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Industry NewsOntario unlocks alcohol retail market in a move to expand consumer choice

Ontario unlocks alcohol retail market in a move to expand consumer choice

The Retail Council of Canada is applauding the Ontario government’s decision to remove barriers allowing Ontarians to purchase beer, wine, cider, and seltzers at convenience stores.

The move would also allow the sale of alcohol in big box outlets, select gas stations, and an expanded network of supermarkets starting in 2026.

“Retail Council of Canada is pleased to see the government move to end the Master Framework Agreement with The Beer Store. That agreement placed choice, convenience, and price for customers subordinate to the profits of big multinational brewing conglomerates. By ending the MFA, Premier Ford is moving Ontario forward and opening choices for consumers; more grocery stores will soon sell a wider range of alcohol options, in all formats and sizes, and will have the option to introduce private label products,” Karl Littler, senior vice president of public affairs for the Retail Council of Canada, said in a statement.

‘We’ve got to start treating people like adults’: Premier Doug Ford

Hailed as “the largest expansion of consumer choice and convenience since the end of prohibition almost 100 years ago”, the decision to eliminate the MFA targets an election promise made by Ontario Premier Doug Ford in 2018, a statement reads. The MFA is a pact between the Ontario government and multinational conglomerates that own The Beer Store, which created a quasi-monopoly on beer distribution and sales.

Grocers and retail and convenience associations have long decried the Master Framework Agreement (MFA), stating that the MFA, enacted in the early 2000s, became outdated and failed to adapt to changing consumer preferences and market trends. It has also been labelled a barrier to modernizing the alcohol retailing sector.

In a press conference on Thursday (Dec. 14), Premier Ford said, “We’ve got to start treating people like adults here in the province.

“Folks, we all have busy lives, so just imagine that on a Friday night in December, instead of being stuck in a long lineup at the LCBO, you’ll be able to pop into your local convenience store before heading out to the holiday party,” he added.

This is the second time the premier has attempted to make this move, according to the CBC. The MFA, extended in 2015 by the previous Liberal government, will expire at the end of 2025.

Expansion allows private retailers to set prices

The Ministry of Finance projects that approximately 8,500 new locations will offer low-alcohol products, positioning Ontario as the third-highest province in alcohol retail store density, trailing only Newfoundland, Labrador, and Quebec. Ontario is set to become the second province, following Quebec, to allow beer sales in corner stores and the first to introduce ready-to-drink cocktails in these locations.

Private retailers can now establish their own prices for beer, cider, and ready-to-drink seltzers without any restrictions on pack sizes, eliminating the prior obligation to adhere to pricing set by the LCBO. Smaller Ontario craft breweries and wineries will also have the option to distribute their products through alternative channels.

Meanwhile, The Beer Store will remain the primary beer distributor to retailer outlets, bars, and restaurants until at least 2031, facilitating a smooth transition to the new regulations, a statement reads.

Moreover, The Beer Store will continue to manage the province’s recycling program for alcoholic beverage containers during this period. Recently, the beer retailer announced $100 million in investments for future projects, including a new, state-of-the-art distribution centre in Bolton, Ont. It also has third-party platform delivery partnerships with Skip the Dishes and others, a statement reads.

“The agreement acknowledges the important role The Beer Store plays in the responsible sale of beer and ensures it will be able to continue its environmental stewardship for years to come through its recycling program and the Ontario Deposit Return Program,” the Beer Store said in a statement.

Provincial opposition parties also chimed in. MPP Jamie West, the NDP’s labour critic, said in a release: “With the jobs of thousands of unionized workers on the line, we need to ensure the transition is done in a way that doesn’t leave anyone behind.”

Ontario craft brewers can distribute beyond The Beer Store, LCBO

To support local Ontario producers, the province will extend existing shelf space requirements for craft beer (20 per cent) and Ontario wines and ciders (40 per cent) to all new retail locations. Additionally, forthcoming legislation aims to eliminate the 6.1 per cent tax at on-site winery retail shops.

However, the Retail Council of Canada says past analysis by the Ontario Craft Brewers reported that craft beer only makes up approximately two per cent of The Beer Store’s sales. By contrast, craft beer can represent 20 to 40 per cent of category sales in grocery stores, depending on the grocery banner.

“Restricting a retailer’s ability to sell private labels eliminates an important source of market pressure on branded vendors to ensure they are price-competitive, particularly where negotiation between retailers and manufacturers is prohibited,” a statement reads.

Despite these changes, the government is assuring a minimum price for alcoholic products to preserve standards for responsible consumption. The province is also increasing funding for social responsibility initiatives to address concerns from provincial safety groups.

It has committed $10 million over five years after the Ontario Public Health Association raised concerns about the potential adverse health implications of expanding alcohol sales, according to a statement.

Opposition to Ontario’s decision to eliminate MFA comes months ahead of upcoming labour negotiations

The Ontario Public Service Employees Union (OPSEU), which represents the LCBO, says the plan to scrap the cap will have spillover consequences.

“The government’s plan will impact the LCBO; it will mean cuts, layoffs, and store closures as the private market takes over, undercuts the public model, and eventually raises prices — and profits,” said OPSEU president J.P. Hornick. “The end goal is clear: turn valuable public revenues into private profits. Period.”

OPSEU says the LCBO generates $2.5 billion annually in revenues that go directly back into the public coffers to pay for hospital services, schools, and other services. In a statement released Thursday (Dec. 11) in response to the move, the union says the announced plan threatens the future of the LCBO as it opens the floodgate to big box grocers and gas stations to sell beer, wine, cider, and pre-mixed, “ready to drink” cocktails.

“Doug Ford’s intentions for Ontario’s $10 billion alcohol retail and distribution system can’t be trusted,” Colleen MacLeod, chair of OPSEU/SEFPO’s Liquor Board Employees Division (LBED), said in a statement. “Scrapping the MFA will mean fewer public revenues and decent jobs, and more minimum wage, contract gigs with no access to a pension or benefits. This will hit hard, especially in northern and rural communities.”

LCBO workers, whose collective agreement expires on March 31, 2024, are heading into bargaining next year and intend to fight against Ford’s privatization plans.

“We’re in a cost-of-living crisis; the workers deserve better, and Ontarians deserve better, not the grocery tycoons or 7-Elevens,” added MacLeod.

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