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Nova Scotia Liquor Corporation needs better plan for local industry, AG says

UnknownNova Scotia’s Crown liquor corporation does not have an adequate strategic plan for supporting the province’s growing alcohol industry, a new report by the province’s auditor general finds.

In his report released Tuesday, Michael Pickup says the Nova Scotia Liquor Corporation’s five-year plan for the industry lacks detail and accountability measures, while oversight is described as “poor.”

Pickup says it’s a major problem given that the number of local alcohol manufacturers has more than doubled over the last five years – from 64 to 141 – with the largest increase being the number of breweries, which have grown from 31 to 86.

He also notes that sales of local alcohol products through the corporation have risen significantly, from $16.5 million in 2015 to $45.3 million in 2019.

“While local product sales increased during the first four years of the plan, there is no clear link between the strategy and this growth,” the report states. “An appropriate strategic plan would align with NSLC’s mandate and include clear goals and objectives for the local industry, including action plans with measurable targets to determine success.”

The auditor’s report says the only performance measure included in the current plan is growth in local product sales through the corporation’s retail network, although there are no specific targets.

Pickup also warns there has been no risk analysis of the corporation’s mark-up rates for local products in order to flag potential risks and unintended consequences – including whether its pricing is in compliance with various trade agreements.

They include the Canadian Free Trade Agreement and the General Agreement on Trade and Tariffs, which have both seen recent or ongoing challenges to local pricing structures across Canada. Pickup also noted that Nova Scotia is awaiting a decision by the World Trade Organization on its mark-up pricing for locally produced wine.

“A proper risk analysis would identify potential risks … which is ultimately in the best interest of manufacturers in the long term,” says the report.

As well, the report assesses the NSLC’s compliance program to measure whether employees were following its proof-of-age policy, which requires asking for identification from anyone under 30.

Corporate stores registered a 12% fail rate and agency stores failed 19% of the time, while privately-owned business failed to ask 37% of the time and breweries failed 63% of the time, the report finds.

The results were from internal compliance checks conducted from April 1, 2017, to March 31, 2019.

Pickup also found that the NSLC is not completing responsible retail training for new employees within the first 30 days of employment, as required.

He said a test of 30 retail employees found 20 did not complete the training within 30 days of starting work. Four never completed the training, which covers areas such as age verification requirements, dealing with minors, and dealing with intoxicated customers.

Pickup said to call the compliance results disappointing would be “an understatement.”

“To see the age verification compliance program not working as it should work is very concerning,” Pickup said in an interview. “On the one hand the corporation is there to exist as a business enterprise but they also have a lot of corporate social responsibility.”

Pickup pointed out that over the two years covered by the audit, a corporate social responsibility committee put in place by the NSLC’s board of directors only met once.

NSLC spokeswoman Beverley Ware said the corporation would act on all 11 recommendations in the report within the next 12 to 18 months, including one calling on the corporation to clarify its role and to set measurable goals in supporting local brewers and distillers.

“There’s been exponential growth in the local industry in recent years and we just haven’t kept pace with it on the regulatory side of our business and on the policy side,” said Ware.

Ware also said the corporation would work to better document identification oversight, and has already put in place measures to ensure new hires get their training in a timely manner.

Meanwhile, the report highlighted that a board decision made in 2014 that could have saved the corporation $4.5 million had not been acted on.

It would have seen rural-owned stores turned over to private owners that would have run them as agency stores. Pickup said the plan appears to have stalled when it was taken to the provincial government and cabinet for approval.

He said it’s part of the reason his office is doing a governance audit of the corporation that will be released at a later date.

31360 LCBO Convenience Outlet Logo

LCBO Convenience Outlets opening in select c-stores across Ontario

As part of the Provincial Government’s plan to deliver more choice and convenience for consumers when it comes to alcohol, several new Convenience Outlets are now open in Ontario convenience stores. The LCBO continues to invite businesses in select communities to apply for LCBO Convenience Outlet status with its Request for Proposal (RFP) now through October 8, 2019.

The Caledon Enterprise reports the Esso Station at Charleston Sideroad and Cataract Road in Caledon Village is up and running with “a small selection of liquor, wine, beer and ciders, including a cold fridge for some chilled varieties.” The Shell Station at Airport Road and Highway 9 in Mono Mills is “expecting to stock shelves in two to three weeks,” while, Palgrave Variety at 17210 Highway 50 in Palgrave started selling LCBO products on Sept. 5.

The Provincial government announced in June that the LCBO would authorize approximately 200 LCBO Convenience Outlets by spring 2020. Retailers in 302 communities interested in becoming authorized to sell beverage alcohol can access the RFP and download an application package here. Sixty stores were to open by now and up to another 90 by the end of 2019, with the remainder opening in spring 2020.

Established in 1962, The LCBO Convenience Outlet program (previously the Agency Store Program) provides access to beverage alcohol products to communities that do not otherwise have convenient access to an LCBO retail store. At the moment, there are more than 200 outlets across the province. The latest plans by the provincial government would see that number double.

All applicants that meet the requirements for an authorization will be entered in a lottery for each community. Those selected will be eligible to operate as LBCO Convenience Outlets.

Competition watchdog writes province to support loosening Ontario liquor rules

Canada’s competition commissioner says he supports measures to increase competition in Ontario’s alcohol industry.

