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Study: Younger generations show preference for cannabis over alcohol

cannabisConsumer preference has reached an intersection. A decreased stigma and greater access to legal cannabis products are shaping the way younger generations spend money, a new study from New Frontier Data, a data, analytics and business intelligence firm for the cannabis industry, shows.

“Young adults approaching legal drinking age represent new potential consumers for alcohol brands, but New Frontier Data’s research reveals a noticeable shift in younger generations’ preference of cannabis over alcohol,” noted Giadha Aguirre de Carcer, founder and CEO of New Frontier Data. “Whether such a shift is indicative of potential sustained behaviour over time or a short-term spur in consumption remains to be seen, and is something we are currently looking into, but in the meantime, it could materially impact the alcohol industry.”

Some of the key findings of Cannabis Consumer Series: Alcohol vs. Legal Cannabis Consumption in North America include:

  • 45% of those surveyed said they were likely to replace some of their drinking with cannabis in the future.
  • 65% said, given a choice, they prefer cannabis to alcohol.
  • 47% said their drinking had not changed in the past two years.
  • 31% said they now drink less than they used to, and 23% said they drink more.

Monster looks to alcohol for growth

UnknownMonster Beverage Corp., a leader in energy drinks, is considering an expansion into alcohol, according to The Wall Street Journal.

In addition to alcoholic beverages, Monster is keeping a close on the emerging cannabis beverage market and looking at hard seltzers, as well as nonalcoholic drinks

“We do have an appetite to look at alternative brands and to develop more beverages in the nonalcoholic … as well as the alcoholic market,” CEO Rodney Sacks told investors on June 6.

Coca-Cola owns an 18.5% stake in Monster and distributes the beverage. As a result, The Wall Street Journal reported alcoholic beverages could come first due to the temporary non-compete clause the company has with Coca-Cola.

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

Ontario government reviewing report from special alcohol adviser

The Progressive Conservative government is now reviewing recommendations from its special adviser on alcohol as it looks at making changes to the system.

Ken Hughes, a former MP and Alberta cabinet minister, delivered his report Friday to Finance Minister Vic Fedeli on ways to improve consumer choice and convenience.

The Tories have already indicated they plan to put beer and wine in corner stores, but it may not be easy to do so.

The previous Liberal government signed a 10-year agreement with the brewers who own The Beer Store that permitted an expansion of beer and wine sales to hundreds of grocery stores.

In order to further expand those sales, Premier Doug Ford’s government would need to break that agreement with the brewers, who have warned that doing so would trigger steep financial penalties.

The Tories also announced a number of loosened alcohol restrictions in last month’s budget, 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.

Alcohol deregulation is good for consumers and the economy: RCC report

Screen Shot 2019-05-14 at 10.23.18 AMA report from The Retail Council of Canada maintains that Ontario’s new alcohol laws allowing people to buy booze at more locations will stimulate the economy, create new jobs and bring down the price of alcohol.

The Spring 2019 Retail Perspectives report delves into deregulation of the alcohol market in British Columbia and notes that liquor licensing a grocery store increases store sales by an estimated $880,000.

The report states: “That number is significant, in part because of just how under served the Ontario market is. Based on Statistics Canada data, the Province of Ontario only has 2,702 locations that can retail alcohol in one form or another. As pointed out earlier this month in Ontario’s 2019 budget, that represents 2.4 outlets per 10,000 persons ranking us last in the country – and well below the national average of 5.91. To move to the national average, Ontario would need to increase the number of locations by 4,028. Based on this RCC report, if 4,028 new grocery locations could sell alcohol, that would mean an increase to Ontario’s GDP of 3.5 billion a year.”

The report also challenges the notion that deregulation in Ontario will result in job losses and an increase in the price of alcohol.

The Beer Store maintains that opening the market will result in job losses for 7,000 of its full- and part-time staff. While acknowledge that Beer Store staff will experience cuts, the report maintains this will be countered by an increase of 2.3 staffers at each licensed grocery store. “That means that a move to Canada’s average per capita store count would see a net increase of 9,100 jobs. That means, any job loss that occurs as a result of increased competition by grocers with The Beer Store is more than offset. Even when using The Beer Store’s 7,000 number, the result is still a net increase of 2,100 jobs overall.”

As for pricing, RCC surveyed its membership and found that the net-of-tax price of popular beers were an average of 8.3% more expensive in Ontario compared to Quebec: “This suggests that increased choice and convenience can also mean savings for consumers, as large grocers negotiate with suppliers to compete for business.”

According to RCC, Ontario is “dead last” in Canada when it comes to alcohol choice and convenience. Prior polling has shown that 73% of Ontarians support the sale of 12- and 24-packs in grocery stores, and that 68% of Ontarians support the sale of alcohol at all grocery store locations in Ontario.

Ontario Premier Doug Ford is moving ahead with his government’s plan to extend beer and wine sales to corner and big box stores in the province.

In a statement to Global News, Ford spokesperson Simon Jefferies emphasized the government’s mandate:  “We remain committed to our campaign promise to expand beer and wine to corner stores, big box stores and more grocery stores and we continue to consult across the province. By expanding choice and convenience for Ontario consumers, we are also expanding opportunities for small businesses across the province. Local store owners, brewers and consumers all stand to benefit from an expanded market.”

The Beer Store ad features Canadian curler and Beer Store manager Glenn Howard

The Beer Store ad features Canadian curler and Beer Store manager Glenn Howard

Earlier this week, The Beer Store launched an ad campaign against the Ford government’s efforts. The ads feature Canadian curler and Beer Store manager Glenn Howard, who maintains the Ford government’s changes would drive up alcohol prices, allow for easier access to alcohol for minors and cause job losses.

Canadian curler and Beer Store manager Glenn Howard is featured in the ads and claims the Ford government’s changes would cause higher alcohol prices, allow for easier access to alcohol for minors, and lead to 7000 Beer Store employees losing their jobs.

The campaign features five radio ads and one television commercial.

“There’s been a lot of talk lately about putting beer in corner stores, but not enough facts about what that will mean,” Howard says in one of the ads.

“High taxes drive our beer prices up. Selling beer in corner stores won’t change that. The Beer Store’s efficient distribution system helps keep prices down. I’m proud to say when it comes to selling and distributing beer, The Beer Store does it best,” he says in another ad.

The United Food and Commercial Workers Union Canada Local 12R24, the union representing Beer Store employees, also launched an ad campaign criticizing the government’s plans.