Beverage alcohol three-month check-in
There’s been highs. And there’s been lows. But with beverage alcohol being sold in Ontario convenience stores since Sept. 5, the market for the category has recently passed its three-month anniversary. While a still nascent category, c-store players are reporting longer stretches of stability and steadiness between the ups and downs.
“It has no doubt been a roller coaster for operators, suppliers, the LCBO (Liquor Control Board of Ontario) and TBS (The Beer Store) since September,” says Bromlyn Bethune, president of Steam Whistle Brewing who first spoke to CSNC about beverage alcohol’s long-awaited arrival to c-stores three months ago. “Things continue to shift and evolve.”
She says the independent channel has emerged a big player in the market, with over 2,300 c-stores classified as such ordering beer from Steam Whistle to date. But Bethune says the need for education at store level has been very high, on everything “from how to order, trucks, deliveries, and small versus large producers. Many of these owners have been told by various brands what is craft, when in reality, it’s not craft.”
In addition, she says “As a supplier it can be difficult to keep up and invest in the costs to service this growing channel to educate site by site on what is true craft beer. There are some systems the LCBO wholesale team could implement to guide retailers further in the portal. For now, I do know the craft brewers are doing their best to get into trade to showcase what would qualify as part of the 20% small producer assortment. This educational piece will be ongoing for some time.”
Independent c-stores report mixed messaging
Independents have also struggled with the LCBO’s online ordering system, GMS (Grocery Management System), and Bethune finds “delivery patterns are all over the map.”
But more and more independents are starting to find their groove. “We can now see some volume patterns in regions,” she says. “Some indie retailers have really figured out what they need to carry so that it does not sit on shelves or compete with their local grocers, TBS or LCBO locations. This will only continue to evolve as more and more stores open.”
As of Dec. 2, the LCBO has received over 62,000 convenience store orders and shipped more than 2.7 million cases of product to over 4,100 c-stores. That is up by about 88% from the over 33,000 c-store orders the LCBO had received as of Oct. 11. And it’s also up 93% from the more than 1.4 million cases of product that had been shipped to over 4,200 c-stores as of Oct. 11.
As stipulated by the Alcohol and Gaming Commission of Ontario, 20% of beer, cider and premixed cocktails on display must be from small Ontario producers, while 10% of wine on display must be devoted to small Ontario wineries.
But August Guo, owner of Carp Foodliner in Carp, Ont., near Ottawa, agrees with Bethune that what constitutes a “small” producer isn’t clear. “For example, I have ordered Landshark beer made by Waterloo Brewing and if I compare them to Labatt or Molson, it’s definitely a small brewing company,” he says. “But the government and AGCO says it is not small enough.”
The criteria of a small brewer is defined by Ontario regulation, but he says it’s difficult for an independent and the wholesaler they’re working with to know if a particular brewer meets that requirement or not. “It would be easier to follow for independents like me if we get the list of the small breweries,” says Guo.
“Working through the newness and ambiguity was a process,” says Alan Crew, convenience retail manager at BG Fuels, which introduced beer, wine and ready-to-drink (RTD) alcoholic beverages in all 75 Ontario stores of its retail operation, Waypoint Convenience, on Sept. 5. “Getting our network settled with this new category required a highly nimble approach from all involved, and having highly skilled hard-working teams both in the field and in our head office allowed us to react quickly to changes as they rolled out.”
Characterizing BG Fuels’ approach as “highly conservative to begin with, focused on top brands and optimized assortments,” Crew says the fuel and c-store retailer has since “implemented a more robust offering, expanding our product lists to include a broader range of both product types and brands. In some cases, we also adjusted store layouts to enhance product visibility and customer flow. Taking this flexible approach eased a lot of potential stress that came with the roll out and the first 90 days of the category on shelf.”
While keeping expectations modestly optimistic, he says “it’s been a pleasant surprise to see how well received the category has been by consumers” and “been performing across the board well for us. The integration of beer and wine into the convenience channel has driven consumer interest and increased foot traffic.” He also notes a surprising low “incidence rate of theft.”
That doesn’t mean it’s all been smooth. The delivery process and procedures to ensure optimized logistics and a smooth transaction for retailers has room for improvement, points out Crew.
"There are continued challenges in regard to logistics and government bodies grappling with expansion into a channel that they have limited experience with,” he says. “There is hope, however, that 2025 will bring in additional positive change as the category moves toward greater maturity. There’s significant opportunity to expand logistical partnerships within the category, improving product availability and mitigating some of the current pinch points retailers are dealing with.”
Initially offering beer and wine in about 80 of its 130 stores across Ontario, Burlington, Ont.-based Hasty Market Corp. now has 98 stores participating in the category.
“The majority of these stores feature coolers ranging from three to six feet, along with about four feet of ambient shelf space for product display,” says Marietta Cini, vice-president of operations and development for Hasty Market. “One key lesson we've learned is the importance of maintaining strong inventory positions for key SKUs, particularly to mitigate risks associated with out-of-stock situations and delivery challenges. It's crucial to anticipate demand and plan accordingly to avoid disruptions.”
It’s also critical to watch for shifting preferences and trends by region, adds Cini. “While single-serve beer remains a top performer in our portfolio, we’re seeing noticeable growth in both wine and RTDs, especially in urban markets,” she says. “This shift in consumer preferences is prompting us to adjust our approach.”
She says proper staffing is also important to maintaining strong inventory positions.
“We've also realized the need to continuously reevaluate our workflow and labour allocation. By ensuring that the appropriate number of labour hours are assigned to stocking, we can optimize efficiency,” explains Cini. “For stores with smaller merchandising spaces, we’ve found that filling coolers twice a day is necessary to meet demand, so scheduling has to be spot on to keep up.”
“Additionally, in terms of security and theft prevention, having clear procedures and regular training for employees on vigilance and loss prevention tactics has been essential,” she adds. “By focusing on these areas, we've been able to improve operations and maintain smooth sales flow, even during high-demand periods like the holidays.”
Getting holiday ready
C-stores in Ontario are about to hit a critical sales period for beverage alcohol. While Andy Williams' Christmas classic, "It’s the Most Wonderful Time of the Year," is all about holiday cheer. The famous holiday tune also rings true for retailers in terms of sales hauls.
And Ontario c-stores, which have often been left out in the cold as a destination for holiday shopping (outside of perhaps OLG’s instant lottery gift packs) have reason to feel festive about beverage alcohol. The combo of Christmas and New Year’s Eve typically lights up wine, beer and ready-to-drink alcoholic beverages (RTDs) like a Christmas tree.
Despite inflation, 75% of Canadians plan to maintain or increase their holiday budgets this year, according to the Retail Council of Canada and Leger 360’s RCC X Leger 2024 Holiday Shopping Survey. The survey indicates that average holiday spending is expected to reach $972, up $74 (or 8%) from last year. Food and alcohol is forecasted as a big area of spend, accounting for 16% of the budget in a tie with clothing.
“The holiday season is LCBO’s busiest sales period, in particular the days leading up to Dec. 25,” the provincial regulatory agency said in a statement to CSNC. It could be even bigger than previous years, given the two-month GST/HST reprieve between Dec. 14, 2024, and Feb 15, 2025. The federal tax holiday applies to beverage alcohol, including beer and cider, wine and spirit-based RTDs (7% of less ABV).
C-stores will have a competitive advantage during the holiday crunch, too. “They can remain open when their competition will be closed with the stat holidays,” says Bethune. “We suspect they will triple in sales that week of Christmas and New Year’s.”
Keeping this in mind, stores should adjust, if they haven’t already, their beverage alcohol delivery schedules.
“C-stores are used to their own trucks delivering two to three times a week to top up stock needs—they will not see LCBO and The Beer Store trucks at the frequency they are used to in other categories,” she says. “So, they need to order up and find space for back-up stock to have inventory to help sales lifts they will see between Christmas and New Year’s Eve.”
Some stores are looking to push multi-can/bottle formats, too. “Many of them have commented on ordering larger packs to get consumers to trade up from singles or six-packs with consumption up over the holiday season,” says Bethune.
She adds that retailers will gather a lot of important learning during this period. “This will be a real test to see how stores can manage stock in the summer months. The holiday season is the first big occasion c-stores get to sell in and watch the sales lifts we all see this time of year.”
Hasty Market has been analyzing sales data with the goal of optimizing inventory levels for the holiday surge.
Cini says this is about “making sure our stores are stocked with the right amount of our top 20 to 30 SKUs, which drive the majority of sales in our franchise locations. This data-driven approach will help us allocate capital efficiently and avoid stockouts, ensuring we're well-positioned to capitalize on the holiday demand.”
Hasty is also focusing on a few key promotional merchandising strategies. “We're rolling out endcaps for wine and implementing a case stack program across our stores, ensuring high visibility for our top-selling products,” says Cini.
BG Fuels’ footprint, meanwhile, “is running some of our first feature offers [in the category] to test the waters and see how we can best support our customer base,” says Crew. This includes a $1.99 price feature for select 472mL single cans of beer.
