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Beer Store wars

April 2019

Re: “LILLEY: Ford’s beer battle could be lost due to Wynne” (Toronto Sun, 19 April 2019): Serious question here: When have people and private businesses not liked getting government contracts?  This is a question that needs to be asked in light of the Ford government’s plan to get beer into corner stores, one that may force the province to pay financial penalty to The Beer Store due to a 10 year contract signed by the previous Liberal government of Premier Kathleen Wynne.

Many have argued that if governments break contracts, as they have the power to do through legislation, that corporations will not want to do business with the government.

Government contracts, even with the restrictions that can often come with them, are usually pretty lucrative, especially in the long-term. For a private company like The Beer Store, having a contract to sell beer can still be very lucrative, even with some competition from grocery and corner stores. The most obvious reason is the variety and quantity of the selection The Beer Store can provide, something that other stores likely couldn’t/wouldn’t match due to limitations on shelf space.

The Ford government should absolutely try to come to a negotiated settlement with The Beer Store about breaking the current contract, one that doesn’t come with huge penalties for the taxpayers. However, if one can’t be reached, what would stop the government from legislating a new agreement, along with a clause would limit or cancel any financial penalties? If The Beer Store doesn’t like that, then how about passing legislation that takes away the monopoly that Molson and Labatt (and Sleeman) have on the retail end? Maybe craft brewers like Steam Whistle, Creemore and Flying Monkeys would love the opportunity to run a new version of The Beer Store.

Who knows, they might even designate a portion of the shelf space to Molson and Labbat.

Now I’m certainly not saying that this should be the solution and my suggestion (just a suggestion) bets heavily on the opinion that Molson and Labbat wouldn’t simply abandon a huge market like Ontario in favour of selling their beer in other provinces, but if Molson and Labbat are going to hold a gun to the heads of taxpayers, then all the cards should be on the table.

The government has the power to make life very miserable for both if they don’t play ball. Hell, the government of Ontario Premier George Stewart Henry suspended Sleeman’s brewery licence in 1933 for bootlegging, putting them out of business for 50 years.

Speaking of booze, ever since Ontario Premier Doug Ford announced his “buck-a-beer” plan, he has been openly mocked by critics, many of whom are likely not Doug Ford fans to begin with, but also by craft brewers, who state they aren’t willing to sell their beer for only a dollar.  Ford didn’t make it the law that all beer must be sold for a dollar; he simply gave those who wish to do so the legal right to sell their beer for only a dollar.  I completely agree with the right of any manufacturer of alcoholic beverages to sell their products at a price that will allow the company to make a reasonable profit, without sacrificing their quality standards.

I would also like to point out that some people just don’t care about the taste; they just want to get alcohol in their system and want to do it as cheaply as possible.

Don’t believe me?  Well, there’s a reason why in America there are wines such as Thunderbird, Night Train, Cisco and Mad Dog.  These “fortified wines” are controversial, with critics saying they do nothing more that promote alcoholism and public intoxication among homeless people and students who are looking for a cheap buzz.  That said, they do sell quite well because they are cheap, a perfect example of the customer voting with their wallets, though thin they may be.

Thunderbird’s motto is “The American Classic”, although I joke that it should be “The choice of winos across America.”  I always found it humorous that it says on the label, “Serve cold.” Yeah, I’m thinking that if I find myself having to resort to drinking a “fortified wine,” I’m probably not that concerned whether it’s chilled or at room temperature.

I came across an article about Night Train titled:  “I can’t believe it’s not paint thinner.”

Cisco’s motto is “Takes you by surprise.”

Do I need to say anymore?

*******************************************************

The original article that inspired this column:

Ford’s beer battle could be lost due to Wynne

Officially both sides are negotiating but privately the Beer Store and the Province of Ontario could be headed for battle over putting beer into corner stores.

From as far back as their election platform, the Ford PCs have said they plan to expand the number of ways that Ontario residents can buy beer and wine.“Further expand sales of beer and wine into corner stores, grocery stores, and box stores, based on market demand and not government decree,” the PC’s Plan for the People said.

Premier Ford, a man who does not drink alcohol, has made making it more convenient for Ontarians to buy beer and wine a cornerstone of his campaign and his government.

At a recent stop at the Toyota plant in Cambridge, Ford received strong applause when he responded to a reporter’s question on the difficulty of expanding sales by appealing to the workers standing in front of him on a Friday afternoon.

“I’m sure there are a few men and women who would like a cool beer,” Ford said.

He ended the news conference with a promise to those workers.

“Don’t worry, beer is coming to those convenience stores,” Ford said.

But standing between that promise and reality is one of the worst agreements ever signed by the Government of Ontario.

Don’t get me wrong… if you are the Beer Store or one of its original shareholders — Labatt, Molson and Sleeman — then this is a great deal, but from the point of view of the taxpayer, it is awful.

In 2015, then-Premier Kathleen Wynne decided to do what no previous premier had done and expand the sale of beer in the province to 450 grocery stores.

Rather than follow the model of other provinces, like Quebec or Alberta, Wynne decided to negotiate what can only be described as a crony capitalism deal.

She didn’t like the way Beer Stores looked and wanted them to change their image to the tune of $100 million in upgrades.

She didn’t like their corporate structure and wanted them to change that by letting craft brewers buy small stakes in the company and get seats on the board.

She wanted them to freeze prices and make sure that by expanding retail options she didn’t face a political backlash from the beer drinking public.

In exchange she negotiated away the farm.

She agreed to cap the number of grocery stores that could sell beer at 450, and effectively made it impossible for the province to change the deal before it expires in 2025 without significant penalties.

I’m not saying that the province can’t negotiate a way out of this deal.

Both sides say they are committed to the negotiations now underway, but Wynne severely handicapped any future changes by the province.

There is language in the agreement that no government lawyer should have agreed to, but Wynne wanted her social engineering to take hold at the Beer Store and now it could cost us all.

The Beer Store, despite what some people think, is not a government agency.

It is in fact a quasi-monopoly established in 1927 at the end of prohibition to deal with the sale and distribution of beer.

About the author

Bruce Forsyth

Bruce Forsyth served in the Royal Canadian Navy Reserve for 13 years (1987-2000). He served with units in Toronto, Hamilton & Windsor and worked or trained at CFB Esquimalt, CFB Halifax, CFB Petawawa, CFB Kingston, CFB Toronto, Camp Borden, The Burwash Training Area and LFCA Training Centre Meaford.

Permanent link to this article: https://militarybruce.com/beer-store-wars/

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