Ontario mulls bringing beer and wine into grocery stores

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The shelves of Ontario's large supermarkets may soon be brimming with beer and wine as the government seriously contemplates a long-delayed modernization of the province's alcohol retailing rules.

But smaller shops would still be prohibited from selling booze, and these retailers are calling on the government to go further and allow stores of any size to get into the market.

According to government and industry sources, Premier Kathleen Wynne is considering a plan to loosen The Beer Store's private monopoly and allow a few other retailers, likely larger grocery stores, to stock beer and wine. No final decision has been made; the province is expected to unveil its plan in the spring budget.

(What's the story behind The Beer Store and its lucrative monopoly in Ontario? Read The Globe's easy explanation)

The government has been under mounting pressure to abolish The Beer Store's lucrative cartel arrangement. Controlled by three foreign-owned brewers – Molson Coors Brewing Co., AnheuserBusch InBev SA, and Sapporo Breweries Ltd. – The Beer Store has the near-exclusive right to sell most beer in the province, and to supply the most popular brands to bars and restaurants. Nearly all other private beer retail is banned.

A government advisory panel led by ex-banker Ed Clark last fall advised Ms. Wynne to charge a franchise fee to The Beer Store to capture some of its profits for the treasury. But the sources said the province will go further than that in response to consumers' desire for more choice.

Ontario Economic Development Minister Brad Duguid confirmed on Friday that "changes are coming" to the sector, but chose his words carefully on what that would entail.

"I like the idea of making sure that we are in all ways possible modernizing the customer experience," he said. "I do, every week, have to pick up a case of beer, and if I can do it more conveniently, I would probably welcome that opportunity."

Canada's National Brewers, the group that represents The Beer Store's owners, did not respond to a request for comment.

The reforms would go only so far. The government source said the province would likely not allow independent beer retail outlets, or let existing smaller stores stock beer and wine. And Ms. Wynne has already publicly ruled out allowing convenience stores to sell beer.

David Wilkes, vice-president of the Retail Council of Canada, said he has met with Mr. Clark's panel. He said his group represents many major retailers, including discount giants Wal-Mart Canada Corp. and Costco Canada as well as grocer Loblaw Cos. Ltd.

"We went in representing the entire grocery community," Mr. Wilkes said. "We've been advocating for a level playing field."

He said details of which retailers would qualify to carry wine and beer "remain to be defined."

But the Canadian Federation of Independent Grocers, which represents small grocers, countered that the playing field will not be even if smaller outlets are excluded. It is scheduled to meet with the government panel on March 24, a representative said.

Any measure that restricts beer and wine sales to larger companies "would put the government in the position of picking winners and losers in the grocery industry – that is not the role for government," president Tom Barlow said.

Cam Heaps, co-founder of Steam Whistle Brewing and chair of Ontario Craft Brewers, said if the government expands beer retailing, it must put rules in place that ensure all brewers have access to the grocery stores. "A key aspect for Craft Brewers is that any new access, whatever form it takes, is affordable and that it does not allow large players to purchase all of the shelf space. Shelf space fees are illegal in many U.S. states for that very reason," he said in a statement.