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Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.

 

Ontario to allow beer sold in grocery stores

Friday, April 17, 2015 > 10:12:49
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(Canadian Grocer)

Beer to be sold in 450 grocery stores across the province

Ontario’s “biggest shakeup’” to beer sales since it repealed prohibition in 1927 will allow beer to be sold in hundreds of grocery stores, said Premier Kathleen Wynne on Thursday. There will also be a new tax on the beverage.

Ontario will allow beer to be sold in 450 grocery stores, and will start a pilot project to sell 12-packs of beer in 10 Liquor Control Board stores, which could expand to about 60 LCBO stores.

Modernizing beer sales was recommended by a government-appointed panel, headed by former TD Bank CEO Ed Clark, which also examined Crown assets such as the LCBO, Hydro One and Ontario Power Generation to find ways to squeeze out the maximum value to help fund the Liberals’ infrastructure plans.

“When it comes to the sale of beer in Ontario, I’m here to announce that the status quo is over and that the days of monopoly are done,” Wynne said as she released a report by a panel she appointed to look at liquor sales and Crown assets.

The new tax–approximately 25 cents on a case of 24–will be phased in over four years, and the government predicts it will raise $100 million annually by 2019.

The government’s revised agreement with the foreign-owned Beer Store–which holds a near monopoly on beer sales in Ontario–includes a pledge by major brewers to cap prices on their most popular brands, which represent about 50 per cent of the market, until May 2017.

“One thing we do not want to see changed is our commitment to affordable prices,” said Wynne.

Not everyone agrees with Wynne’s approach. The Ontario Convenience Stores Association expressed its disappointment with the recommendations, noting enabling only large grocery stores to retail beer would radically tip the balance in a competitive marketplace.

“Large convenience stores are in fierce competition with grocery stores–especially in urban centres,” explained David Bryans, CEO of the OCSA, in a release. “One needs to look no further than grocery stores opening small convenience-oriented stores and purchasing smaller competitors to see this happening. I am disappointed that the Clark panel did not adequately consider the tough competition that exists between convenience stores and grocery stores… We have concerns that this plan would give a few dominant corporations an unfair advantage over their competitors.”

The Ontario Public Service Employees Union also released a statement saying the report displays “profound ignorance of the relationship between alcohol, society, and government budgets.”

“‘Drink more beer’ is bad social policy that will cause direct harm to Ontarians and their families, and on top of that, government will actually lose money as alcohol sales expand,” said Warren Thomas, president of the OPSEU.

The government is still examining how to modernize the sale of wine and spirits, including expanding its retail presence.

Details from the panel’s report:

— Grocers can begin selling beer by Christmas, with up to 150 outlets in operation before May 1, 2017

— Retailers can only sell six-packs or single beers

— The beer will be wholesaled to the stores by the LCBO, and must be sold in separated areas that keep the same hours as The Beer Store

— The government is still finalizing how it will distribute the new licences to sell beer. Licences will be granted based on how to best meet demand, ensure fair competition and distribution, and serve communities across the province while still meeting the principles of social responsibility

— All kinds of beer will be sold in grocery stores and craft beer will receive new shelf space and promotion in Beer Store outlets.


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