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In letting some grocers sell beer, is Ontario picking winners, losers?

Sale of wine and beer in grocery stores said to be a main plank of the next provincial budget

The Ontario government’s plans to liberalize booze rules by allowing “hundreds of large supermarkets” to sell beer and wine, as reported by the Toronto Star, will give an unfair advantage to megastores and hurt small grocers, especially in rural areas, says the head of the Ontario Convenience Store Association.

Dave Bryans, the association's CEO, said 75 per cent of the province’s population wants to buy “cold beer on a hot summer day at their local convenience store” and government plans will siphon more traffic away from local stores, especially in rural areas.

The Star says "potentially hundreds" of Ontario's larger supermarkets will be allowed to sell beer and up to 200 could be licensed to sell wine, a long-awaited policy shift that will end the 448-outlet Beer Store’s monopoly in the province on beer and government-owned LCBO stores control of the wine trade.

The sale of wine and craft beer as well as national brands in supermarkets is said to be a main plank of the next Liberal government budget expected in a few weeks.

“We’re disappointed,” said Bryans, whose association represents 7,500 convenience stores in Ontario. “We’ve done all the heavy lifting on this file, met with everyone in government.”

He added that the big grocery chains will “be the winners” from Ontario’s decision.

Independent grocers have also expressed concern. They worry that only the largest grocery chains will be allowed to sell beer and wine.

Tom Barlow, president and CEO of the Canadian Federation of Independent Grocers, said in a statement that while his group applauds the liberalization of sales, “any measure that through arbitrary size restrictions or prohibitive licensing fees would, in reality, exclude smaller size grocery stores from having an equal opportunity to sell beer and wine.”

Giving only larger supermarkets the ability to sell beer and wine “would put the government in the position of picking winners and losers in the grocery industry. That is not the role for government," Barlow said.

He noted that consolidation and acquisition have already made it difficult for independent stores to compete with large supermarkets. He added that the federation will be meeting with the government’s advisory council later this month to press its case.

The convenience store association’s Bryans said c-stores feel slighted by the government’s plans because they sell $2.2 billion worth of lottery tickets as well as collect the bulk of the tobacco taxes from the sale of cigarettes, but will be left out of what could be a bonanza in beer and wine sales, now worth $5 billion a year, says the Star.

The newspaper says Premier Kathleen Wynne put the kibosh on sales in c-stores, citing difficulty of distribution and “questions of social responsibility.”

In Quebec, c-stores flourished thanks to a monopoly on beer sales for decades. Once supermarkets were allowed to sell beer and wine, many small neighbourbood stores closed.

In Ontario, The Beer Store, owned by a triumvirate of three brewers–Anheuser-Busch InBev, Molson Coors and Sapporo Breweries–will be asked to start paying a franchise fee, says the report, that could be as high as $100 million a year.

The Beer Store now has 80 per cent of the beer market. The LCBO also sells beer, but in less popular six-packs.

Economic Development Minister Brad Duguid told The Star the government is awaiting final recommendations from former TD Bank chair Ed Clark’s advisory council on government assets to determine how to improve beer and wine distribution.

“The demands of customers are growing in retail, the expectations are growing,” the minister was quoted as saying. “This does provide an opportunity for the government to provide Ontarians with a better retail experience.”

According to Retail Council of Canada vice-president David Wilkes, grocery executives were called in by the government's panel to discuss selling beer in supermarkets.

In a release Friday, Ontario Craft Brewers said “improved access for Ontario Craft Beer will accelerate our job creation ability and solidify the establishment of craft breweries across the province.”

It quotes Cam Heaps, co-founder of Steam Whistle Brewing and chair of Ontario Craft Brewers, stating, “A key aspect for craft brewers is that any new access, whatever form it takes, is affordable and that it does not allow large players to purchase all of the shelf space. Shelf space fees are illegal in many U.S. states for that very reason.”

A spokesperson for the LCBO, which runs 639 retailers and supplies another 217 rural outlets, said the government had yet to make any final decisions.

It is believed that spirits will still only be sold in government-owned LCBO stores.

The Star’s report says the government has shifted from its stance of simply increasing revenues by expanding retailing options to advocating for consumer convenience and greater support for domestic producers.

There has been no word yet on whether retailers would have to purchase products from the LCBO or could buy directly from brewers.

A request for information from the Minister of Finance has not yet been answered.

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