New beer rules delight and confuse

With an April 15 announcement, the Government of Ontario finally began the process of shaking up the sale of alcohol in this province. The changes, which come after a long period of will-they-won&rsquo;t-they between the province and The Beer Store, are complex and at some points strange, but do mean that some liberalization in the Ontario beer world is arriving after decades of a government-corporate duopoly.</p>

The most high profile of the coming changes is the licensing of up to 450 supermarkets across the province to sell beer. Suds will appear on grocery store shelves as early as December of this year, but the project will be rolled out slowly, with as few as 150 stores getting access within the next couple of years. The stores will be required to carry at least 20 per cent craft beer on their shelves. This comes with a limit of annual beer sales to $1 million a year per store, and package sizing only up to six-packs. These limits have been heavily criticized as arbitrary, and will deny access to consumers if a store reaches its limit before the end of the year.

Shelf space changes also are coming to the Beer Store, which has been forced by the government to undergo some structural changes recently, but is still majority owned and controlled by three foreign brewing giants. The government will require more shelf space for craft beer on the Beer Store’s shelves, as well as better marketing. The Beer Store is also being required to update all of its stores to a self-serve format, instead of the current system of beer being ordered at a cash register and brought out to consumers. This change is likely to increase the visibility and accessibility of craft beers.

“With us being — for lack of a better word — oppressed for so many years, it needs to be legally mandated that there is a minimum amount of space for the local craft brewers,” Matt Johnston of Hamilton’s Collective Arts Brewing Co. told the Canadian Press. “There’s no point in saying you’ll give us 20 per cent unless consumers can see it on the shelf.”

Changes to the LCBO include a pilot project testing the sale of 12-packs starting in 10 locations and potentially expanding to 60 LCBOs, as well as the sale of growlers (refillable 64 oz. bottles). The LCBO will also launch an online store for pick up or delivery, likely to be very popular among students. The most perplexing change is the creation of a “beer ombudsman,” an office overseeing the sale of beer in the province, something that is already done by the Alcohol and Gaming Commission of Ontario.

The government is also levying a $100 million tax on beer sales, which will be applied one dollar at a time per 24-bottle case. This new tax also comes with a stipulation that Molson-Coors and AB In Bev (owners of Labatt’s) are not allowed to pass on the cost of the tax to consumers for two years. This is one of the most controversial aspects of the changes, as the tax will raise the prices of all craft beers in the province while keeping prices the same for beers from major breweries. It has been criticized as a “craft beer tax” that will disincentivize consumers from buying local beer by raising prices.

The last notable change is that brewers with multiple locations will now be able to sell their own product at any of their locations, regardless of the volume produced at that site. This is especially attractive to brewers with one location in a more heavily populated or visited area than another. Previously, a brewery with a large location and a small location could only sell an amount of beer equivalent to what each location produced.

So far, reaction to the changes has been varied. Some are seen as unquestionable positives in the beer industry, others as platitudes or bizarre restrictions. Only time will tell how Ontario beer’s future will shape up.