Ontario will allow 150 grocery stores to start selling wine, jack up the minimum price of a bottle and possibly raise taxes on the beverage.
The reforms – which will create more rules and regulations even as they slightly open up the province’s rigidly controlled wine-retail system – are designed to pull in more revenue for the cash-strapped government and encourage expansion of local wineries by giving them more places to sell.
“We are further strengthening and diversifying Ontario’s wine marketplace,” Premier Kathleen Wynne told reporters Thursday morning at a Longo’s supermarket in Toronto’s tony Leaside neighbourhood. “People in Ontario will now be able to buy wine with their cheese, at the same place, at the same time, at the same checkout.”
The changes are part of a review by Ed Clark, the former TD bank CEO advising Ms. Wynne on how to squeeze more money out of government assets. Previously, he oversaw the privatization of Hydro One and a new program to put beer in grocery stores starting last fall.
Currently, wine retail is restricted to the government-owned LCBO and 292 stores mostly owned by two large wine producers, Constellation Brands Inc. and Andrew Peller Ltd. Under the government’s plan, the first 70 licences for grocery stores to sell wine will be auctioned off this summer, with the aim of having the first wine on store shelves by fall. The rest of the licences will be auctioned at three-year intervals over the next six years.
There will be numerous restrictions in the new system. For one, only half of the first group of grocery stores to get licences will be allowed to sell foreign or out-of-province wines immediately; the other half will have to exclusively sell Ontario wine for three years before they are allowed to bring in wine from elsewhere.
Asked why the province didn’t simply allow all grocery stores to sell any wine they like, which is the norm in most European countries and much of the United States, Ms. Wynne said she believes a free-market system would push prices up.
“We have a system in Ontario that … keeps prices low, that keeps them competitively low. Government should protect that, I think that’s a responsible policy objective and it’s one that we’ve taken very seriously,” she said.
But the government is actually looking to make wine more expensive. Grocery stores will not be allowed to sell wine for less than $10.75 a bottle. The government is also looking at raising the minimum price for wine sold through the LCBO and the winery-controlled stores; the floor price is currently about $6.10 for a 750-millilitre bottle. Mr. Clark also hinted that the province is considering hiking taxes on wine and beer.
Finance Minister Charles Sousa – who described the new system as “a fine pairing of wine and grocery stores” – said the primary purpose of the reforms is to rev up Ontario’s wine industry.
“The biggest impact that this has is on our economy, is on a number of industries. The wine industry has grown because of some of the enablements we have put in place; this is yet another way for them to grow,” he said.
The changes unveiled Thursday include several other new rules. Existing winery-owned stores attached to supermarkets, such as the Constellation-owned Wine Rack and the Peller-owned Wine Shop, will be allowed to use regular grocery-store checkouts. They will, however, be obliged to sell wine from other Ontario wineries not controlled by Constellation or Peller. The LCBO, meanwhile, will now be allowed to sell more wine in boxes, a practice that has been restricted since the early 1990s because the bags in the boxes are hard to recycle. Also, craft distillers will now be allowed to sell their product directly to bars and restaurants. And grocery stores with beer licences will be allowed to carry cider as well.
Even Mr. Clark conceded the new system is more than a little Byzantine. Asked about the rationale behind one of the myriad rules – the one requiring some grocery stores to stock only Ontario wines for three years – he said he has had trouble explaining it.
“Yeah,” he said. “I tried that on my wife and she couldn’t figure out what I was doing, either.”Report Typo/Error