The Beer Store Vs. The LCBO? Not Quite

There is nothing wrong with a little healthy competition in retail, but in Ontario, there aren’t many options when it comes to buying an alcoholic beverage. We have The Beer Store, the LCBO, Wine Rack, and lately, a bunch of brewpub retail stores popping up. Your drink of choice is probably what dictates which franchise you frequent most of the time, because there aren’t many options when you are looking for something in particular.

The Toronto Star recently published a report that The Beer Store and LCBO made a secret deal in 2000 that guarantees the two retail companies will not have to compete with each other for sales. If you are a beer drinker, you have definitely noticed that the LCBO never sells anything bigger than a 6-pack of beer. That means you will have to stop by a Beer Store in order to get a 12-pack, or 24-pack. Most people are used to that reality, and probably don’t think about it that much. But according to the Toronto Star, you should be.

An article by Martin Regg Cohn published on December 9th says, “The 10-page document, authenticated by an LCBO source, details an arrangement that constrains growth in the LCBO’s beer sales to protect the effective retail monopoly of the ever unpopular — but forever profitable — Beer Store.” One of the stipulations in the agreement reads, “LCBO will not sell beer… in packages containing more than 6 containers.” So, that explains why you can only get a 6-pack at the LCBO, but why they would ever agree to something like that, is the real question.

The result of the LCBO’s limitations not only forces customers to miss out on the savings that come with purchasing a 12 or 24-pack, but it also gives the Beer Store a monopoly over any significant beer sales, allowing them to set any price they please. The agreement also extends to bulk sales to restaurants and bars, which needless to say, means the LCBO is missing out on a lot of potential revenue.

The Beer Store is run by private, foreign owners, and the LCBO is owned and operated by the Ontario government, so why would our government limit the growth of a local company in order to appease outsiders?

Cohn spoke to former LCBO CEO, Andy Brandt, who said he did it under the direction of the Tory government headed up by Mike Harris in 2000. Brandt also said he believes the Tories were forced to give in to intense pressure from the privately-owned Brewers Retail Inc. (aka The Beer Store). If the LCBO was able to sell larger packages, the revenue for the government would be huge, but instead the majority of money made through beer sales is going straight into foreign owners’ pockets. Kind of contradicts the assertion that the agreement was made to benefit the Ontario beer consumer.

Cohn comes to the conclusion that since political parties in Ontario benefit from campaign donations, it is in their best interest to keep the private companies who make those donations, happy. This isn’t the first time The Beer Store’s effectiveness has been questioned. Their monopoly has been under scrutiny for awhile, and now with the leaked document on the government’s involvement with giving them that monopoly, maybe they won’t be able to hold on to it for much longer.