Good article in the Toronto Star today about the ridiculous Beer Store. I've known for a while, but it seems a lot of Ontarians still don't understand who runs the stupid thing.
Their prices are insane and their reasoning is weak.
The real reason your beer costs more than it should
Monopoly boosts prices, limits choice, critics say
Imagine a store where most of the products are kept in the back.
You order from the cashier. The products can't be sold below a legislated minimum price. And the overwhelming majority are made by one of three large companies, which also own the store.
In Ontario, that is how $2.5 billion worth of beer is sold each year.
Surprisingly, few consumers know this is the set-up.
On a sunny Friday afternoon, shoppers outside The Beer Store at Bayview and Eglinton were surprised to learn the government doesn't own the store. Some said they'd like to see beer sold in corner stores, for convenience, and said they hope competition would lead to lower prices.
"I'd like to see the price of beer go down," said Grant Skiffington, 57.
Six out of 10 people think The Beer Store is a government entity similar to the Liquor Control Board of Ontario, according an independent survey for a review of the distribution and sale of alcohol in Ontario.
In reality, the retail chain responsible for just over 80 per cent of beer sales in Ontario "is essentially a private monopoly" owned by the province's three largest brewers, Labatt, Molson and Sleeman, the provincial study noted.
The brewers, in turn, belong to some of the highest-grossing beer makers in the world – Belgium's InBev SA, the United States' Molson Coors Brewing Co. and Japan's Sapporo.
Analysts estimate that these foreign entities earn a combined $1 billion a year in profits in Canada, mostly in Ontario, making the province one of the most lucrative beer markets in the world.
And Ontario's beer consumers pay the freight, with higher prices, less choice and lack of convenience, the Beverage Alcohol System Review concluded three years ago.
The review recommended opening beer sales to competition. But Ontario's government decided against sweeping changes.
So little has changed.
A 24-pack of popular brands, such as Coors Light, is regularly priced at $36.95 in Ontario, at least 25 per cent more than in such markets as Quebec and New York State, where beer is almost always on sale.
The brewers who own The Beer Store argue that taxes account for much of the difference in prices, and say the chain is one of the most efficient, environmentally friendly, socially responsible beer-marketing systems in the world.
Moreover, the brewers say they uphold the founding principles of what was originally a co-operative, ensuring access to all brewers and brands.
But many smaller brewers, restaurant operators and convenience store owners say that it's time the province took a closer look at how beer is sold in Ontario.
In 1927, at the close of Prohibition, Brewers Warehousing Co. Ltd. was founded as a brewers' co-operative.
The provincial government retained control of the sale of wine and spirits through the LCBO, but beer, with its lower alcohol content, could be distributed by the hundreds of mom-and-pop breweries.
Initially, the brewers were involved only in wholesale operations, jointly warehousing and distributing their product to stores operated by private contractors.
But in 1940, the brewers bought out the contractors and took over the stores, changing their name to Brewers Retail Inc. The stores were later renamed The Beer Store.
Along the way, Canada's beer industry changed dramatically. Governments signed trade agreements in the 1990s that removed barriers to beer sales between provinces and countries. The Beer Store began selling imported beer, which the LCBO had carried for years. For a while, competition increased.
Successive waves of consolidation – in the 1950s and 1960s, then again in the 1990s – saw ownership of the beer industry shrink to the current handful of multinationals.
The Beer Store ended up in the hands of some of the world's largest brewers. Government oversight dwindled to a handful of regulations related to public safety.
Beer prices soared.
"I can't believe we let that go on," says Chris Wilcox, general manager of Quickie Convenience Stores, based in Ottawa. "How does this province legislate two (or three) foreign-owned multinationals to run the manufacturing, distribution and the retail network for beer in this province? ... That's like telling Ford and General Motors, `You're the only two companies that can sell cars in this province.'"
Convenience store operators have long wanted to take over beer and wine sales, partly to help offset declining sales of tobacco.
Restaurant, bar and hotel owners, would love to be able to sell booze for "off-premise" consumption.
"What we question is the total lack of transparency at The Beer Store. They are not beholden to anyone. There's no real overseer," says Syd Girling, strategic issues and research manager at the Ontario Restaurant Hotel & Motel Association.
But successive governments have been loath to privatize sales of booze, fearing it could lead to more crime, drunkenness, underage drinking and other public ills.