Beer Store Controversy

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

The 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.


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