In Ontario, debate continues over liquor sales at the grocery store


Ontario’s decision to allow alcohol sales in some grocery stores may be the first step to loosening that province’s tight retail liquor laws.

But in the short-term, few Ontarians will notice, let alone benefit, from the decision. And by this time next year, only a handful of supermarkets will likely have liquor for sale.

As announced New Year’s Eve by Finance Minister Dwight Duncan, the government’s liquor arm, the Liquor Control Board of Ontario, is being given the green light to open 10 LCBO Express stores inside supermarkets.

Express outlets will be true store-within-a-store operations. They’ll be run separate from the supermarket by LCBO staff and will maintain LCBO hours of business, the agency’s media relations co-ordinatior, Heather MacGregor, said. If a supermarket is normally open until midnight, the Express store would close earlier, likely around 9 or 10 p.m.

Grocery shoppers won’t buy liquor directly from the supermarket either. They’ll take alcohol purchases to the LCBO cashier, not to the grocery checkout. Few other details have been made available yet.

Scott Blodgett, spokesperson for the finance ministry, said no decision has been made as to the ideal size of LCBO Express stores and in which towns, and in which supermarkets they’ll be located.

Those decisions will depend on a procurement and analysis process, he said, which is yet to be carried out.

Blodgett did say the province intends to situate Express stores in areas where demand is growing but where there is no stand-alone LCBO store nearby.

A neighbourhood that might fit that description, he surmised, would be a large suburban tract where new houses have recently been built, with a grocery store already open, but no liquor store.

Likely the government will issue a request for proposal from supermarkets wanting to host one of the 10 Express stores, though no details have been issued.

Ontario is following in the footsteps of Manitoba, which announced in May 2011 that it was going to open up to 10 provincial-run Liquor Mart Express stores–half of those in grocery stores–as part of a strategy to make beer, wine and spirits available in underserved areas.

To date, however, only two stores have opened: one at the Winnipeg airport and another in a Safeway store, also in Winnipeg, this past December.

The Safeway Liquor Mart is 755 square feet and stocks 440 of the Manitoba Liquor Control Commission’s most popular SKUs. It’s located near one of the store’s entrances and beside the customer service counter. The space was formerly occupied by a bank, according to Manitoba Liquor Control Commission spokesperson Susan Harrison.

Harrison said the relationship between the Liquor Mart and Safeway is a landlord-type deal. The MLCC rents the space from Canada Safeway. The supermarket chain does not get a cut of alcohol sales or profits.

The hours of operation of the Liquor Mart are 10 a.m. to 10 p.m. Monday to Saturday and noon to 6 p.m. on Sunday.

A third Liquor Mart Express is to open in Brandon, Man., this year, as part of the plan the Manitoba government has called a pilot project.

Blodgett stopped short of calling the Ontario government’s program a pilot. “We’re convinced it’s going to work,” he said.

Not everyone, however, believes Ontario is doing enough to update its retail liquor laws. With several exceptions, those laws limit beer sales to Beer Store outlets, run by the major brewers, and wine spirits, as well as beer, to the province-owned LCBO stores.

The opposition Progressive Conservatives want more private sector sales allowed, especially in convenience stores.

“What the government has done is just a band-aid solution,” said Dave Bryans, CEO of the Ontario Convenience Stores Association, which is also pushing for beer and wine in corner stores.

He points out that opening 10 liquor stores in the suburbs of cities like Toronto does nothing to help consumers living in rural areas, where picking up a bottle of wine or six-pack of beer can involve a lengthy drive.

Bryans’s association released a petition in July with 112,500 signatures gathered across the province supporting the idea of a broader retail availability of beer and wine.

Supporters of Ontario’s current retail liquor laws say they help fund essential services, since profits from the LCBO’s stores go into provincial coffers.

But Bryans said allowing private retailers to sell booze would spur economic activity. There would be more investment in convenience store construction and stores would need to staff up.

As an example he cited a $2.5-million Mac’s convenience store built in rural Thamesford, Ont. The store is licensed to sell beer, wine and spirits through the LCBO’s agency arrangement–a setup whereby retailers in remote areas, far from provincial liquor stores, hold a licence to sell liquor.

Bryans said the store was the first ground-up LCBO agency store built in Ontario in years. Normally, he said, retailers don’t invest much in agency stores because the LCBO licences are only good for a few years. “So it can be tough to recoup the capital,” he said. (There are some 214 agency stores across Ontario but they represent only a small part–2.1 per cent–of the LCBO’s total retail sales.)

Bryans added that when corner stores are allowed to sell beer and wine, sales of other items, such as lottery tickets and snacks, go up 30 to 50 per cent.

A recent FMI study in the U.S. also found a boost for sales when wine specifically is allowed to be sold in supermarkets and other food stores. Using Infoscan data, it found that consumers tend to buy more food when they shop for wine at grocery stores, leading to incremental sales of about $20 beyond the cost of the wine bought.

Between two per cent and 12 per cent of total food store revenue in the U.S. is derived from wine. The FMI study was put together to help push more American states to allow grocers to sell wine. Currently 33 states allow them to do so.

Neil Kudrinko, owner of Kudrinko’s grocery store in Wesport, Ont., estimates that if he were allowed to sell beer and wine he would probably need to expand his business by about 5,000 square feet–with 2,000 sq. ft. devoted to liquor and 3,000 sq. ft. to additional food items.

“Not every grocer wants to sell beer and wine, but it should be our right,” Kudrinko said, calling the province’s LCBO Express stores a solution that “tries to make everyone happy but ends up making no one happy.”

In particular, he said, it won’t help consumers in rural areas like his, where the LCBO store doesn’t stock nearly the selection that it does in big-city stores. Kudrinko’s store is located not far from the wine-producing region of Prince Edward County, but he said his local LCBO doesn’t carry many of those varieties, nor many local craft beers.

Grocery stores, he argues, excel at giving their customers wide selection and local foods and they would do the same with beer and wine.

“The consumer would be better served and vintners and microbrewers would be better served if allowed private retailers to buy the SKUs that customers want and do what they do best, which is understand and serve customers.”

The provincial government has made the opposite argument if beer and wine were sold in corner stores–that choice would disappear.

“That will destroy our wine industry because they won’t stock in corner stores VQA products and things like that. They’ll just jam in the highest volume things, which inevitably will hurt not only our wine industry but our craft beer industry,” Duncan, the finance minister said.

Yet the LCBO’s stranglehold on liquor could be coming to an end. Bryans said his Ontario Convenience Store Association intends to step up its campaign to allow beer and wine sales in corner stores.

Ontario’s premier, Dalton McGuinty, meanwhile is resigning, with a leadership race to replace him underway. The Liberals barely won the last election and only hold a minority in the Legislature. If the Conservatives win the next election, retail liquor laws might presumably be overhauled.

Bryans, for one, is counting on it. “I think we’re closer than we’ve ever been. I expect to see changes made in the next two to three years.”

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