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Beverage alcohol in convenience update: Ontario

With the Master Framework Agreement set to expire in 2025, what are c-stores doing in the interim?
Set of colorful icons of alcoholic drinks' bottles. Vector isolated illustrations in flat style design

The outlook for the Ontario government to finally open the sale of beer and wine to the province’s 8,000 convenience stores appears to be brightening.

The previous Liberal government’s 10-year Master Framework Agreement with the Beer Store is set to expire in 2025. Under terms of the agreement, the Doug Ford government is required to give notice by next fall if they don’t intend to renew it.

And if they don’t, as expected, it would clear the way for c-stores to sell alcohol.

“I speak to my local MP all the time about it. I have been assured it’s going to happen,” says Jamie Arnold, the president of family-owned chain Little Short Stop Stores in southwestern Ontario.

Little Short Stop Stores has converted store freezers into refrigerators in preparation of a greenlight. “Right now, the refrigerators are filled with extra SKUs of bottled water and alternative beverages, with the hope that they will eventually be replaced by beer,” notes Arnold.

Meanwhile, industry players continue to build the case that alcohol is a critical category for the future viability of the c-store.

The Convenience Industry Council of Canada has pulled together new sales data showing how well the category performs in Quebec, where consumers are allowed to purchase beer at their local corner store.

Last year, beer and wine accounted for $473 million in convenience store sales in the province. That makes it not just the second-highest category by revenue in Quebecbut also for all of Canada (behind only tobacco).

Unlike a lot of product staples, “the good news is that the category is on an upward trend,” adds Anne Kothawala, president and CEO of the CICC.

Sales were $2.7 million higher than in 2020. That is impressive given the market had skyrocketed from 2019 to 2020 by 25%, according to Nielsen MarketTrack.

These figures will be in the CICC’s upcoming State of the Industry report to be released at its National Convenience Industry Summit from Sept. 27 to Sept. 29 at Omni King Edward Hotel in Toronto.

“We need to innovate, expand our product mix and offer consumers what they want to purchase,” says Kothawala. “The data shows consumers are increasingly wanting more one-stop shopping.”

Liquor licence pushback

In the meantime, c-store chains have applied or are considering applying for liquor licences in Ontario, in an effort to grow their foodservice offering.

7-Eleven Canada has numerous applications before the Alcohol and Gaming Commission of Ontario that would allow for the sale, service and consumption of liquor on-site at select stores. The licence would not allow for takeout or delivery of alcohol, however.

These applications have been met by objections from local politicians. However, 7-Eleven Canada has had such objections successfully dismissed for at least four of its applicationstwo stores in Toronto and one store each in London and Sarniaafter they went before a Licensing Appeal Tribunal (LAT) hearing.

Meanwhile, an application for a 7-Eleven store near Western University in London, Ont., is also facing pushback from politicians and labour groups. They contend it will worsen off-campus partying. A LAT hearing had been set for this month, but will now be rescheduled after conflict-of-interest concerns were raised about the adjudicator.

City councillors in Hamilton have objected to liquor licence applications made at 7-Eleven’s two stores in the city. Noting community concerns have been insufficient to deny 7-Eleven licences in other municipalities, the city of Hamilton said in a release it “will seek reasonable constraints to be placed on alcohol sales at these locations.”

Little Short Stop Storeswhich has locations in Kitchener, Waterloo, Cambridge and Guelphhas looked at applying for liquor licences for some of its stores, says Arnold.

It also considering applications for select Little Short Stops to become an LCBO Convenience Outlet (LCO). There are roughly 400-family run LCO stores in the province, which were set up to serve rural Ontario.

“We have never had one, but the program recently changed the distance a store needs to be from a LCBO or a retail outlet of the Beer Store down to 5 km,” explains Arnold. “We have locations outside that radius, so we will be applying for some LCO stores and see what happens.”

For its part, the CICC is focused on in-store sales of alcoholic beverages, rather than the move by stores to become establishments that serve alcohol.

“It is important to understand that this is a separate and distinct issue from the expansion of beverage alcohol sales in convenience,” says Kothawala. “The latter is what CICC continues to push for.

“A restaurant has a bottle shop where customers can purchase beer or wine to take home with their food. You can order beer from The Beer Store through Skip the Dishes. You can buy beer and wine at many grocery stores or at farmer’s market,” she continues. “A convenience retailer that is expanding foodservice shouldn’t be any different.”

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