‘Beer Ombudsman.” No two words better sum up the philosophy behind Ontario’s so-called New Beer Framework. It is not about competition or customer choice. It’s not about markets. The Great Beer Leap Forward will at least bring beer to more stores – some grocery stores, even – but the system isn’t really changing. Nor is the Liberal government’s attitude to the industry. Politicians will be, more than ever, deciding who gets to sell beer and who does not, and which beer, where, when, how and at what price. Competition will still be largely forbidden.
But, good news: If you are unhappy about anything, please write to the new Beer Ombudsman. He’s there to listen.
Premier Kathleen Wynne announced the new beer strategy on Thursday, with her Twitter feed appropriating the hashtag #FreeTheBeer. If only it were about that.
Until now, The Beer Store has been a private monopoly, owned by three major non-Canadian brewers, and maintained by an assiduously lobbied and greased provincial government. If you think the solution is for the monopoly to be ended and free market competition to replace it, you are out of luck. If, on the other hand, your preferred idea is for politicians to get even more deeply into the business of beer central planning, then the province has a plan you’ll love.
That plan, adopted by the Wynne government after a report by former TD Financial Group CEO Ed Clark, will turn a concentrated monopoly into a complex, multi-channel, many-tiered beast, overseen by Queen’s Park. The Clark report says the number of places selling beer across the province will increase by about 30 per cent. But the free market – you know, consumer demand – won’t decide where that happens. Or when. Or how. Premier Mom and Co. will retain control. That is likely to ensure that beer remains one of the province’s most lucrative neighbourhoods for lobbyists – and party fundraisers.
Consider the promise of beer in grocery stores. Your average grocer would be happy to start selling beer the day after tomorrow, but the government is determined to move at the pace of a banana slug on downers. Mr. Clark’s report says that eventually as many as 450 grocery stores could be licensed. For the moment, however, all it promises is “up to 150 grocery stores” carrying beer by “May 1, 2017.” Two years from now? Seriously? This is not the Apollo moon landing. It’s putting some beer in a fridge.
But the Wynne government is instead making things as complex and convoluted as possible. Only “urban grocery stores” will be eligible for a beer-selling licence. There will be “uniform pricing” between grocers and The Beer Store – no competition allowed – and limits on how much beer each grocery store will be allowed to sell. And grocers will not be allowed to sell anything larger than a six-pack. Of course not.
Why will only some grocery stores get to sell beer? “We believe,” says the Clark report, “that by offering a limited number of licences, scarcity will be maintained.” Competition and consumer convenience are not the primary goals. The objective is for government to extract the maximum revenue from the sector, in this case through what looks like an auctioned licensing fee.
Then there’s the LCBO. The government liquor monopoly, which for the benefit of the Beer Store has long been restricted in its beer sales – including not selling anything bigger than a six-pack – will now be permitted to “conduct a 10-store pilot study to explore the viability of offering 12-packs.” Gosh. A pilot project. To study whether it’s humanly possible to sell more than six beers. That is surely the most revolutionary idea since the fall of the Bastille.
But be of good cheer: The government is ordering The Beer Store to “improve the experience of its customers.” It promises to spend $100-million to “modernize,” with 80 per cent of the money “allocated to retail store improvements.” Please call the Beer Ombudsman with your interior decorating suggestions.
This is a plan not to #FreeTheBeer. It’s more of a scheme to #SaveTheBeerStore. Queen’s Park wants to ensure the golden goose keeps on laying golden eggs, albeit with more of them ending up in government coffers. For example, the Clark panel notes that it initially favoured allowing the LCBO to sell 12-packs, but backed off and now merely wants to “explore” the idea. Why? “This initiative,” says the report, “may significantly erode the economics” of The Beer Store.” Well, yes, competition might do that.
The greatest irony of all? The Beer Store announcement came on the same day as the more controversial, more complex overhaul of the province’s electricity system – which is similarly motivated by a need for cash. That deal, which may net the province as much as $9-billion, but possibly at the cost of future revenues down the road, could ultimately have a much bigger impact on consumers than fiddling with booze sales.
It’s a topic we’ll return to next week.Report Typo/Error
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