Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A Beer Store outlet in Oakville, Ontario.

Deborah Baic/The Globe and Mail

The three companies that own the Beer Store – Anheuser-Busch InBev SA, Molson Coors Brewing Co. and Sapporo Breweries Ltd. – will not say how much higher their profits or revenue are in Ontario as a result of their unusual arrangement with the province. So the Globe used the best data we could get to estimate that number ourselves.

We tried to quantify the two major benefits to owning the Beer Store.

First, the cost savings the owners get from running the entire retail, warehousing and distribution system. Simply put, pooling all those logistics results in massive economies of scale and a lot of money saved.

Story continues below advertisement

Second, the extra market share the owners appear to have from controlling the retail outlets. Ed Clark, the ex-banker leading the Ontario government's asset advisory panel, argues that the Beer Store is designed to promote sales of the owners' brands over beers made by other brewers.

Let's look at each one in turn.

Cost savings

The Beer Store's numbers peg retail and distribution costs in Ontario at $5.34 per 24 case of beer (or a little over $65 per hectolitre), compared to $9.06 in Quebec.

We multiplied these costs by the volume of beer sold by the owners at the Beer Store. Ontario's costs yielded a total of $352,539,762.3232; the same calculation, but with Quebec unit costs, yielded $598,129,259.6752.

The difference between these two numbers is just under $246-million. That is the total cost savings for Beer Store owners, compared with what they would be paying if they had to pay the same unit costs as in Quebec.

For what it's worth, we could have instead used Alberta or B.C. as comparators. Both of those provinces have higher costs than Quebec, and would have shown larger relative savings for the Beer Store.

Story continues below advertisement

Market share

The Beer Store's annual sales -- minus sales taxes -- came to $2.5-billion in 2013 (the most recent figure available.) Beer Store owners' share of sales is 80 per cent, which yields a total take of $2-billion.

By comparison, their market share at the LCBO is 74 per cent. Mr. Clark attributed that six per cent gap to the owners' ability to "create programs and structures" at the Beer Store that favour their own products. Better display for owner brands, for instance. Craft brewers complain that even the set-up of most Beer Stores, where the beer is hidden behind a wall, hurts their sales because customers are less likely to discover and try new brands.

That six per cent additional market share represents $150-million to the owners.

The grand total and the alternative method

The cost savings ($246-million) added to the higher market share ($150-million) gives a total of $396-million in extra revenue for Beer Store owners as a result of their monopoly.

Story continues below advertisement

It's worth mentioning here that there may be a different way to calculate this.

University of Waterloo economist Anindya Sen contends that the Beer Store owners benefit from higher beer prices in Ontario than in Quebec. His analysis of beer prices found that La Belle Province's suds are, on average, six per cent cheaper than Ontario's. In a paper for the C.D. Howe Institute last summer, he used this price difference as a starting point to estimate that the Beer Store pulls in $452-million extra because of its monopoly status. If you subtract 20 per cent, for non-owner brewers, you're left with $362-million for the owners.

Two different methodologies, but both reveal similar hauls.

The dispute over price

The Beer Store's owners, however, contend their average prices are actually lower than Quebec's and that Mr. Sen's estimates are incorrect. They also say that Ontario's higher taxes mean the federal and provincial governments take more from beer sales than the brewers do.

In effect, they argue, the money they save is passed on to government and consumers, not pocketed by the owners.

Story continues below advertisement

"The efficiency benefit of the system is going to the government with high tax and consumers with low price," said Jeff Newton, president of the lobby group that represents the owners.

The Beer Store's data on Quebec, it's worth noting, is not comprehensive. Those numbers, from AC Nielsen, take into account several supermarket chains, but exclude about 60 per cent of the market, including convenience stores.

The non-disclosure

The Beer Store owners could, of course, settle this question by releasing details on their profits in Ontario compared to Quebec and other jurisdictions. Citing commercial sensitivity, they declined.

"Much of the information you have requested (e.g. individual brewer profits and costs by market) is commercially confidential to individual companies and is not disclosed," Mr. Newton wrote in an email.

We received similar responses from the three companies individually when we approached them directly.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies