Ontario’s alcohol retail landscape is set for a significant transformation as The Beer Store’s long-standing monopoly on selling 12- and 24-packs comes to an end in 2025. To support this transition, the provincial government has committed up to $225 million in compensation to The Beer Store, ensuring a smooth adjustment.
As of September 5, 2024, convenience stores across the province are now allowed to sell beer, wine, cider, and cocktails, with grocery stores following suit by October 31.
This move will greatly expand consumer access to alcohol in Ontario, a change that was long overdue for Ontario craft beer aficionados. Alongside this shift, the government is introducing competitive pricing for private retailers while maintaining a minimum price floor, though the LCBO will continue its exclusive sale of high-alcohol spirits.
“People finally have more options to responsibly and conveniently support local Ontario breweries and wineries – or whatever their drink-of-choice may be – even closer to home, and today’s announcement is another milestone in the government’s commitment to delivering more choice and convenience to consumers,” said Minister of Finance Peter Bethlenfalvy in an interview.
While the changes promise more convenience for consumers, public health experts have raised concerns about the potential for increased alcohol-related harm due to easier access.
Why Are Beer Sales Expanding Beyond The Beer Store?
The Ontario government’s decision to expand beer sales beyond The Beer Store is rooted in a desire to offer consumers greater convenience and modernize the alcohol retail system. The Beer Store has controlled 70-80% of Ontario’s beer sales for decades, and in 2015, a deal between the provincial government and The Beer Store cemented these exclusive rights. However, this agreement is set to expire in 2025, and the government has chosen not to renew it.
Premier Doug Ford’s government, pushing for a more consumer-friendly alcohol market, has framed this change as a necessary modernization. Ford has emphasized that Ontarians deserve the same access to alcohol as residents of other provinces, where grocery and convenience stores have been selling beer, wine, and cider for years. This shift is being hailed as the largest expansion of consumer choice since the end of prohibition, with the goal of making alcohol purchases more convenient for the public.
In exchange for unwinding this long-standing monopoly, the Ontario government is compensating The Beer Store up to $225 million to ensure a smooth transition. This compensation aims to protect jobs at The Beer Store and help maintain its store network until at least 2025. Despite the shift in the retail landscape, The Beer Store will continue to play a significant role as Ontario’s primary beer distributor and recycling facilitator until 2031, a vital role in maintaining Ontario’s impressive 97% bottle recycling rate.
Where Will be Able to Buy Beer in Ontario?
As part of the government’s initiative, consumers will soon have access to an unprecedented number of retail outlets selling beer across Ontario. By the end of 2024, up to 8,500 new locations—including grocery stores, convenience stores, and big-box retailers—will be able to sell alcohol, including beer, wine, and ready-to-drink beverages. This expansion marks a major shift from the current 2,200 licensed retailers, making it far easier for Ontarians to purchase alcohol alongside their regular shopping.
The province of Ontario has a dedicated web page with a map of all locations selling beer, cider, liquor and wine here.
The rollout will occur in phases. By September 2024, eligible convenience stores will begin selling beer, cider, and wine, followed by grocery stores by the end of October 2024. Unlike the previous restrictions, which limited grocery stores to smaller pack sizes, the new regulations will allow all licensed retailers to sell larger packs such as 12-packs, 24-packs, and even 30-packs.
Will Beer be More Expensive in Ontario?
Beer prices are almost certainly going to go up as retailers opt to take their share of the market. In neighboring Quebec, the retail markup is roughly 25%, and sometimes up to 30% of the brewer’s price.
Prices could even go up by 50%. Retail consultant Bruce Winder told the Toronto Star “The convenience-store premium could be anywhere from 20 to 40 or even 50 percent, depending upon the product,” said Winder. “The smaller the store, the higher the premium’s going to be.”
Ultimately, the price increase will be limited by competition, but that only happens in a scenario of widespread adoption. Many convenience stores already opted out, whereas the full conversation to corner store beer sales is expected to take another year. This means we could see prices going up for a while before reaching the new plateau.
Conversely, we could also see prices fall a bit after that plateau. A 2022 Fraser Institute report noted that alcohol prices in provinces with more retail competition, like Alberta, are about 5-10% lower than in provinces with monopolies.
