Canada: Ontario should allow grocers to bid for the right to carry beer

Ontario should get out of the booze-selling business by allowing grocery stores to bid for the right to carry beer, wine and spirits, The Canadian Press cited on July 18 a report calling for sweeping changes to the monopolistic way alcohol is sold in the province.

But recommendations to auction off the Liquor Control Board of Ontario and its licences to sell alcohol - as well as open up competition against The Beer Store locations run by giant breweries - were immediately quashed by Finance Minister Greg Sorbara.

"It's our strong view that the public is best served by the continued ownership of the LCBO," Sorbara told reporters Monday in "ruling out entirely a major recommendation" of the four-member panel's report.

The Beverage Alcohol System Review said its plan would allow the province to keep collecting more than $1.5 billion a year in alcohol tax, product licence fees and other revenue streams. But it would also get $200 million or more annually by selling private sector licences to sell alcohol, "enough revenue to build a 300-bed hospital each and every year," said John Lacey, a former LCBO director who chaired the study. Sorbara called the estimated $200 million a year "at best, speculative."

The review, ordered by Sorbara in January, essentially calls for a break-up of the province's interests in roughly 600 LCBO locations - representing nearly half of Ontario's alcohol retailers - by putting the assets of those locations and their licences to sell alcohol up for auction.

It would be up to Brewers Retail, owned by beer giants Molson, Labatt and Sleeman, and wineries, mostly controlled by Vincor and Andres, to decide whether they would want to put any of their outlets up for auction. They could decide to keep all of their locations for at least a 10-year term, after which they would have to bid again for their licences.

For consumers, the recommendations would see a current LCBO outlet sell 2-4s of beer, and current beer stores sell more than just beer and coolers - in fact, any type of alcohol they wanted, Lacey said.

Additionally, large retailers like Loblaws or Wal-Mart could bid for the right to sell alcohol, as long as products were sold in "walled-off" areas with separate entrances and cash registers - in other words, not next to a dairy or meat counter inside a superstore.

Quebec and Newfoundland allow beer sales in grocery or corner stores, as do most U.S. jurisdictions.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .