Advertisement

Ontario’s Beer Store research warns of costlier booze under open market

Convenience stores slam Beer Store ads showing kids buying alcohol

Ontario's closed-door approach to selling beer and alcohol is saving people money, unfairly restricting access or both, depending on what set of research you are reading at the time.

As the debate over privatizing liquor sales in Ontario continues to circle around the political sphere, the Beer Store, a privately-owned company currently tasked with selling brew across the province, is warning the public that such a change would mean higher prices.

A new study suggests that Ontario beer prices would increase if the government deregulates the industry. The research paper, commissioned by the Beer Store, concludes that allowing beer to be sold in convenience stores could bump the average cost up by $10 for a case of 24 bottles.

According to the study, the evidence is "overwhelmingly clear" that deregulation of liquor stores in Alberta and B.C. results in higher costs to consumers, not price decreases.

"Current average Beer Store prices are over $10 less per case than those of private retailers in Alberta or B.C.," the study states, hinting that Ontario prices would be similar under similar circumstances.

The claim is the latest volley in a brewing battle between the Beer Store outlet and the Ontario Convenience Store Association (OCSA), part of a tug-of-war over whether the province would benefit from allowing more access to beer.

[ Related: Jim Flaherty targets youth joblessness, price gaps in budget ]

In Ontario, liquor sales are restricted to the provincially-operated LCBO. Beer sales, however, have been commissioned out to the Beer Store, which runs some 450 stores across the province and is owned by Anheuser-Busch InBev of Belgium; Molson Coors Brewing Company of the United States; and, Sapporo of Japan.

The LCBO also currently allows the sale of alcohol in 219 rural convenience stores, although those stores account for only about three per cent of total sales.

The issue has been a hot potato at Queen’s Park for years. Progressive Conservative Leader Tim Hudak has said he would privatize liquor sales if his party comes to power. Liberal Premier Kathleen Wynne has stood behind the current model, though there has been some movement to improve access to wine and craft beer.

Global News reported in December that Canada’s Competition Bureau is reviewing the Beer Store’s position in the market. Sources told the network the investigation could bode well for Ontario convenience stores.

[ More Brew: ‘Embarrassed’ Rob Ford admits he lied about drug history on YouTube show ]

The OCSA has been rallying for increasing accessibility of beer by allowing private retailers like convenience stores to compete against the Beer Store. An Angus Reid opinion poll published in December found that 69 per cent of Ontarians want the government to open up the market.

Also last year, the OCSA commissioned a study that determined that the Beer Store was positioned as a "near-monopoly" and that opening up the sale of beer would help the province's bottom line. The study also suggested that Ontario's protected sales market was linked to the price of beer, suggesting Ontario prices were 27 per cent higher than Quebec, where beer is available through convenience stores.

Much of those claims were repeated in a list of myths, released on Monday in response to the Beer Store’s report.

“Competition to The Beer Store is not about prices – markets will determine those – and the Province sets minimum prices,” the release states, regarding product pricing. “It’s about what consumers want – more convenience and choice. When asked by Angus Reid, 50% of Ontarians said convenience was the biggest benefit from convenience stores selling alcohol. Only 15% said price was a factor.”

Preceding all of this was a separate study commissioned by the Beer Store last year that suggested Ontario would see a price increase under "alternate retailing models," specifically privatization. The study claimed that Ontario prices were actually lower that Quebec (again, used as a reference) after considering Quebec's lower provincial taxes.

The war over accessibility to the beer market is being played out on other topics as well, many of which come down to a "he said, she said" stalemate – both sides cite evidence that they are better suited to keep booze away from underage customers, for example.

But where this tug-of-war will be won on prices and accessibility. And the fight is not over yet.

Want to know what news is brewing in Canada?
Follow @MRCoutts on Twitter