Coming to market

Province set to allow wine and beer on grocery store shelves

The province appears set to put wine and beer onto grocery store shelves. When it unveils its budget in a few days or weeks, the Ontario government is expected to shake up the way beer and wine are sold. To do so, it will have to break up the comfortable arrangements that have allowed large foreign companies to prosper while small and local producers have been unfairly restricted from access to the marketplace.

It is expected the Ontario government will auction licenses to large grocery stores that will enable them to carry wine and beer on their shelves. Initially intended as a means to generate a fresh revenue stream, Premier Kathleen Wynne is expected to tout the new policy as a convenience to consumers.

No matter how the policy is spun it represents good news for local wine and beer producers. Dan Sullivan is a principal in Rosehall Run Vineyards. He welcomes the proposed changes, saying that it opens the door upon an archaic distribution system in the province and may provide an opportunity for broader reform.

Under the government monopoly, wine may only be sold through LCBO stores or at the facility at which it is produced—for which producers pay the LCBO fees. But the province also licenses 292 wine stores across Ontario—92 per cent of these stores are owned by industry giants Constellation Brands, based in New York, and Andrew Peller Ltd.,under the brands Wine Rack and The Wine Shop respectively.

It is one of many little-known artefacts in the way wine, beer and alcohol are distributed in the province.

Local producers complain that these stores sell foreign-blend wine, while domestic producers are shut out of retail distribution.

This is expected to change in the next budget. The province has signalled its willingness to repurpose at least some of these licenses to enable wine sales in large grocery stores.

Sullivan hopes by pushing the door open a crack, Ontario wine makers may soon persuade the province to allow VQA Ontario wine stores—finally giving local producers equal footing with their large and foreign competitors.

Small craft beer makers, such as Barley Days and Country Road Beer, set to open this summer, welcome enhanced market access. Currently, the Beer Store controls about 80 per cent of the beer sold in the province—the remainder is mostly distributed through the province’s LCBO stores. The Beer Store is owned by foreign-controlled beermakers Labatt’s, Molson-Coors and Sleeman. Small beer producers have long complained the arrangement has been lucrative for the owners of the Beer Store but has stunted the growth of the craft beer market in Ontario.

Craft beer sales in Ontario represent just a four per cent market share. This compares to eight per cent in the U.S. and 14 per cent in B.C.

Wellington grocer Cline Pierson says he will look at the new policy when it is enacted.

“I’d be crazy not to,” says Pierson.

The province has indicated it wants to provide enhanced convenience to consumers across Ontario—not just larger urban centres. Pierson expects grocers in wine growing regions such as Niagara and Prince Edward County will have a particular interest in pursuing a license to sell wine and spirits.

But Pierson isn’t holding his breath waiting for the new rules to be rolled out.

“We’ve been hearing this for five years now,” says Pierson.

It seems the wait may soon be over.