Other observers are more pessimistic about the outlook for craft beer. Ben Johnston is a veteran blogger on the beer industry and sees the change in distribution resulting from the liberalization as tipping the balance in favor, once again, of large breweries.
In a market where major breweries have maintained monopoly control for nearly 100 years, the solution shouldn’t be to create 4,187 new retail outlets that primarily benefit established players. With over 400 craft breweries currently operating in Ontario, many are already struggling with rising overhead costs while beer consumption has declined 3.4% year-over-year. Local taprooms that once served as neighborhood beer destinations are now forced to compete against every convenience store and gas station province-wide.
This expansion disproportionately advantages macro breweries with established distribution channels while further fragmenting the already saturated craft market where margins have decreased by an estimated 15-20% since 2019. The government’s approach fails to address the fundamental imbalance in Ontario’s beer market, where the top three producers still control approximately 75% of sales volume.
What Are Public Health Concerns About Easier Alcohol Access?
The expansion of alcohol sales has sparked concerns among public health experts. The Canadian Centre on Substance Use and Addiction (CCSA) has pointed out that increasing the availability of alcohol could lead to higher rates of alcohol-related harm, such as drunk driving, underage drinking, and alcohol abuse. Ontario already experiences over 3,000 alcohol-related deaths annually, and easier access could exacerbate this issue.
A study by the Canadian Institute for Substance Use Research (CISUR) found that a 10% increase in alcohol outlet density leads to a 3% increase in alcohol consumption. To mitigate these risks, public health officials are calling for stronger educational campaigns about responsible drinking and stricter regulations for the sale of alcohol.
Is Beer Sales Good News for Convenience Store Owners?
Convenience store and grocery store owners are largely supportive of the expansion, seeing it as an opportunity to diversify their product offerings and attract more customers. The Ontario Convenience Stores Association estimates that alcohol sales could bring a 15-20% increase in revenue for small retailers.
However, there are logistical concerns, including ensuring that staff are properly trained to handle alcohol sales and meet provincial regulations. Many retailers are preparing by implementing new systems for ID checks and hiring additional staff to handle increased foot traffic.
Will This Expansion Impact Small Craft Breweries?
Ontario’s thriving craft beer industry could see both benefits and challenges from the expansion of alcohol sales. On one hand, small craft brewers will have access to a much wider retail network, making it easier for their products to reach new consumers. This could lead to increased sales and greater visibility for local brands.
On the other hand, larger beer companies may use their economies of scale to offer lower prices, potentially making it harder for craft brewers to compete. However, the Craft Brewers Association of Ontario believes that the increased availability could grow their market share by 5-10% over the next five years, as consumers increasingly favor local and artisanal options (Ontario Craft Brewers, 2023).
Some craft business insiders, including on the Quebec side, are more skeptical: the same Ontario breweries that are struggling to compete with Ontario’s many commercial breweries are going to face even more competition in a more saturated market. A total of 30 breweries closed down in 2023 alone, five times more than in 2022.
For Nicholas Malboeuf, owner of the now-closed Tuque de Broue craft brewery, the past five years have been difficult for small craft breweries across the province. « Breweries have been closing at a rate of one per week over the past year », a crisis he says is related to the very structure of the craft beer market in Ontario. As of 2016, several breweries from Toronto started an energetic expansion into Eastern Toronto while commercial breweries bought up several popular craft breweries, resulting in an asymmetric craft beer market.
What is Next for Ontario Beer Sales?
Massive adoption by convenience stores and grocery stores could help stabilize the price sooner rather than later, but a price hike is certainly on the horizon for the next year. For industry observers, further regionalization throughout select convenience stores could help protect local craft beers that want to preserve their independence – and literally – their craft.
Pierre-Olivier Bussières is the Editor-in-Chief of Hoppy History and Uber Optimized. He is the Sales and Marketing Director at Uberflix Studio. He also writes about travel, geopolitics, and alcohol markets, and has published articles in The Diplomat, Reflets, The Main, Go Nomad, Global Risk Insights, and Diplomatie.
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