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Convenience store retailer Alimentation Couche-Tard has become a global giant, but there's one domestic habit it can't seem to quit: pushing Ontario to allow it to sell alcohol in its 547 stores there. The company has lobbied the government for years, to no avail, and its latest move is calculated to turn up the heat, but Ontario consumers shouldn't get too hopeful for change; powerful vested interests point to a likely continuation of the status quo.
In a speech Monday, Tom Moher, a vice-president with Couche-Tard's Mac's chain, committed the company to building 27 new stores at a cost of $54-million and creating up to 170 full-time jobs in Ontario within two years if the government allowed it to sell alcohol. That's in addition to the 1,600 jobs the company says it would add at its existing stores in the province, where it would spend millions of dollars on retrofitting.
Couche-Tard's push is entirely self-centred – "sin" products (smokes, junk food and, in Quebec and many U.S. states, beer) are big in-store traffic drivers. But its message has politically compelling points: in a fiscally and economically challenged province, a change to its outdated alcohol-selling regime would indeed increase jobs and investment.
Then there's the Alberta experience: last week, the province celebrated the 20th anniversary of its decision to privatize liquor sales. Since then, the number of liquor retailers has increased by almost 150 per cent, product selection has increased more than eightfold – and revenue to the province has risen to $730-million in its most recent fiscal year from $405-million 20 years ago. Increased competition also brought lower prices.
Adding to the case is a recent study by University of Waterloo economics profession Anindya Sen, who found prices at the Beer Store, the near-monopoly Ontario chain controlled by the three global giants who own Molson, Labatt and Sleeman breweries, are a staggering $9.50 – or 27 per cent – higher per case than in Quebec, where grocers and convenience stores can sell wine and beer. For its part, the Beer Store claims the study is "factually incorrect" and its methodology flawed, a spokesman said last month.
But despite whatever price difference there is, Ontario Finance Minister Charles Sousa has shown little interest in opening up alcohol distribution, saying in June the government would look at what's "in the best interest to the people of Ontario and to the province," adding "it's prudent for us to always view opportunities should they be of net benefit to the province."
That translates as follows: Don't bet on it. The Liberal government is well aware of the benefits of privatization. Eight years ago it commissioned a review panel that concluded privatization would bring greater choice, distribution and $200-million more revenue per year to government – a finding that then-finance minister Greg Sorbara ignored. The brewers prefer the status quo – their terribly merchandised, dreary, smelly, Soviet-style Beer Stores keep distribution costs low.
Meanwhile, the Ontario Public Service Employees Union, which represents Liquor Control Board of Ontario's workers, has done a successful job lobbying to keep wine and spirits distribution in the government's hands. Of course, critics, including those with economic self-interests to defend, point to studies showing privatization leads to increases in excessive consumption, although others have found the opposite. The long-in-the-tooth, minority Liberal government lacks a stomach for making too many hard choices or starting more fights than necessary. Couche-Tard's latest gambit is doomed to a buzzkill at Queen's Park.
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff.
Sean Silcoff