Independent grocers say they are being asked to pay the same big fees as retail giants like Loblaws in order to sell beer and it’s effectively going to keep them out of the market.

At an information session held Wednesday, Ontario grocers learned that if they get a licence, selling beer will cost them $7,000 per store, per year, regardless of the size of the operation.

“It seems like they’re just paying lip service to the idea of independents being able to sell beer,” said David La Mantia, owner of La Mantia’s Country Market in Lindsay.

Giancarlo Trimarchi, a partner in Vince’s Market stores in Newmarket, Uxbridge and Sharon, calculated that he’d have to sell $233,000 in beer a year to pay the fee.

“We’d have to sell 54 six-packs a day.”

The province announced in September that it would begin accepting bids from grocery retailers interested in selling beer, ending the monopoly held for decades by the Beer Store.

A total of 60 licences will be granted this year, 12 of them to independent retailers across the province.

But the details revealed Wednesday shocked grocers.

“It was a showstopper for a lot of the independents,” said Gary Sands, of the Canadian Federation of Independent Grocers, who watched the webinar held by the LCBO and the Alcohol and Gaming Commission of Ontario.

Commission spokesperson Eva Innes said the $7,000 fee will support the regulatory framework established to manage the new retail channel for beer, including a robust inspection process.

“A fee of $7,000 to obtain an authorization from the AGCO in order to sell beer in grocery stores was established based on what it will cost to regulate this new line of business,” said Innes.

The $7,000 fee isn’t the only stumbling block for independents.

Grocers who get a licence must also obtain a letter of credit for $150,000 in order to buy product from the LCBO.

“If they don’t pay, that’s when the letter of credit is drawn upon. It’s only as a matter of insurance. It’s not drawn upon unless they don’t make payments,” said Christine Bujold, media relations co-ordinator, corporate communications, for the LCBO.

Keeping $150,000 tied up may not be a problem for a corporation with millions or billions of dollars in sales. But independent store owners don’t have access to the same kind of credit big corporations do.

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Steve Sharpe, of Sharpe’s Fruit Market in Campbellford, Ont., a 25,000 square- foot operation, was hoping to sell products from the local Church-Key Brewing Co. if he won a licence.

Then he found out about the $7,000 fee and met with his banker to find out how much it would cost to maintain a $150,000 letter of credit.

It would cost him about $3,375 a year.

“I think the whole thing is flawed. What the government is really looking to do is to have us do this for nothing. To do it for no profit doesn’t make much sense,” said Sharpe.

Grocers say they won’t be making a big profit on the alcohol. They have to bid competitively for the licences and the feeling is that the grocers willing to keep the least amount of profits for themselves will win, although the basement for profit has been set at three per cent.

Grocers will have to invest in renovating areas of their stores to sell the beer, retrain existing staff and, in some cases, hire new staff old enough to sell alcohol.

Only seven independents and 18 large grocery stores in the GTA will be granted licences in the first round of bidding.

“If our competing store, Zehrs, gets a licence and we don’t, we’ll be at a huge competitive disadvantage,” said Trimarchi, referring to his store in Uxbridge.

Zehrs is owned by Loblaw Companies Ltd.

“It just seems so unfair and wrong.”

And just as unfair, he pointed out, if he gets it and Zehrs doesn’t.

“It should be done in the proper competitive spirit. I feel like it’s not a free market. They’re picking and choosing who’s going to win.”

In response to questions from the Star, the Ministry of the Attorney General of Ontario released a statement.

“Throughout this process, our government has worked to make sure that small and independent grocers had the opportunity to sell beer in a way that made sense for them. That’s why we ensured that a number of the licences will be reserved specifically for small and independent grocers. In the first tranche of licences for example, at least 12 licences are reserved for small and independent grocers,” wrote Ministry of the Attorney General spokesperson Judy Phillips.

“Selling alcohol is a public trust that our government takes very seriously. It is absolutely critical that Ontario’s standards for social responsibility are always met as we move forward with the next steps in modernizing our beer retailing system. We have been clear that as we expand beer sales, we will require that retailers follow strict rules for the safe sale of alcohol and the Alcohol and Gaming Commission of Ontario (AGCO) is a vital part of our government’s commitment to maintaining our high standards of social responsibility.”

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