Ontario’s small grocers push back on recycling requirements to sell alcohol
Ontario independent grocers are pushing back against a stipulation that they must accept container returns as part of their licence to sell beverage alcohol. They argue the accepting, sorting and cleaning of empties would be “a huge cost centre,” jeopardize food safety and take up precious real estate, putting them at significant competitive disadvantage versus larger chain stores.
The new rule was introduced by the LCBO as part of the expansion of its Ontario Deposit Return Program (ODRP). Started in 2007 and managed by The Beer Store (TBS), ODRP has facilitated the return of over five billion containers and diverted almost 88 tonnes of waste.
In addition to accepting dirty bottles, grocers would be required—as outlined in a video, “Introduction to ODRP,” emailed by the LCBO—to clean and sort the empties by category (clear gas, coloured glass, refillable containers, etc.). Pickup of the containers would be coordinated with TBS. The latter receives 16 cents per container and the grocer receives two cents.
Licensed grocery stores located more than five kilometres from a Beer Store have been required to participate in ODRP since Oct. 31. Remaining grocers within that five kilometre radius will be required to participate starting Jan. 1, 2026.
The Canadian Federation of Independent Grocers (CFIG) has asked the Competition Bureau of Canada to investigate the province’s alcohol modernization plan, writing in a letter: “Measures in the plan erect barriers to entry for Ontario’s independent grocers that otherwise would wish to apply for licences to sell these products.”
As evidence of “extremely prescriptive measures around recycling requirements,” the CFIG notes only 5.7% of grocers in Ontario have applied for licences to sell beer, wine, cider and ready-to-drink products.
As of Nov. 11, the Alcohol and Gaming Commission of Ontario has approved 419 Grocery Store Licences (GSL) in Ontario. This number is in addition to the 450 grocery stores that had an existing beer and wine or beer and cider grocery store licence, as the AGCO automatically transitioned these licences to the new GSL category on Aug. 1.
A big bone of contention with licensed independents taking empties is the lack of available retail footprint to make it work, not to mention the extra staff they would have to hire.
“Most of us aren’t in giant commercial plazas, but strip malls and along main streets. Most of us don’t have standalone buildings. Our square footage is relatively small,” says Giancarlo Trimarchi, owner of Vince’s Market. “We’re between 8,000 to 15,000 or 20,000 square feet—not 60,000 or 70,000 square feet like most Sobeys or Metro locations.”
Of its four stores on the outskirts of Toronto, three—in Newmarket, East Gwillimbury and Uxbridge—are licensed to sell beverage alcohol. As the locations are within five kilometres of a Beer Store, Trimarchi has until Jan. 1, 2026 to comply. (A fourth store, in Tottenham, has a restrictive covenant against selling beverage alcohol because it’s in a plaza with a Beer Store and LCBO.)
“We don’t have large entrances with cart corrals. Walk through the front doors of all three of those stores, and within 10 feet you’re at the fresh food displays,” adds Trimarchi. “And my backrooms are about 4% to 8% of my overall square footage. There’s no space to stack and organize empties by container type next to all the fresh food in the back.”
“Every inch is really valuable for independents,” underscores Trimarchi. “The allocation of space is a very different thing for a large chain store versus a small one. We’re being forced to dilute our existing square footage on a much larger scale and overall per cent than competitors.”
He sees only one option: an automated reverse vending machine system, which would have to be set up in the parking lot. “But that’s going to cost a ton of money. That would create a huge cost centre,” says Trimarchi, noting margins on beverage alcohol are slim without adding more expense. “And so, the only way I am going to be able to do it and stay in business is to raise prices on food, just as inflation has been easing for customers.”
Trimarchi recently provided store tours to York-Simcoe MPP Caroline Mulroney and Newmarket-Auror MPP Dawn Gallagher Murphy, showing them what it would look like for Vine’s Market to accept returns. Ontario’s Minister of Finance Peter Bethlenfalvy, MPP for Pickering-Uxbridge, is visiting a Vine’s Market later this week.
READ: Ontario grocers wary of new recycling rules with alcohol sales
“We've been selling beverage alcohol at our three licensed stores dating before this modernization strategy. We knew what we were getting ourselves into—and it didn’t include deposits,” he adds. “We made investments in new shelving and gave up space for alcohol to build this business with customers who have come to expect it in our stores. If we knew we needed to do this before we applied for a licence, it would be a totally different conversation. I’d be asking myself, ‘Do I even want to get into this?’ rather than the spot we’re in now.”
Independent grocers who signed a 10-year contract with the LCBO to sell beer, wine and cider have also been told their contracts will no longer be honoured once the requirement kicks in.
La Mantia's Country Market in Lindsay, Ont., which is within five kilometres of a Beer Store, has a contract with the LCBO, which expires on Sept. 12, 2029. It says nothing about accepting empties. “The contract was in a form prepared by the LCBO legal department. The fact that it does not now suit their future plans is not our issue,” says LA Mantia Country Market owner David La Mantia. “We continue to take the position that the contract does not obligate us to accept deposit returns.”
“Before all this recycling stuff came up, as the category grew, I was looking at adding another cooler for beverage alcohol. But I am not going to invest any more money in a category I might not even be in,” says La Mantia, explaining he has no area in the store for drop-offs and limited check-out lanes.
It also frustrates him that the province paid out millions of dollars to break its Master Framework Agreement with The Beer Store, whose owners are multinational brewing conglomerates but won’t honour the contract with an independent. “They basically rolled out the dollar train for the foreign-owned Beer Store to get out of a contract that was going to expire in less than a year,” says La Mantia.
