Ontario Government Announces New Agreement With Beer Store, Clearing Way for Grocery Store Sales

TORONTO, ON – In a press conference held earlier this morning at Mill Street Brewpub in Toronto, Government of Ontario Premier Kathleen Wynne and Ed Clark, Chair of the Premier’s Advisory Council on Government Assets , announced details of a new “master framework agreement” with the privately owned Beer Store that will allow to province to proceed with changes to beer retailing in the province as originally announced back in April.

Details of the new 10-year agreement include the following:

450 grocery stores in Ontario – including both chain and independent stores – will be awarded licenses to sell beer by the LCBO via a Request for Bids process, with no more than 40% to be granted to one chain.

via a Request for Bids process, with no more than 40% to be granted to one chain. The first wave of 60 licenses will be announced in December 2015, with at least 12 to be allocated to small grocers (under $1 billion worldwide revenue), and the remainder to large grocers.

Grocery stores will be limited to selling six-packs or smaller formats of beers 7.1% abv or less, and will be required to purchase beer via the LCBO distribution system, with prices for all products to be the same as LCBO and Beer Store.

Each grocery store location will have an annual sales limit equivalent to 102,222 six-packs of beer, but it will be a “soft cap”. Sales above that limit will be allowed with a 1% penalty that the LCBO will pass on to the brewery owners of the Beer Store.

At least 20% of shelf space in all grocery stores, LCBOs and Beer Stores will be dedicated to beer from small breweries – both from Ontario and elsewhere – with “small” defined as those that brew less than 4.6 million six-packs a year.

Bars and restaurants that serve less than 250 cases of brands carried by The Beer Store each year – which currently encompasses 9000 licensees in Ontario – will no longer be required to buy at a licensee premium from the Beer Store, and will instead be able to purchase their beer from the LCBO or grocery stores at the same prices paid by consumers.

The Beer Store will form a new 15 member board of directors that will consist of eight members from the chain’s current owners (Molson/Coors, Labatt/AB-InBev, and Sleeman/Sapporo); one from a “midsize brewer” (i.e. Moosehead or Brick); one from an Ontario craft brewery; and four independent members from outside the beer industry that will be appointed by the government.

The government will also appoint a beer ombudsman – reporting to the four independent board members – who will address any issues raised by Beer Store customers.

For more details, see the full announcement from the Government of Ontario, as well as coverage by the Toronto Star and the Globe & Mail. There have also been statements on the agreement released by The Beer Store and the Ontario Craft Brewers.