Ontario residents pay substantially more for beer than people in Quebec because of the “cartel” of multinationals that controls Ontario beer retailing, a study by a University of Waterloo professor says.
The study by economics professor Anindya Sen found that the average price difference in a 24-bottle case of beer between the two provinces is about $9.50, or 27 per cent lower in Quebec.
That’s because most beer in Ontario is sold through the Beer Store, which is owned by three of the biggest multinational beer companies, he said. In Quebec, beer is sold at grocery and convenience stores.
The study was paid for by the Ontario Convenience Store Association, which is lobbying to get legislation in the province changed so corner stores can sell beer.
The Beer Store owners are getting $700-million a year in incremental revenue because of this situation, Prof. Sen said in the study. He said the Ontario government gets very little revenue from the sale of beer through the Beer Store, compared with what it earns from markups at the provincially owned LCBO.
The Beer Store is “a classic textbook example of a cartel,” the study says, and its profits are “captured by the foreign multinationals that own [it].”
The profits are “going directly from consumer pockets to a consortium with majority ownership by foreign based firms,” the study concludes.
The Beer Store is owned by Labatt Brewing Co. Ltd., Molson Coors Canada, and Sleeman Breweries Ltd. (which is owned by Sapporo of Japan).
The “monopoly prices” charged by the Beer Store also generate economic inefficiencies in the marketplace, Prof. Sen argues in his study. And there are concerns, he said, about whether local brewers have sufficient access to shelf space and the opportunity to promote their brands.
The study involved checking the prices of five beer brands over a 22-week period between December, 2012, and May, 2013. In Ontario, Prof. Sen looked at prices posted on the Beer Store’s website, and at weekly price data from the websites of IGA and Metro stores in Quebec.
The average price was $25.95 in Quebec, and $35.56 in Ontario.
The Beer Store says that Prof. Sen’s study is “factually incorrect” and the methodology is flawed. It says the Quebec prices he looked at don’t include sales tax, but the Ontario ones do, and that commodity taxes are not taken into account. The limited number of brands sampled also skews the results, it said.
Beer Store spokesman Jeff Newton said the study also didn’t look at pricing in corner stores in Quebec, where beer tends to be more expensive than at big grocery stores. Over all, that makes the results “highly misleading,” and calls into question the $700-million incremental revenue figure, Mr. Newton said.
An earlier survey by Ipsos Reid, conducted for the three big brewing companies and released in June, suggested that beer prices are lower in Ontario than in British Columbia and Alberta, and competitive with private stores in Quebec. That study looked at 14 brands in a variety of package sizes, and 90 retail locations.
The big brewers argue that allowing corner stores in Ontario to sell beer would boost the price in the province.
In many provinces, all retail beer sales are handled by government-regulated stores. In much of Western Canada, some licensed hotels also sell packaged beer.