Matthew Boswell writes in an open letter to Ontario Finance Minister Rod Phillips that the competition bureau supports a special adviser’s recommendations, including the government working to authorize more retail outlets to sell alcohol.

He says the changes could give retailers equal opportunity to sell their products, encourage price competition and support proper wholesale pricing.

That, in turn, could lead to consumers having more products to choose from and lower prices.

Under the current system, a maximum of 450 grocery stores can sell alcohol, licensed retailers must charge identical prices for products, and bars and restaurants must purchase alcohol from the LCBO and the Beer Store at consumer prices rather than wholesale ones.

Boswell wrote a similar letter to B.C.’s attorney general in January, supporting recommendations aimed at increasing competition in that province’s alcohol sector made in a report commissioned by the provincial government.

Alcohol linked ER visits by women and youth on the rise in Ont., study suggests

Alcohol-related health problems are posing a growing burden on Ontario emergency rooms, including a disproportionate spike in visits by women and young people, a new study suggests.

Experts say the findings signal that the harms of alcohol use are not only on the rise, but becoming more widespread across the population.

The study, published in the Canadian Medical Association Journal last month, looked at patterns in alcohol-related ER visits in Ontario between 2003 and 2016.

Researchers with the University of Ottawa, Ottawa Hospital, the Bruyere Research Institute and ICES (formerly known as the Institute for Clinical Evaluative Sciences) examined several databases of provincial records containing medical and demographic information for more than 15 million Ontario residents aged 10 to 105.

Using diagnostic codes, they found conditions caused by alcohol use—including acute intoxication, alcohol dependence and withdrawal and alcoholic liver disease—were listed as a main or contributing factor in 765,346 ER visits.

The number of alcohol-related ER visits climbed by an annual average of seven% over the 14-year period, increasing at 4.4 times the rate of ER visits overall, the study suggests.

Daniel Myran, lead author of the study, said these findings only represent the “tip of the iceberg” of the damage caused by drinking, noting the numbers don’t account for long-term health hazards, accidents and “second-hand” harm to others, such as violence.

“The increases we’ve seen in alcohol harms are affecting everyone in society, and they’re doing so in an equal way,” said Myran, a family physician and resident at Ottawa Hospital, in a phone interview.

In keeping with previous trends, the data showed that more than two-thirds of patients who went to the ER because of alcohol use were men. But Myran said women have “narrowed that gap.”

Over the study period, the rate of alcohol-related ER visits by women rose 86.5%, compared to 53.2% for men.

The rate of alcohol-related ER visits spiked by 175% among individuals aged 25 to 29, and the change was even more pronounced among young women in the cohort, who saw an increase of 240%, researchers said.

This gender shift was also apparent in ER visits related to underage drinking, with the rates for women below the age of 19 exceeding those of their male peers since 2007, according to the study.

Sheryl Spithoff, an addiction medicine physician at Toronto’s Women’s College Hospital, who authored a commentary on the study, said the results are consistent with broader trends across the country.

Data from the Canadian Institute for Health Information suggests the rate of women dying from causes directly linked to alcohol rose by 26% between 2001 and 2016-2017, compared to a five% increase among men.

For physiological reasons, Spithoff said women are more vulnerable to the effects of alcohol, so it’s unsurprising to see that they’re disproportionately suffering health consequences.

In recent years, Canadian women have been consuming more alcohol following a shift in gender norms that made drinking more acceptable, said Spithoff.

This message has been amplified with the so-called “pinking” of alcohol marketing, she added, saying there’s anecdotal evidence to suggest that advertisements are increasingly geared towards women.

Spithoff noted that in Ontario, rates of alcohol consumption remained relatively steady between 2011 and 2016, according to Statistics Canada, but it appears that people’s habits have become more harmful, fuelled in part by a culture of binge drinking, particularly among young people.

Research indicates that regulations limiting the availability of alcohol can reduce the harms of substance use, she said. But in Ontario, she warned, it appears policy-makers are moving in the “opposite direction.”

Premier Doug Ford promised during last year’s election campaign to make beer and wine available in corner stores, grocery stores and big-box stores.

Along with promising to expand beer and wine sales, the Progressive Conservative government has loosened rules around alcohol consumption in the province in their spring budget.

Ontario will now allow bars, restaurants, and golf courses to start serving alcohol at 9 a.m., seven days a week, and is promising consultations on a further increase in hours of services in the future.

The government will also let municipalities establish rules about where booze can be consumed in public, such as in some parks. Regulations are also changing to allow tailgating parties near sports events across the province.

“While the government trusts Ontarians to make smart, mature and responsible choices when it comes to alcohol use, it maintains a strong commitment to social responsibility,” a spokeswoman for Ontario’s Health Ministry said in a email, pointing to provincial efforts to promote the safe consumption of alcohol, such as $3.8-billion investment to support people struggling with addiction.

But Spithoff said the results of the Ontario study show that provincial lawmakers need to not only reverse their policy direction, but make more drastic interventions, or we’ll be paying the price for today’s decisions in increased health-care costs down the road.

“I think we need to … realize that alcohol is a substance that is as at least as harmful as cocaine and tobacco and treat it within a public health model,” she said.

“We would expect that with these policy changes consumption (will increase), and particularly in youth and people who drink heavily, and those groups are at most risk for harms.”

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.