Consumers, craft brewers, grocers and owners of small bars and restaurants will finally quench their thirst for change under a new deal between Queen’s Park and the Beer Store, the Star has learned.

The 10-year accord clears the way for six-packs to be sold at 450 of Ontario’s 1,500 supermarkets starting later this fall at the same cost as in LCBO outlets and Beer Stores.

Beer prices in Ontario will continue — on average — to be among the lowest in Canada.

“Nobody thought you could get this agreement with the beer guys,” said a senior government official, referring to the foreign parent companies of Labatt, Molson, and Sleeman, which own the Beer Store and have enjoyed a virtual monopoly since Prohibition ended in 1927.

“For the small brewers, we are increasing their shelf space,” the insider said, speaking on condition of anonymity because the arrangement will not be made public until Wednesday.

Indeed, 20 per cent of beer shelving in supermarkets, the LCBO, and Beer Stores will be reserved for independent brewers from anywhere in the world that make fewer than 4.6 million six-packs a year.

That boutique category includes Ontario’s 100 craft brewers — such as Toronto’s Steam Whistle — as well as small Canadian firms like Brick. It does not encompass corporate craft brewer Creemore Springs, which is owned by Molson, or Labatt’s Goose Island.

The 190-page “master framework agreement,” to be unveiled by Premier Kathleen Wynne at the Mill Street Brew Pub, replaces a 10-page deal from 2000 that was kept secret until the Star’s Martin Regg Cohn revealed it last December.

Under the new accord, 9,000 bars and restaurants, which serve fewer than 250 cases a year, will no longer be forced to buy from the Beer Store at a premium of $8 more per 24-case than ordinary consumers pay.

“They can go across the street and buy their beer for the same price as everybody else,” the source said Tuesday.

That should level the playing field with larger bars and restaurants, which often receive better deals from the Beer Store thanks to free glassware, patio umbrellas, and other promotional material.

The beer changes are the result of negotiations led by Ed Clark, the former TD Bank CEO who is Wynne’s point man on monetizing government assets to bankroll transportation infrastructure expansion.

Clark is also leading the privatization of the Hydro One, the provincial electricity transmitter, which should net Queen’s Park $4 billion toward a 10-year, $31.5-billion push to build public transit, roads and bridges.

Before the end of the year, he is expected to table recommendations on getting wine on grocery shelves alongside beer.

Those reforms are taking longer because the privately owned Wine Rack and Wine Shop kiosks now in many supermarkets have “grandfathered licences” exempt from international trade agreements.

Those 268 licences allow the sale of both quality vintages made here and foreign blended bulk wine bottled in the province.

That means an expansion of supermarket wine sales is not likely until late next year, though beer will be on grocery shelves before this Christmas.

As first disclosed by the Star last week, the 450 eligible grocers will be limited to selling the equivalent of 46 million six-packs a year, but will be allowed to exceed their quota if they pay a penalty worth 1 per cent of the cost of the beer.

That fine will go to the Liquor Control Board of Ontario, which is the distributor. The LCBO will then pay that surcharge to the breweries to compensate them for lost revenue from cannibalized Beer Store sales.

But sources say the government is happy with this “soft cap” because they want supermarkets to sell more beer despite the quota, which was a concession to the Beer Store’s owners.

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In return, recycling of all wine, booze, beer bottles and cans will continue to be handled by the Beer Store no matter where they are purchased.

At the same time, grocers will be limited to selling beer at 450 stores for the duration of the 10-year agreement, but the Beer Store, which must spend $80 million improving its austere warehouse-style stores, faces no such curbs on new outlets.

Details of the licence auction are expected to be announced Wednesday, but sources say no supermarket chain will be allowed to own more than 40 per cent of them and smaller, independent grocers will get a piece of the action.

The cost of beer will continue to be set by the breweries — with a government-regulated minimum price — and supermarkets will only be able to put brands on sale when they’re also reduced at the Beer Store.

By the numbers

Beer will be sold in 450 supermarkets as well as 448 Beer Stores, 651 LCBO outlets, and 210 rural LCBO agency stores.

Supermarkets can each sell the equivalent of 279 six-packs per day. If they exceed their quota they will pay a penalty worth 1 per cent of the cost of the beer to the LCBO, which will then compensate the Beer Store.

The 100 Ontario craft brewers, which currently employ about 1,000 people, are expected to double or triple the size of the industry within a decade, meaning thousands of new jobs.

There will be no private-label beer on grocery shelves, meaning Loblaw’s President’s Choice brews will continue to be sold only at the Beer Store.

Publicans and restaurateurs who sell fewer than 250 cases of beer annually will no longer be forced to purchase them at the Beer Store for a premium of around $8 per case. They can now buy their brews at the LCBO or grocery stores for the same price as everyone else.

One fifth of all beer shelving will be devoted to small brewers.

A new board of directors for the Beer Store will consist of 15 members: eight from Molson and Labatt; one from Sleeman; one from another midsize brewer, such as Moosehead or Brick; one from a craft brewery; and four provincially appointed independent members who are not from the beer industry.

A beer ombudsman will be appointed to tackle public concerns about the Beer Store and will report to the four independent board members.

The government expects to make around $10 million auctioning off licences to sell beer in grocery stores.

Ontarians spend around $3 billion a year on beer, 80 per cent of which goes to the major foreign-owned breweries that control the Beer Store.

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