Coming soon to a supermarket near you: Beer and wine.

Three decades after politicians first promised beer and wine in corner stores, the Liberal government now plans to go further — by liberalizing sales in hundreds of large supermarkets across the province.

In a move that will shake up the Beer Store, the government wants to significantly loosen the quasi-monopoly held by the foreign-owned chain ever since prohibition ended nine decades ago.

Potentially hundreds of Ontario’s larger supermarkets — from among the roughly 1,500 located across the province — would initially be permitted to sell craft beer and major national brands on their premises, providing stiff competition to the Beer Store’s 448 existing outlets, sources say.

As many as 200 large grocers could also be licensed to carry Ontario and imported wines in their stores for the first time in the province’s highly regulated history. But wine sales would be more complex due to trade laws that restrict the number of licences the government can issue.

Grocery executives have been called in by a government-appointed panel to discuss “liberalizing the distribution of beer and wine in this province,” according to David Wilkes, a vice-present at the Retail Council of Canada. The discussions made it clear the government wants to “enhance choice and enhance convenience.”

The new policy will be a centrepiece of the spring budget expected in several weeks, sources say. Other elements could include the partial privatization of Hydro One, the electricity transmission company that is now publicly owned.

Sources say no final decisions have yet been made about beer and wine sales that are worth $5 billion a year. But the rough outlines are emerging from a government-appointed panel that has discussed the scenario with major players in the grocery business, including Loblaw CEO Galen Weston.

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Beer and wine would be displayed in a defined area or aisle of a large supermarket, but not cordoned off from other food and beverages. The idea would be for customers to pay for their alcohol at the final checkout corner, facing the same age identification checks now carried out by the Beer Store and the LCBO.

The Beer Store could continue to operate its outlets across Ontario. But sources say it would have to start paying a “franchise fee” of as much as $100 million a year to reflect its privileged position as the dominant retailer — now holding nearly 80 per cent of the market.

Distilled spirits — high alcohol-content vodka, whisky and the like — would continue to be restricted to the government-owned LCBO, for reasons of social responsibility. Supermarkets have also shown no desire to enter that market.

In recent public statements, Premier Kathleen Wynne has ruled out alcohol sales in convenience stores, where distribution costs would be higher and questions of social responsibility might be more politically difficult.

Her comments came after getting an initial report last year from her advisory council, headed by ex-TD Bank CEO Ed Clark. Initially, the main motivation was to extract higher revenues from the Beer Store, whose foreign owners are believed to earn high profits from their quasi-monopoly.

The government’s thinking has shifted. Instead of a primarily revenue-raising exercise, it is taking account of recurring complaints about poor service and limited choices at the Beer Store. Under increasing pressure from local craft brewers, and media reports that reflected public discontent, the Liberals are now stressing consumer convenience and support for domestic producers.

Sources say Queen's Park is looking at a reorganization of how the Wine Shop and the Wine Rack operate in their own highly profitable, private sphere.

“The government is driving toward other retail channels that are convenient,” said one source. “Beer could and should be as easy to get as going to the local grocery store.”

Representatives of the Beer Store and its major owners — Labatt and Molson-Coors — did not respond to questions. Despite their legacy of lobbying and donating generously to political parties (documented in Star stories last December), the Beer Store and the big brewers have been lying low in recent months — and were conspicuously absent from a major Liberal fundraising dinner Wednesday night attended by Wynne.

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In addition to the privately owned Beer Store, two other private retail channels that have existed for decades — the Wine Rack and the Wine Shop — would also see their operations restructured, as first reported by the Star earlier this month. The 268 wine outlets, “grandfathered” by previous free trade deals, are based mostly in small supermarket boutiques that are cordoned off.

Patrick Gedge, head of the Winery & Grower Alliance of Ontario (which speaks for the owners of the two private wine chains), declined to be interviewed, saying only that he is co-operating with Clark’s council. Another wine industry source confirmed that as many as 200 wine licences could be repurposed and issued to large grocers.

The government has yet to decide how supermarkets would be selected to sell beer, wine, or both, but a major criterion would be size. Nor has it decided whether foreign beer would also be sold in supermarket locations, and whether larger packages of 12 and 24 beers would be available. Under a secret deal revealed by the Star last December, the LCBO was permitted to sell only six-packs of beer; last year, Clark proposed allowing it to sell 12-packs — while reserving the most profitable, high-volume (and affordable) cases of 24 for the Beer Store.

Prices would remain the same across all retail channels, whether in the Beer Store, the LCBO, supermarkets, or any remaining Wine Rack and Wine Shop outlets (which are owned by the country’s two biggest wine conglomerates). Supermarkets would have to remit to the government the equivalent of what the LCBO currently earns in markups and taxes.

Most (but not all) major grocers are unionized in Ontario, which would diminish concerns that well-paid jobs would be lost as the Beer Store’s quasi-monopoly is relaxed. The United Food and Commercial Workers union, which represents 6,000 workers at the Beer Store, has publicly supported the foreign-owned chain in its attempts to maintain its stranglehold. But the same UFCW represents many of the tens of thousands of workers at major supermarkets such as Loblaws, Sobeys and Metro. (Other major grocers, including Walmart and Costco, are non-union).

The emerging plan has not been decided upon by cabinet or debated in caucus. But it has the strong support of Clark and the premier’s key advisers, and will add ballast to a spring budget that will be buffeted in other areas as the government’s financial plan comes under scrutiny.

mcohn@thestar.ca , Twitter: @reggcohn