With the Ontario budget scheduled to be release on April 23rd there are expected to be radical change to the way alcohol is sold in Ontario. Unfortunately the changes that are speculated to be in the pipeline may not be enough.
There is going to be no immediate change to the way that wine is sold as there are multiple international agreements that need to be consulted and considered in order for the province to make changes while still maintaining their protectionist policies. What is expected to change though is the sale of beer.
This change is going to come in the form of 300 new licenses for the sale of beer that will be auctioned off to grocery stores. Restrictions are slated to be that: the alcohol may not take up more than a certain percentage of the shelf space in the store, the store must have a total floor area of a certain size, and there will be a 25% cap per retailer on buying up these licenses. While these restrictions are meant to be an effort to avoid littering our cities with stores selling alcohol they are actually there to limit the direct competition with the beer store.
The problem with these proposed changes is that they don’t go far enough. As was mentioned about the auctioning of taxi licenses, this type of process severely limits access to the market for smaller players by creating a huge barrier to entry for anyone who doesn’t have deep pockets.
By limiting the program to 300 licenses the province is using the program to try and help balance the budget without affecting any real change. If the Ontario government was serious about changing the way alcohol sales are conducted in the province then they would follow a similar structure to what I recommended for the taxi system in Ottawa. A license for selling alcohol in the province should be made available for a flat fee of the amount needed to cover the administrative cost of the program. This way the small retailers will have the same level of access to licenses as the big box stores.
If there needs to be a gradual roll-out of the program over a number of years to avoid shocking supply and price issues then that works too. What needs to be avoided is the selling of the proposed 300 licenses and then considering that the end of the program a success. Without any real commitment to long term expansion and de-regulation of alcohol sales in the province this new plan will just expand the existing monopoly in Ontario.
Sidenote: Worse case Ontario, they choose the only allow for 300 licences to be auctioned; I would like to see The Beer Store having to bid on those for their stores as well ☺
The idea that the only two choices consumers in Ontario have is to stick with the status quo we have been living with for 80 years, or accept these sub-par changes, is a false dichotomy. We should never settle for a sub-standard program that the government is trying to implement just to win misguided favour with consumers, raise capital for a short term gain, or appease big business without actually improving anything in the long run for the majority of constituents.