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Doing away with Ontario’s Beer Store ‘cartel’ could help province’s coffers: study

Convenience stores slam Beer Store ads showing kids buying alcohol

Ontario’s closed-door approach to the sale of beer has been called into question by an Ontario economics professor, who says the province’s Beer Store retailer acts like a “cartel” and allowing the sale of alcohol at convenience stores would help the province’s bottom line.

Anindya Sen, an associate professor of economics at the University of Waterloo, suggests the higher prices at Ontario's Beer Store "near-monopoly" secures the company $700 million in incremental profits.

His study suggests that the average pre-tax cost for a 24 Pack of beer was $25.95 in Quebec, where beer can be sold at convenience and grocery stores, and $35.56 in Ontario.

“Beer prices are an average of $9.50 per case or 27 percent higher in Ontario versus Quebec," Sen said in a statement.

[ Related: Beer Store profits $700M yearly from near monopoly, study finds ]

"These findings aren't necessarily an argument to reduce beer prices, as there are arguments that higher prices play an important social policy role. But it raises the important question of whether through modernizing retailing the Ontario government could be benefitting more - and capturing more revenue - particularly in a period of large government deficits."

Such a change in the province's liquor sales regulations sure would benefit the Ontario Convenience Stores Association, which commissioned the study. Mac's Convenience Stores said earlier this summer that it would create 1,600 full-time jobs if it were allowed to sell beer and liquor. The OCSA says the province needs to have a serious discussion about the province's alcohol retailing system.

The Beer Store 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.

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The company is spoiling for a fight, accusing the professor of using faulty numbering.

A spokesman told Postmedia News that Sen's study focused on two grocery store chains, and did not include details from Quebec convenience stores, where prices tend to be higher.

An Ipsos-Reid study conducted on behalf of The Beer Store in June suggested Ontarians pay less for beer than private stores in British Columbia and Alberta, and pay similar average prices to those in Quebec.

According to the study, a 24 Pack of beer sells for $46.40 in B.C., $43.13 in Alberta and $31.59 in Quebec grocery stores. At Ontario Beer Stores, the same 24 Pack sells for $32.08.

The Beer Store claims its prices hold up after all options are "normalized to Ontario's tax rule."

Under that scenario, the costs are:

  • B.C.: $45.58

  • Alberta: $46.57

  • Quebec: $35.68

  • Ontario: $32.08.

The study further found that most people believe the price of beer would either stay the same (34 per cent) or decrease (30 per cent), while suggesting prices would, in fact, increase.

The debate comes down to what is more benefitial for government coffers. The province is facing an $11-billion deficit, so if a more open beer-sale policy would bring extra money their way, they would probably consider it.

"It's prudent for us to always view opportunities should they be of net benefit to the province," Finance Minister Charles Sousa said on the debate in June.

And that is definitely not a no.