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Further to the special update we provided to our Ontario members last week on this issue, late yesterday the Ontario government released the report to the Minister of Finance by Ken Hughes, the Special Advisor overseeing the Province’s Beverage Alcohol Review.
CFIG participated in roundtable discussions as part of this review and also met with Ken Hughes to convey our perspective on the issue of Alcohol in the retail channel. To reiterate the core positions we conveyed to Ken Hughes were:
- CFIG strongly supports the opening of the sale of beer and wine to all retail grocery stores. We also indicated the sale of spirits was not something our members were interested in, but would likely carry the product, for competitive reasons, if it were permitted.
- CFIG did not support the framework implemented by the previous government in that it ended up creating ‘winners and losers’. CFIG said that bids for licenses should be eliminated.
- CFIG advocated in the strongest terms possible that minimum pricing both for LCBO as a wholesaler and at retail needed to be in place as a protection, or guardrail, to ensure that independents were not put at a competitive disadvantage vis-à-vis large grocery chains. As well, the elimination of minimum pricing was not socially responsible. The Retail Council of Canada, representing the chains, advocated the elimination of minimum pricing saying that “RCC believes in the power of markets to self-regulate.”
- CFIG said that retailers however, should be allowed to compete on price above the minimum price. Let the retailer decide their own margins.
- CFIG advocated that retailers should have the ability to cross merchandise beer and wine with other food products.
WHAT THE HUGHES REPORT RECOMMENDS:
Here is the link to the entire Hughes report. CFIG has reviewed the observations and recommendations and from our interpretation, we completely support what Ken Hughes has recommended to the government. In particular, we would draw your attention to Section 8, Recommendation number 4, which states that:
- The government should end the anti-competitive practice of uniform pricing across Ontario alcohol retailers and enable price competition at the retail level.
- Guardrails, like minimum prices, should remain in place to ensure that beverage alcohol is sold in a socially responsible manner.
- The government should consider maintaining uniform pricing across the LCBO network to ensure fairness for rural and Northern customers.
As well, recommendation number 7 also says that the LCBO should be “expanding its role as a wholesaler.”
While CFIG is pleased with the Hughes report, it is worth noting that these are recommendations to the government, and that this does not guarantee where the government will finally land on the recommendations. Accordingly, CFIG will need to remain engaged closely with this issue as the government now begins its formal review of the report.
The opening up of beer and wine in all grocery stores is long overdue. It will provide more convenience, fairness and choice for the people of Ontario. But if we do not ensure components such as minimum pricing are maintained, then the new system will also have even more winners and losers.
But again, we are very encouraged by the Hughes report and the approach the government has taken throughout the course of this review process. It has been open, constructive and positive.
CFIG thanks you for your continued support.
Link to the Report of the Special Advisor:
