections you currently find among the Hostess, Lays, and Kraft products that convenience stores choose to stock.

DEREGULATION WILL HARM THE ENVIRONMENT

TBS says
The Beer Store's industry-funded recycling program has a 92% return rate on bottles and recycled more than two billion beer, wine and liquor containers in 2011-2012; roughly half of what the entire Ontario Blue Box recycles. If the deposit system is lost, they claim 453,000 tons of liquor packaging will have to be managed by municipal governments. They claim the cost to municipal taxpayers will be $40 million a year.

The OCSA says
The OCSA makes no claims in relation to recycling.

Sniff test
There's no clear bullshit here, with the possible exception that no one is actually proposing we do away with the Beer Store's "award winning recycling program." People just want an alternative place to sell beer. If The Beer Store remains in business, there doesn't seem to be any reason they can't keep acting as the province's bottle recycler. Indeed, given the skill with which they handle recycling, few might object if they opted to focus just on recycling. There is a suggestion that with less capital, the recycling system might suffer, but this point seems, at best, an attempt to simply shoehorn in a pro-Beer Store talking point and, at worst, a veiled threat to the province that they might stop recycling if they aren't allowed to maintain their monopoly.

Conclusion

Both sides are flinging more shit than angry monkeys at the zoo. The Beer Store is a legally-protected monopoly providing massive profits to foreign-owned breweries and the way they use this position to promote their own brands is a clear conflict of interest. The province obviously needs some alternative to The Beer Store, but let's not be so eager for it that we blindly accept the first alternative that comes along. The OCSA raises some good points, but theirs is not the fix-all solution to our Beer Store woes that we all want to think it is.

Finally, all this posturing seems largely moot anyway. The province has demonstrated no desire to change the status quo. Some people got their hopes up when Kathleen Wynne, in her February 11, 2014 Reddit AMA said, "We are in conversation with the Ontario Craft Brewers association and we're looking at ways to modernize beer distribution," but she also noted that "We need to make sure we make socially responsible decisions about the distribution of alcohol. We have a controlled distribution system in place in Ontario and it's worked well."

I contacted the Ontario Craft Brewers to ask about the "conversation" that was happening and was told by Christine Mulkins, who handles OCB's PR, that "OCB is always in discussions with government about ways to improve access for consumers and create more jobs in Ontario." So, Wynne's mention of a "conversation" was likely just a reference to an ongoing series of AGCO modernization consultations that are occurring (consultations at which you'll find sizable teams from the companies that own the Beer Store sitting alongside the OCB) as opposed to any real commitment to change

So while it's great that the issue is getting much-needed public discussion and more Ontarians are getting informed about alcohol distribution here, The Beer Store isn't going anywhere any time soon. That's no bullshit.

Ben Johnson also writes about beer on Ben's Beer Blog. Follow him on twitter @Ben_T_Johnson.

Discussion

32 Comments

W. K. Lis / February 18, 2014 at 01:33 pm
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Beer and liquour has price controls on them by the Ontario government. They are prohibited to sell beer, wine, etc. below a legislated price. Also, taxes are very high compared to other jurisdictions.

As for the Beer Stores, you may be able to buy beer made by companies other than the ones that own the stores, but they can only display their labels (sometimes high up on the display wall). One has to ask for them by name, not pick them up yourself. Very, very, very few self-serve beer stores.
Susan / February 18, 2014 at 01:36 pm
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Does the beer store really offer exactly 420 different types of beer? The young stoner in me is giggling.
Phil / February 18, 2014 at 01:51 pm
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Having just recently moved to Ontario from New Brunswick, this article really cleared up the debate that I've heard so much about without really taking a side. Much appreciated!
Ben replying to a comment from Phil / February 18, 2014 at 01:55 pm
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Happy to help!

You might also want to read this other blogTO post to understand why people really want an alternative to the Beer Store: "Revisiting The Beer Store monopoly (and why it sucks)"

http://www.blogto.com/eat_drink/2012/07/revisiting_the_beer_store_monopoly_and_why_it_sucks/
Sarah / February 18, 2014 at 03:22 pm
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I don't think all convenience stores should be allowed to sell beer. You should have to apply for a license to sell it and that portion of your store only opens at certain times e.g. after noon for example. That way there is more control over who can sell it and each case is treated on an individual basis. It is kind of pointless that you can't buy beer in large stores like Fortinos and you have to go out of your way to a beer store.
hoc / February 18, 2014 at 03:27 pm
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Thanks for the article Ben!

I was thinking why there couldn't be an OCB shop much like the Wine Rack?
They showcase Ontario wines... why not have one to showcase and sell all the craft brews around?
lister replying to a comment from hoc / February 18, 2014 at 03:39 pm
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Everything I've read about setting up an OCB shop comes back to NAFTA. In other words, if it's OCB only then US government on behalf of the US breweries could file a NAFTA claim to be allowed in. Stores like the Wine Rack were grandfathered in and are exempt to NAFTA claims.
lister replying to a comment from Sarah / February 18, 2014 at 03:41 pm
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What purpose does allowing alcohol sales only after noon server, when a convenience store or grocery is open sooner or 24/7?
christopoher / February 18, 2014 at 03:42 pm
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Why not have a micro brewerey store/outlets like the Wine Rack? That would follow what is happening in the beer world. Boutique independant beer stores?
sofanisba / February 18, 2014 at 03:46 pm
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The Beer Store could pretty much win this debate in terms of public opinion if they were just open longer. That's 90% of why any consumer cares about whether they can get their booze in a convenience store.

Or they could monopolize on dial a bottle.
lister replying to a comment from Sarah / February 18, 2014 at 03:48 pm
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This whole we-must-protect-the-children thing is ludicrous. I've always been a youngish looking male that doesn't look my age. I have hardly been carded by the LCBO and TBS compared to practically all the time in the USA. The LCBO and TBS is so proud of their carding ability however...

Anyone amused at the recent radio ads by the Conservative Feds slamming Trudeau over his apparent marijuana legalization ideas that says how much easier it'll be for kids to get it much like beer and alcohol?

The solution to private selling (and private selling exists already in numerous forms!!) is a license and for violations of that license a very stiff fine plus a suspension of the license for the first offence and for a second offence an even stiffer fine plus revocation of the license. By stiff fine I mean a figure that'll make your mouth drop at how large it is.
Astin replying to a comment from hoc / February 18, 2014 at 03:52 pm
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The Wine Rack (and Vineyard stores) are owned by wine companies (Constellation and Andrew Peller respectively) and sell brands under their individual umbrellas. It just so happens they own a good chunk of the major Ontario wineries. The Government restricted the laws that allowed them to exist in 1987.

So an equivalent would be the independent brewers opening their own stores, which would be prohibitive for most of them, unless they could form coalitions of some sort, which then leads to... The Beer Store all over again.

My problem doesn't lie in TBS existing so much, as it being foreign-owned, thereby providing little economic benefit to Ontario. When it was Labatt, Molson, and other Canadian brewers that ran the joint, at least the money was staying in Canada. Now that those are just part of larger non-Canadian conglomerates (perhaps Molson has an argument here), it causes one to wonder why the Government still supports its existence.
Mike Brock / February 18, 2014 at 04:04 pm
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This article contains some factual inaccuracies. The biggest is that Alberta is a completely privatized liquor market. This is not true. The province has privatized retail. But it still has it's own provincial equivalent of the LCBO which maintains a wholesale monopoly which ALL retailers must order their supply from.

That's hardly completely privatized.
Liberty Villain / February 18, 2014 at 04:51 pm
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TBS should just extend the operating hours of their retail, and you'll see how fast support drops for the OCSA. That's all I want; the ability to buy beer legally outside of a bar, past midnight from a reputable retailer.
stopitman / February 18, 2014 at 05:37 pm
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Also remember that the Ontario Convenience Store Assoc. is mostly funded by tobacco companies and petro companies, so it's not like they're fighting for the little guy, but massive multi-national conglomerates.

TBS is owned by a bunch of foreign companies now anyways, but any study that says the province will make more money by privatizing the LCBO is spouting diarrhea from their mouth. There is no way the Treasury would make the amount it currently does off of tax + profit in taxes alone through privatisation. That being said, the LCBO does need to pull its act together, as it could be transferring more money to the treasury through some reorganisation and improved practises.
Mongo the Mongolian / February 18, 2014 at 05:47 pm
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Yes, extend the hours...then legalize marijuana. MCBO?? TMS? No...sell at convenience stores!
alanna s replying to a comment from christopoher / February 18, 2014 at 07:02 pm
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exactly this. The craft brewers of Ontario (at the very least) should be granted their own retail outlets - any political parties listening?!
I'm an enthusiastic beer drinker - thus, I haven't bought beer at the beer store in years because they have a terrible selection.
Ming The Merciless / February 18, 2014 at 07:21 pm
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A very good article on this subject from last year: http://www.nowtoronto.com/news/story.cfm?content=190599
ecoke4lyfe / February 18, 2014 at 07:50 pm
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I think a privately ran OCB beer store would probably help matter quite a bit- most of the OCB members seem to tout that solution over total deregulation. It's much more beneficial, however, to totally decentralize distribution over sales locations. It's no surprise that BC has many more microdistilleries, and Quebec has much higher rated breweries, when the government makes it easier for them to set up and distribute. In Quebec,rural breweries (think Brasserie Charlevoix) can distribute to whomever they like inside the province, meaning that a depanneur in Gatineau can easily purchase beer from a brewery in Baie-St-Paul, 8 hours away, as they deal directly with one another. This easy-access amongst breweries and customers allow them to tailor their beers to the people who want them... and the result has been some of the top-rated beers in Canada, and world-renowned breweries like Dieu du Ciel! and Trou du Diable.

Plus, this makes so, so many more jobs for Ontario than the major breweries. Craft breweries are almost by definition inefficient- they have drivers, brewers, machinists, marketing teams, and usually restaurant staff. The OCB claims they already employ more workers than the Big Three combined. Really, placing laws against beer distribution for the little guys does way more harm than good, especially in a province that's badly bleeding manufacturing jobs.
Gabe / February 18, 2014 at 10:16 pm
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Craft beers don't have the volume to support all ontatrio and all the drinkers of they did they'd be mass distributors and no longer craft beers.
Just allow beer sales at Walmart Grocery, Loblaws, Shoppers, Canadian Tire, 7eleven, Beckers, Hasty Market. All the chains. If you can find a chain you can find booze.
Mongo / February 18, 2014 at 10:17 pm
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I work in this space and am expecting big things from the industry in Q4.
tm / February 18, 2014 at 10:22 pm
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nice jurassic park reference.
Tim / February 18, 2014 at 11:46 pm
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Isn't it kind of (not) funny that society is a collective alcoholic?
Donald the beer lover the Beer Store hater / February 18, 2014 at 11:56 pm
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Simply, repeal the provincial legislation mandating the industry market share %age controlled retail consortium. Let the beer market develop its own retail solutions, whatever they may be, subject only to existing labour and trade legislation.

Let the free market decide. Who knows how it will develop. Let the Beer Store continue, let other breweries conjoin retail and marketing, let them sign deals with independent convenience stores, with large grocery stores similar to every other food and drinks manufacturer, let them sign creative marketing and sales deals with special organizations such as the CN tower, TIFF, ROM, season-licious, etc. Let them experiment, fail and succeed.

The problem isn't getting beer into convenience stores, the problem is the government mandating 1 retail sales model. Let the market decide, subject to other existing labour and liquor laws.
DonaldTheFuckNut / February 19, 2014 at 12:27 am
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GIMMIE DAS BEERS!
Henry / February 19, 2014 at 07:38 am
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I'd happily accept a small bump in the price of beer if it meant being able to pick up a few craft cans in my own neighbourhood. Like most people, I'm not buying beer in such large volume that a dollar or two will make any difference. I'm spending that in gas, wasted time and effort right now slugging the 10 blocks to my nearest LCBO.
Rick / February 19, 2014 at 08:32 am
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Total BS on the price increase if booze was to be sold in grocery/convienence stores. Just look at quebec..... 24 premium domestic (somtimes imported) beers less than $1 each ALL OVER THE PLACE.... How the hell would it be more expensive in the largest market in Canada?

Dont be fooled by the nonsense these idiots are trying to tell us.
Kdiddy / February 19, 2014 at 02:07 pm
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I'm calling BS on all of TBS's claims. They will say anything to protect their ridiculous monopoly.

Perhaps TBS will put some effort into providing a pleasurable retail experience if they actually had to work for people's business.

De-regulate and give the power back to the consumer.
Paul / February 19, 2014 at 05:32 pm
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I know it's not 100% relevant but it needs to be said... LCBO has a much better selection of good beer, I don't mind if this model were expanded a bit, just wish I didn't have to go to TBS to bring back empties.
dweezil replying to a comment from lister / February 20, 2014 at 08:55 pm
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many American states have blue laws that Alcohol sales remain restricted between the hours of 1 a.m. and 7 a.m. daily.
dweezil replying to a comment from lister / February 20, 2014 at 09:06 pm
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two words: Premier Gourmet. featuring over 1,500 varieties of craft beer, and Growlers too. if greater buffalo, with a population of 1.2 million, can support a beer store of this size, so can Toronto!
Shane / February 22, 2014 at 02:15 am
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If Sherbrooke Liquor in Edmonton can have over 1,000 different varieties in their walk in cooler, in middle of nowhere Edmonton, surely Toronto and smaller centers can manage private beer sales competition.

And no, prices aren't always higher in Alberta. Macro swill is higher priced but craft beer is similarly priced. Why bother with swill? Plus they have real sales and real discount beers for the price conscious set. (Like 24 Boxer Beer cans for $24)

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