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Convenience industry welcomes Ontario’s plan to end Beer Store deal

Photo: Canadian Press

Photo: Canadian Press

Ontario plans to rip up an agreement with The Beer Store in order to allow the sale of beer and wine in corner stores, but the retailer has already signalled it will fight the move in the courts. Meanwhile, convenience store associations and their members are welcoming the announcement.

The Progressive Conservatives tabled legislation Monday that would terminate a 10-year contract with The Beer Store that was signed by the previous Liberal government. The deal permitted an expansion of beer and wine sales to hundreds of grocery stores.

Premier Doug Ford has repeatedly indicated he plans to broaden the sale of beer and wine to corner stores, but he has to break that agreement signed with Beer Store co-owners Molson, Labatt and Sleeman to do so. In explaining Monday’s move, Finance Minister Vic Fedeli said the current system is a monopoly that is a bad deal for consumers and businesses.

“The province’s current beer distribution system is owned by three global giants who were handed a sweetheart deal by the previous government, and who are more interested in protecting profits than providing convenience or choice for average people,” Fedeli said.

Scrapping the deal could trigger steep financial penalties, but the legislation contains provisions to nullify any such costs.

The Beer Store, however, suggested it was not willing to accept voiding any financial claims, saying it will fight the legislation through the courts.

“The government cannot extinguish our right to damages as outlined in the Master Framework Agreement,” president Ted Moroz said in a statement.

“It is critical to understand that The Beer Store has, in good faith, based on a legally negotiated 10-year operating agreement with the province of Ontario, invested more than $100 million to modernize its stores and to continue to upgrade the consumer experience.”

The Beer Store’s lawyers sent a letter to the attorney general, saying they reserve the right to start litigation challenging the bill and seek compensation.

“The bill is unconstitutional and constitutes misfeasance in public office by certain ministers and officials involved,” they write.

When the brewers signed the deal in 2015 they also agreed to spend approximately $100 million on capital investments in Beer Store locations, to freeze prices on most Labatt and Molson products for a year and were required to give more shelf space to small brewers.

The deal also allowed the Beer Store to keep the exclusive right to sell 24-packs and most 12-packs in the province, while grocery stores would only carry six-packs. The agreement also opened up ownership of The Beer Store to smaller breweries.

NDP finance critic Sandy Shaw said ripping up the deal sends a signal to businesses that government agreements are not worth the paper they’re written on.

The Beer Store and its union have been embarking on a public relations campaign to push back against having beer in corner stores, with the brewers taking out an ad saying they keep prices down with their distribution system, and the union taking out ads warning that cancelling the Beer Store’s deal could hit taxpayers hard.

The United Food and Commercial Workers local representing Beer Store employees said Monday that the government’s decision could cost thousands of jobs.

“We will fight this government and this premier to keep our jobs and to save the taxpayers the billions Ford is willing to pay to put beer in corner stores,” president John Nock said in a statement.

On Friday, the province’s special adviser on alcohol delivered a report to Fedeli on ways to improve consumer choice and convenience.

Asked about the short turnaround time between the report being completed and the legislation being tabled, Fedeli said he had always been working on all options.

The Tories have also announced a number of loosened alcohol restrictions, including allowing alcohol to be served at 9 a.m., seven days a week, letting people consume booze in parks, and legalizing tailgating parties near sports events.

Interim Liberal Leader John Fraser said the government has an obsession with alcohol.

“There’s six more years left on this deal,” he said. “What’s the hurry? Why not negotiate a transition to get to where you want to? There’s a whole bunch of things that are way more important in Ontario right now than beer and wine in corner stores.”

The Canadian Federation of Independent Business and Retail Council of Canada applauded the legislation.

The Ontario Convenience Stores Association released a statement saying it “supports the Ford government’s work to allow convenience stores to support Ontario craft brewers and wineries, create jobs and deliver more choice and convenience to customers.”

The group believes the Bringing Choice and Fairness to the People Act is also a step towards job creation in communities across the province, even in areas where it may otherwise be challenging to attract new businesses.

“We are keen to play a role in helping the Government increase revenues, create jobs and offer consumers more convenience,” said OSCA CEO Dave Bryans. “We’re ready to provide new retailing space for Ontario craft brewers and wineries to showcase their products in their communities, while continuing to be responsible retailers.”

The Convenience Industry Council of Canada (CICC), which represents Ontario’s 7,500 convenience stores and the distributors that service them, including banners like Circle K, Petro Canada, Canadian Tire, 7 Eleven, Parkland, and MacEwen, also welcomes new provincial legislation that seeks to expand the sale of beer and wine in corner stores.

“The Convenience Industry Council of Canada (CICC) supports the Ford government’s decision to bring Ontario’s beverage alcohol policies into the 21st century,” said CICC president and CEO Anne Kothawala. “As the only organization representing all aspects of the convenience store supply chain from manufacturer to sale, I can attest to the excitement felt by all of our members who are working to make expanded beverage alcohol sales a reality.”

A survey conducted by Abacus Data in early April found that 73% of Ontarians who regularly consume beverage alcohol support the expansion of beverage alcohol in convenience stores. Additionally, 64%t of those surveyed say the convenience of alcohol close to home is important.

“Our industry has a strong track record in the sale of age restricted products, from lottery to tobacco and we have drawn on lessons learned from other jurisdictions and rolling out significant age-testing training in our stores across the province,” said Kothalwala. “We look forward to working with the Ontario government to bring choice and fairness to the marketplace and putting the needs and convenience of our customers first.”

With files from Michelle Warren